Legislative Programme and the Budget

The Committee consisted of the following Members:

Chairs: Mr Dai Havard  , †Albert Owen 

Andrew, Stuart (Pudsey) (Con) 

Bebb, Guto (Aberconwy) (Con) 

Brennan, Kevin (Cardiff West) (Lab) 

Bryant, Chris (Rhondda) (Lab) 

Cairns, Alun (Vale of Glamorgan) (Con) 

Caton, Martin (Gower) (Lab) 

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) 

Fabricant, Michael (Lord Commissioner of Her Majesty's Treasury)  

Flynn, Paul (Newport West) (Lab) 

Francis, Dr Hywel (Aberavon) (Lab) 

Gillan, Mrs Cheryl (Secretary of State for Wales)  

Griffith, Nia (Llanelli) (Lab) 

Hain, Mr Peter (Neath) (Lab) 

Hanson, Mr David (Delyn) (Lab) 

Hart, Simon (Carmarthen West and South Pembrokeshire) (Con) 

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) 

Lumley, Karen (Redditch) (Con) 

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 and Alison Groves, Committee Clerk

† attended the Committee

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Welsh Grand Committee 

Wednesday 20 June 2012  


[Albert Owen in the Chair] 

Legislative Programme and the Budget

2 pm 

The Chair:  We are now resuming debate. Before I call Jonathan Edwards, I inform the Committee that we will finish five minutes early, as there is a vote in the Chamber at 4 o’clock. I will call the Front-Bench spokespeople to speak at 25 to 4, so that the Committee can finish at five to 4. 

Question again proposed,  

That the Committee has considered the matter of the Government’s legislative programme as outlined in the Queen’s Speech and the Budget statement as they relate to Wales. 

Jonathan Edwards (Carmarthen East and Dinefwr) (PC):  Diolch, Mr Owen. I will conclude my remarks as soon as I can to allow as many Members as possible to partake in the debate. 

Before we adjourned, the Secretary of State made a helpful intervention. I welcome the fact that there will be a UK Trade and Investment presence in Wales. It is something that I have been calling for, because we have been the only nation in the British state not to have a UKTI presence. May I press her to make further demands on the Secretary of State for Business, Innovation and Skills? When the Select Committee on Welsh Affairs recently visited Germany, it struck me that Germany Trade and Invest—UKTI’s counterpart in Germany—has a deliberate strategy to direct investment to the poorest parts of the state. That is how it has been able to address the issues of reunification. I would like a similar commitment from UKTI, not simply a presumption to push investment into the south-east of England. 

The Secretary of State for Wales (Mrs Cheryl Gillan):  I am grateful to the hon. Gentleman for giving way. He makes a valid point about other countries, but I must point out that inward investment, as Mrs Hart, the Business Minister in the Labour Welsh Government has said, is a matter for the Welsh Government. I believe however that the two Governments need to work very closely together, which is why I am pleased that we will now potentially have a permanent presence in that Government office. 

May I also correct a misunderstanding? There has always been a UKTI person looking at Wales, but they have not been based in Wales, but have been nipping in and out, which I do not think is helpful. At lunchtime, the Government published their response to the Welsh Affairs Committee’s report on UKTI. I think that the hon. Gentleman will want to read it. 

Jonathan Edwards:  I am grateful for that intervention. From my perspective, as long as Wales is part of the British state, it is impossible that the apparatus of the

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British state will work in the interests of Wales. I will continue to make that point. 

To conclude on the Budget, we were somewhat concerned about the removal of universality in child benefit. It creates a huge anomaly. A single-income household with earnings above the arbitrary threshold of £50,000 could be worse off than a household with two people earning slightly less than the threshold. The Treasury has yet to address that point. 

We welcome the reduction in corporation tax, but if the Treasury is serious about geographically rebalancing the economy across the British state, it should surely think about how it could offer fiscal incentives to stimulate demand in those parts of the state that face the brunt of the cuts. That is, those parts of the British state that are more reliant on the public sector. Unfortunately for us, Wales is included in that. 

We need countervailing measures. I am personally relaxed about whether corporation tax is devolved to the Welsh Government, or the Treasury implements a policy of differential taxation across the state. I am relaxed about which avenue is taken. The key point is that there must be countervailing measures. I understand that there are moves ahead to devolve responsibility to Northern Ireland; what is good enough for the Six Counties is good enough for Wales. 

A big theme in the Finance Bill, which we will debate on the Floor of the House before we rise for summer recess, is the planned 3p increase in the cost of fuel. We will table an amendment calling for it to be scrapped, and that is in addition to our work on a true fuel price stabiliser. We are all aware that in the isolated and remote communities we represent, fuel prices are a major issue for constituents. Clearly, if someone lives in an isolated community, they are far removed from where they work, seek leisure and access services. 

Jonathan Evans (Cardiff North) (Con):  Will the hon. Gentleman give way? 

Jonathan Edwards:  I will finish this point and then give way. 

Plaid Cymru will table an amendment to the Finance Bill and we look forward to the support of hon. and right hon. Members. I hope that the hon. Member for Cardiff North is about to say that he will join us in the Lobby. 

Jonathan Evans:  I am about to suggest to the hon. Gentleman a way in which we can work more closely together—on transparency in relation to petrol prices. He will know that when the wholesale price of crude oil goes up, there is an immediate increase in the petrol pump price, yet, as the Secretary of State has pointed out, there is not a commensurate drop-off when the wholesale price falls. Of late, a colossal fall in price has reflected the fall in crude prices. In the context of transparency, should more not be done in rural areas to draw the public’s attention to places where the decrease is not being passed on? 

Jonathan Edwards:  The hon. Gentleman makes a very interesting point, and I certainly agree with him in that regard. However, the focus in terms of the Finance Bill will definitely be the planned 3p increase. 

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Turning to what we were calling for in the Budget, we would have saved £8 billion by scrapping the higher rate pension rebate. We would have introduced a windfall tax on the profits of the big six energy companies and reinvested that revenue in improved energy efficiency for homes. That would have achieved the twin objectives of creating jobs in the green industries and dealing with the major social issue we face across the British state in terms of fuel poverty. 

We particularly wanted the housing revenue subsidy scheme for Wales to be scrapped, which would free £80 million for local authorities that have retained their stock to invest in their housing. The scheme has been scrapped in England and never existed in Scotland and Northern Ireland. There is no justification for its continuation. I look forward to the conclusion of the intergovernmental negotiations on the planning formula, when I hope the matter might be addressed. 

We also wanted positive moves towards a financial transaction tax to curb speculation by casino financers and to raise revenue for investment in the productive side of the economy. We would cut employer’s national insurance, as it is essentially a payroll tax. A reduction would therefore encourage job creation. As John Maynard Keynes said: 

“Look after unemployment and the budget will look after itself.” 

The Treasury would be wise to locate that wisdom at the heart of its thinking. 

In conclusion, what we needed was a Budget for jobs and growth. Although it was spun in those terms, this was not such a Budget. The catalogue of mistakes in the Budget has exposed the vacuous nature of the coalition. The Government did inherit an absolute mess from Labour, but their remedy is making matters worse. 

2.7 pm 

Simon Hart (Carmarthen West and South Pembrokeshire) (Con):  I decided over lunch that for the purposes of managing my blood pressure, I am going to turn up at fewer Welsh Grand Committees, because there are so many points of frustration and so much apparent rewriting of history. However, a nugget of gold was presented to us this morning by the new and very welcome shadow Secretary of State. From hereon in, he will be the monkey to the First Minister’s organ grinder—those were almost his words, rather than mine. That is rather a shame in terms of joint efforts to project Wales on the international stage. 

My frustration comes in several forms. I will keep my comments brief. First, there was some good news in the Budget and the Queen’s Speech. It is pretty depressing to hear speech after speech, and comment after comment from the Opposition, who almost revel in the difficulties the nation faces at the moment without apparently remembering that they might—I am being generous—be partly responsible for them. 

People who own businesses in Carmarthenshire or Pembrokeshire and who are watching these proceedings on television—unlikely though it may be—could be forgiven for thinking that we hold out no hope whatsoever for business and jobs in Wales. That is absolutely and fundamentally wrong. We do, and plenty of companies in my area are making great progress, hiring people, doing well and increasing their order book. I am not so

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arrogant as to suggest that that is necessarily because of Government policies; some might even say that it is despite them. I would say that it is happening as a consequence of a forward-looking Government who recognise the problems that face the nation—not only Wales, but the UK as a whole—and who have some coherent plans to deal with them. 

I was disappointed that some of the good things that the Government had in mind in the Queen’s Speech and Budget were obscured by an almost hysterical reaction to some of the more eye-catching media elements. The fact that the number of people not paying tax in Wales has doubled as a consequence ought to have been commanding the headlines and the media across not only our nation, but the UK as a whole, yet it was not; it was obscured by other more tantalising stories. 

Owen Smith (Pontypridd) (Lab):  A brief chirp from the monkey on the Front Bench, if I may. Does the hon. Gentleman accept that the real reason why the news about people being taken out of tax in Wales and elsewhere was obscured was not because the more eye-catching aspects of the Budget attracted the media but because many of those people were correspondingly worse off as a result of the other changes in the Budget in respect of benefits, tax credits and all the other things that largely wiped out—netted off—any increase that they received in respect of taxation? 

Simon Hart:  It is interesting. As a consequence of my frustration, I held a public meeting in Whitland in Carmarthenshire, where my office is, for anybody to come along and meet me and others to discuss aspects of the Budget, in particular its impact on pensioners. The interesting aspect of that was that—unsurprisingly, perhaps—only six people came to the meeting and of those six people none had been adversely affected by the Budget. In fact, although they thought that they had been adversely affected by the Budget, they had actually been positively affected by it and it was simply the opportunity to explain the situation that was missing. I suspect that if the shadow Secretary of State and I agree on one point, it is that the marketing of the message may have been lacking rather than the message itself. 

I do not deny for one minute that not everybody came out of the Budget as well as they might have liked. I simply say that nobody on the Government Benches—from whatever party, I suspect—took any pleasure whatsoever in some of the measures that we have felt compelled to introduce in the two years since we were elected. I certainly did not apply to be a candidate in order to look policemen or soldiers in the eye and tell them that we may have to address their budgets. We did that because of the catastrophic situation of the nation’s finances. From time to time, it would be nice to hear some acknowledgement of the role of Labour in that catastrophe, but two years on we are still waiting. 

Owen Smith:  The point is that it was not the presentation of the Budget that was a problem; it was the substance. Far more compelling, perhaps, than the anecdote about the six people who turned up to the hon. Gentleman’s public meeting is the fact that 43,000 families in Wales are worse off as a result of the working tax credit changes and 9,000 families earning less than £17,500

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will be worse off to the tune of £3,000 a year unless they can get an extra eight hours of work a week, which is unrealistic in large parts of Wales, including his own area. 

Simon Hart:  I am keen that we do not incur the wrath, or the boredom, of the Chair in dealing with this specific point, because it was dealt with pretty well by the Treasury Minister when it was raised this morning. Maybe we can come back to it later. 

I wanted to dwell on three aspects as briefly as I possibly could, two of which— 

Paul Flynn (Newport West) (Lab):  Does the hon. Gentleman put it down to the joys of the Budget or his own magnetic drawing power that fully six people turned up to his public meeting? As there are divisions and a possible divorce in the coalition at the moment, does he think that it would be a good idea if the public could be allowed to express their appreciation of the Budget in a general election in the next few months? 

Simon Hart:  Tempting though it is to be drawn down that line, I suspect that when the same question was asked during the latter stages of the long—painfully long—13 years of Labour Government, the same answer would have been given. I am not going to be drawn on that. I regret that the hon. Gentleman was not in the Committee for the entire sitting this morning, because if he had been present he would have heard some arguments that would have helped to answer his question. 

Let me turn briefly to the groceries adjudicator, mentioned by hon. Members, and express my support for that role, as it applies to the rural sector, especially farming. There was huge support for the various ways in which it was articulated in manifestos in the run-up to the election. It was, of course, known then as the supermarket ombudsman. The fact that it has now translated into the groceries adjudicator fills me with a tiny bit of alarm. The measure has enormous public support; it has support from the main farming unions in Wales, and rightly so. There is plenty of evidence that third parties, campaigning charities and the like are also generally supportive—if not in detail, then in principle—of the measure. However, I reflect some of the concerns raised, not only in this place but in the House of Lords. We have to be careful to manage expectations and I suspect that there are farmers in my part of the world, and probably in Carmarthen, East and Dinefwr as well, who believe that the groceries adjudicator will be able to bang the table with regard to the price that they are paid for their product and they may be disappointed when they learn that that is not the case. 

They may be disappointed to learn that the sanctions, despite the reassuring words from the Secretary of State this morning, are at this stage just a name and shame, rather than a fine. If I were the chief executive of Tesco, would I be alarmed by the prospect of a finger-wagging from the Secretary of State for Environment, Food and Rural Affairs on a Government website? Probably not. We need to make sure that our hard-working farmers are not disillusioned, having supported all three parties in the run-up to the announcement, because what we come

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up with is not quite what we said it would be and does not have the teeth that we said it would have. If we do that, we could end up in a worse position than where we started. The measure is very good; it started well. I fully accept the Secretary of State’s position that we should see how it unfolds before we start tinkering with it, but we have to be very careful that people are not underwhelmed by the final product. 

Secondly, although it is not absolutely tied to the Budget or the Queen’s Speech, I mentioned the possible electrification of the main line from Cardiff to Swansea in Prime Minister’s questions a few moments ago. I think that the economic argument is a good one and extends a long way west of Swansea; both Carmarthenshire and Pembrokeshire county councils have made strong submissions to the Secretary of State for Transport and perhaps to the Secretary of State for Wales as well—I do not know. That essentially underpins the case that electrification would enhance growth and the job prospects of 750,000 people in our region. That in itself is a very compelling argument, not just for a valleys-line electrification, or indeed a vales-line electrification, but to go the whole distance. I am indebted, as I did not acknowledge in Prime Minister’s questions, to the hon. Member for Carmarthen East and Dinefwr for the eye-catching statistic that this entire project would cost slightly less than the new station at Tottenham Court Road, which is part of the Crossrail project. Looked at in that context, we have a good case to recognise Wales in a very visible way that encourages outside investors to take our part of the world seriously. 

I shall finish on a less consensual note; my normal concrete relationship with the Front Bench crumbles a little when we get on to the topic of constitutional reform. There are two aspects. I am completely happy with individual voter registration. I know that there are some concerns, but in principle, everybody from the Opposition to the Electoral Commission recognises that it is an important step forward. It will eliminate electoral fraud and in time make voter registration easier and more accurate, which is important—there has to be a benefit for voters, rather than a benefit for us. That measure is to be welcomed, as long as it is not hurried and botched. However, we drift apart a little on the business of reform of the House of Lords. 

I could speak for the next half hour on that issue— I will not, the Committee will be pleased to hear—but possibly driving me more strongly than any other argument is the fact that I do not really have it in me at this stage to look voters in Carmarthen West and South Pembrokeshire in the eye and explain why we are going to occupy so much of our time in the coming months and, I am told, something over £500 million, to implement a worthy Liberal ambition; it does not happen to be one of mine. If we are trying to persuade people that we are not out of touch, and if we are trying to be relevant to the concerns of the nation, not next year or the year after, but today, I am afraid that engaging in mutual pleasure or—I am trying to think of a polite phrase—constitutional activity of this nature is not for me, particularly because nobody, whether members of the Joint Committee or anybody else, has considered the issue of Lords reform in the context of devolution, be it in Scotland or in Wales. We have spent a great deal of time worrying about how the House of Lords should look, but none at all on what it should do. 

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At the risk of incurring the wrath of the Whips, the Front-Bench representatives, the Secretaries of State, the Liberal Democrats, Plaid Cymru, Uncle Tom Cobley and all, I fear that the measure will bring no benefit whatsoever to the nation of Wales or to the voters in my region. [ Interruption. ] I will give the Whip a copy of my speech when I have finished. It is, therefore, with a great sense of sadness that I feel unable to support the Government for the first time in my short career in the House. 

That should not obscure the fact that, if my measurement of the temperature in my small and isolated corner of west Wales is anything to go by, there is hope, because there is recognition of the extraordinarily difficult hand that the coalition Government have been dealt with regard to growth, prosperity and jobs. There is frustration that sometimes the good news is obscured by the bad, and there is intense frustration that it happens as a consequence of political one-upmanship from Opposition Members. Such activity seeks, for its own political gain, to obscure the advantages and advances that the coalition has made. Fun though that may be in the confines of the Welsh Grand Committee in Committee Room 10, in the final analysis it is an irresponsible practice when we are so delicately trying to cling on to the good parts of the economy and to fix the bad parts. 

I commend the coalition for what it has been able to do. We do not agree on everything—that is the nature of coalition—but on the things that really matter, I think that the nation recognises the coalition’s good work and the difficulties it faces. 

2.22 pm 

Dr Hywel Francis (Aberavon) (Lab):  It is a pleasure to follow the hon. Member for Carmarthen West and South Pembrokeshire, particularly because of his positive remarks on rail electrification. I am happy to be able to begin on that positive note. 

We now have a Government committed to jobs and growth—in socialist France. The socialist President, François Mitterrand—[Hon. Members: “François Hollande!”] I apologise to the French Socialist party. The French National Assembly is also under socialist leadership. The French are setting an excellent example for our own Government and the rest of Europe. The French socialist belief in equality, jobs, growth and progressive taxation, with an emphasis on infrastructure, particularly transport, is something that we should enthusiastically follow. It sounds as if we may well be doing that sooner rather than later in south-west Wales—who knows? I will say something about that in a moment. 

Unfortunately, in stark contrast, our austerity Budget in Britain will only blight the Welsh economy. None the less, I am full of socialist optimism because of the efforts being made in Wales itself, led by our socialist Welsh Government and the Welsh Local Government Association, which is also, thankfully, now under socialist leadership. Notwithstanding the difficulties with the austerity Budget, I urge the Secretary of State to follow the example of her Labour predecessors by engaging constructively with the Welsh Government, the Wales TUC and Welsh local government, in order to reinvigorate the Welsh economy. 

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The Parliamentary Under-Secretary of State for Wales (Mr David Jones):  Would the hon. Gentleman equally urge the socialist Government in Cardiff to engage constructively with the Conservative-Liberal Administration here in Westminster? 

Owen Smith:  They do. 

Dr Francis:  It was my right hon. Friend the Member for Torfaen who developed the policy and successful strategy of partnership between the Assembly Government and the Westminster Government. I am sure that the hon. Gentleman is keen to follow that example. 

I want to refer to two infrastructure projects that directly affect my constituency of Aberavon and which would benefit from an expansionist Budget, rather than the present austerity Budget. We have already heard several mentions today of rail electrification to Swansea, as envisaged by the last Labour Government, and I welcome the comments of the hon. Member for Carmarthen West and South Pembrokeshire. That seems to have been, at best, postponed—although now it sounds as if it may not have been postponed, but we shall see—because it was not supported in the recent Budget. However, the excellent business case has strong, local, cross-party support and private and public sector backing, including from all the local authorities in south-west Wales. I look forward to the hon. Members for Brecon and Radnorshire, who represents Ystradgynlais and Abercraf and for Ceredigion joining in with the positive comments made by the hon. Member for Carmarthen West and South Pembrokeshire in support of that business case. I pay particular tribute to my hon. Friends the Members for Swansea West and for Swansea East for leading the campaign and for bringing together all the key stakeholders. 

The business case has the support of Virgin Media, Virgin Atlantic, Admiral, Royal Mail and Swansea university. David Stevens, Admiral’s chief operating officer, has said that Wales needs “game-changing” trains investment to ensure growth. It is generally accepted that all expanding cities and regions need rail electrification. On the projected Swansea Bay region, as outlined by my hon. Friend the Member for Swansea West, distinguished Swansea academics such as David Herbert and Graham Humphrys have always emphasised that such regions need and deserve rail electrification. City regions cannot exist without it. 

Jonathan Evans:  The hon. Gentleman quoted David Stevens from Admiral. He may also be aware that David Stevens is an enthusiastic supporter of the creation of a rail hub that would encourage people who live in the valleys of south Wales to come south to Cardiff for work, which is a proposition that has not been greeted quite so enthusiastically by some local authorities. Does the hon. Gentleman also support those ideas of David Stevens? 

Dr Francis:  The hon. Gentleman may have been at the presentation by Assembly Members and Members of Parliament making the case for Swansea electrification, but what impressed me was the number of business people from Cardiff who were arguing the case for Swansea. We would of course support that proposition, but we should also support rail electrification to Swansea, because it is not an either/or; it should be both. 

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The second infrastructure project affecting my constituency is Swansea university’s planned Bay science and innovation campus. It is generally accepted that that major development will have an enormous impact on the whole Welsh economy. I acknowledge that the campus has received the welcome support of the Secretary of State and also of the recently-appointed shadow Secretary of State. Nevertheless, the Government’s austerity Budget restricts higher education growth across the UK, which will no doubt have a negative impact on the campus. This week, as I mentioned earlier, my local authority, Neath Port Talbot county borough council, gave its planning support for the project, and the Government should see the welcome support of the Welsh Government and the European Investment Bank, alongside major stakeholders such as Rolls-Royce and Tata, as a model partnership to be replicated and encouraged across the UK. Professor Iwan Davies, a pro-vice-chancellor at Swansea university, who has led the project, summed up its long-term significance by saying: 

“The Bay Science and Innovation Campus in Swansea Bay will be the catalyst for what is likely to be both the largest knowledge economy project in the UK and within the top five in Europe.” 

The high-tech clusters that will be established will bring together academic research and industrial private sector research and development. It has been estimated that that will create at least 10,000 new jobs and contribute at least £3 billion to the local regional economy. An expansionist budget would secure the long-term future of this important development. 

Mr Owen, I began by welcoming the developments in France as an example for us to follow here in Britain, particularly in Wales. I should at the outset declare an interest. I am a member of the Huguenot Society and my late father was able to sing “La Marseillaise” in Welsh. As a contribution to a new entente cordiale could I suggest that the Secretary of State joins me in learning the “Marseillaise” in Welsh? I know that she has a good singing voice. This would be a recognition of Welsh and Gallic superiority in our collective understanding that growth will always triumph over austerity. 

2.31 pm 

Guto Bebb (Aberconwy) (Con):  It is a pleasure to serve under your chairmanship this afternoon, Mr Owen. I reiterate the comments of my hon. Friend the Member for Carmarthen West and South Pembrokeshire: this meeting is always frustrating because of the attempts to rewrite history. In particular, the hon. Member for Swansea East stated that we needed to put money back in the pockets of consumers. It is all very well for Labour Members to say that, but we had 10 years of growth fuelled by consumer and Government debt. It was irresponsible debt advocated by the former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), as the way forward for this country. Householders are repairing their financial position, and when they are trying to do that in a responsible manner, it will be difficult to create a consumer-based growth strategy. 

The Government should be applauded for ensuring that we try to rebalance the economy. Some of the figures that we have seen recently, such as the three

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months of falls in unemployment, should be welcomed by the Opposition, not grudgingly but with applause. Three months is a pattern that should be applauded at a difficult time in the European and world economic circumstances. The people who are trying to rebuild their personal finances appreciate that this Government are trying to do something about the financial position of this country in general. 

Some of the difficult decisions we are making are understood by people in the wider world. They are certainly understood by my constituents in Aberconwy. Yes, of course they feel that some of the things that we have announced over the past two years have seemed difficult. Yes, they believe that some of the announcements that were made in the Budget have proved less than inspiring. But they accept that this is a coalition Government who are serious about trying to repair the damage that was done to this country by, yes, a global financial crisis but also by a Labour Government who felt that they could carry on borrowing, and carry on expecting the people of this country to borrow, in order to fuel economic growth which had no real base. 

It is really depressing to be a Member of Parliament doing surgeries every Friday and Saturday morning when time after time people come in who are facing real difficulties because they have mortgages which are seven or eight times their incomes. That type of approach to borrowing money, which was almost encouraged by the previous Government, is something that Opposition Members, talking about the need to put money back into the pocket of the consumer, should consider very carefully. We hear a lot about the successes of the Welsh Labour Government in Cardiff Bay and the fact that they are defending Wales from the coalition Government. Well, I feel that we need to highlight the fact that in so many ways Wales is failing, none more so than in education. 

Education figures from Wales show that we are not performing well, that we are at the bottom of the European league tables and that we do not compare with people across the border in Cheshire, to put it in a north Wales context. We have to ask ourselves why we are failing to attract inward investment. Why are the figures for Wales going down in comparison with other parts of this country such as Scotland? One of the key reasons is that we are not competing. We are not competing because of the lack of vision from the Labour Assembly for the past 12 years and from Labour local authorities for generation upon generation. 

Owen Smith:  Does the hon. Gentleman agree, in light of what he has said about education, that the Welsh Assembly Government should be congratulated on prioritising spending on education? His party has not been congratulatory about that in previous months and years. 

Guto Bebb:  I would certainly applaud the recent recognition of the need to make up the £600 a head shortfall. When there is such a shortfall, a primary school in Wrexham might find that perhaps £60,000 or £100,000 more is being spent across the border on a similar school with the same number of pupils, so it was about time that that shortfall was recognised. I would rather the Government in Cardiff Bay recognised the

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problem, but there is no denying that the issue was allowed to drift for 10 years, for which we are now paying the penalty. 

In the same way, it is important to state that some parts of Wales suffer immense deprivation. There are parts of Wales where educational achievement is extremely low and we are losing young people. Time after time, the local authorities in those parts of the world are predominantly Labour-controlled. Before Labour Members start preaching about the past two years being two years of failure from the coalition Government, a point I would contest, they should look at their own performance in Wales, not for two years but for generation after generation. 

The hon. Member for Carmarthen East and Dinefwr is right to highlight the fuel duty issue. As I represent a rural area, I have no doubt that the proposed 3p increase in August is a concern, and coalition colleagues and I have relayed that concern to the Chancellor of the Exchequer. What I find unacceptable about the comments of the hon. Member for Carmarthen East and Dinefwr and his sister party in Scotland, the SNP, is not that they are asking the Chancellor not to impose the 3p increase, which is a reasonable request, but that they are not indicating how to replace some £1.5 billion that would be lost to the Treasury. Where would that money come from? 

As a coalition Government, yes, we have a responsibility to try to ensure fairness for the motorist and, yes, we have to recognise the problems of rural areas, but our problem is that we also have a responsibility to highlight how, when we are trying to balance the Budget, we will find that £1.5 billion. We cannot afford to go borrowing money, which would increase, rather than decrease, the Government’s deficit, because we need to keep the confidence of the financial markets. I would have much more sympathy for the amendment tabled by Plaid Cymru and the SNP if it was an honest amendment that indicated where the money would come from, in addition to stating the effect on rural communities. 

The Government have done a lot on fuel duties, and I think that is fair to say. If we had undertaken the policies left us by the previous Labour Government, fuel duty would be some 10p per litre higher. Yet, time after time, when we have frozen or reduced fuel duty, the price has gone up; over the past six weeks, because of world market fluctuations, there has been a bigger reduction in the price at the pump than because of anything that the Government could have done. The issue is complicated, and I am very sympathetic to the plight of businesses and individuals in my constituency, but we need grown-up politics, not just on the coalition Benches but across the House, on this important issue. 

I welcome some of the tax changes in the Budget. Some hon. Members have given the credit for the personal allowance increase to the Liberals, and I am also more than happy to give credit to the Liberals on that issue, but any good Conservative would always say that taxes should be as low as possible. Taking people out of tax through the personal allowance is to be warmly welcomed. 

I have made the case time and again that the small business community is the lifeblood of my constituency’s economy. Without that small business community, jobs would be in much shorter supply and we would face real

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difficulties. Despite the economy not growing as it should, there is confidence among small businesses in my community. Those small businesses are employing staff, looking to the future with confidence and working hard to ensure that they can employ more people. 

The key thing to remember is that small businesses in my part of the world are often not limited companies. They do not benefit from the corporation tax cuts, but they do benefit from the increase in personal allowances. From a business point of view, we should warmly welcome a situation in which, for example, a husband and wife running a small business in a tourist location in my constituency could end up making £20,000 profit in 2015 as a partnership without paying a penny of income tax. I assure hon. Members that those businesses will be reinvesting, because they know that that they must do so in order to grow and prosper. The personal allowance increase is good for hard-working people in all parts of Wales, but it is particularly beneficial to the small-business community that is the lifeblood of a constituency such as mine. I welcome the fact that the Liberals advocated the policy, but Conservative Back Benchers and Front Benchers who understand the needs of small businesses have also warmly welcomed the changes. 

On age allowance, I think I am correct in stating that my constituency has the highest average age of any in Wales, which is fascinating to note. I did not undertake to hold a public meeting, so I cannot claim that only six people turned up, but I did receive some 30 e-mails and letters on the matter. I assure hon. Members that 30 e-mails or letters is a small number in comparison with the number that I received when we proposed to sell the forestry estate in England. The sell-off obviously did not affect people in my constituency of Aberconwy, but I received some 400 letters and e-mails on the matter; I have just reached 30 in relation to the age allowance. 

I understand people’s concern, because when the papers are writing about a granny tax and stating that pensioners are paying more tax to fund tax cuts for millionaires, it makes for a difficult set of facts to try to counter. However, when people have contacted me on the age allowance, I have argued very strongly that it should be regarded in the context of the personal allowance, which we have increased significantly. I wonder whether it is reasonable or acceptable to expect people to fill in tax returns in order to claim an age allowance that may be currently worth some £80 of additional tax benefit. 

The policy was a correct one. Tax simplification should mean that accountants do not make £150 to £200 for filling in tax returns for people who might qualify for an age allowance that is withdrawn anyhow if they have an income of more than approximately £26,000. When people contact me about their concerns and I explain the circumstances, the context of the challenges facing other parts of society and the difficult decisions that the Government must make to deal with the deficit, those people are remarkably understanding of what we are doing. A number of constituents have said to me, “We understand that our children and grandchildren are making sacrifices. In the context of the challenges facing the country, freezing the age allowance is not as huge an issue as the Daily Mail has implied.” 

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Owen Smith:  Did the hon. Gentleman take the opportunity to point out to those 30 people that the £3 billion that the Exchequer has gained through the age-related allowance change is being used to pay for the £3 billion reduction in tax for people earning more than £150,000? Is that justified? 

Guto Bebb:  It is interesting that the hon. Gentleman has raised that matter, because I was coming to it next. I am disappointed by the decision in the Budget to cut the higher or additional rate of tax from 50p to 45p. It was a temporary tax, brought a month before the general election. I have always subscribed to the Nigel Lawson view that taxes should be low and should be paid. When he famously cut the higher tax rate from 60p to 40p in 1988, many people complained that it was a tax giveaway to the rich, yet the statistics on what happened to the UK tax take as a result of the reduction show that the amount of tax paid by higher rate taxpayers went up. 

I accept that figures in the Red Book show that cuts to the additional rate of income tax from 50p to 45p will cost the Treasury money. However, the measure sends a strong message that we are not in favour of having the highest tax rate in Europe. We do not want to have a higher tax rate than Germany or France. It is crucial for our Government to send out a signal that we want people to aspire to do well in this country. 

I suggest to the hon. Gentleman and the Labour Front Bench that the challenge is to look at the figures in due course. Will the amount of tax paid by those earning most in this country go up? Over the past 20 years, when there has been a reduction in tax rates for most people, the amount and share of tax paid by the richest in society has consistently gone up. As someone who believes in investing in public services, I do not care whether the high tax rate is 50p, 45p or even 40p; I care about the money that comes in. I am confident that experience from past Budgets shows clearly that when we reduce the higher rate of tax, the money coming into the Treasury goes up in due course. That is the issue, because more money coming in will deal with the deficit and allow us to invest in public services, which is something that all Members of the House should welcome. 

While I am talking about the Budget, I need to turn quickly to the VAT changes. Since being elected to this House, I have requested a Westminster Hall debate on the simplification of the VAT system on 16 occasions, and not once have I been successful. In view of the Budget, I suspect if I now put in for a Westminster Hall debate on simplification of VAT I might be successful, because it has gone significantly up the political agenda. I have always argued that we need to look carefully at how small businesses face a trap when having to register for VAT. At one minute, the business might turn over £76,000 a year and not have to register for VAT. However, if turnover reaches £78,000, the business must be registered and will immediately lose £15,000 in VAT payments. That is a barrier to growth we need to deal with. 

We should all look carefully at simplifying VAT. After all, any system of taxation that decides that a Pringle is a cake and not a crisp is in need of reform. That is a fact: there is no VAT on a Pringle. Those who prefer Golden Wonder or Walkers—I am not paid for product placement—would pay 20% VAT. That is a nonsense that needs to be dealt with. The key thing

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about the VAT changes is that the Government announced them with a promise of consultation. That promise of consultation was extended from two weeks to four weeks for the tax on static caravans. 

I was accused by the hon. Member for Vale of Clwyd, who is no longer in his place, of having hidden away on the issue of the tax on static caravans. I did nothing of the sort: I went to see the Chancellor and explained my concerns, and the Chancellor said there would be an extension of the consultation period and that it would be a genuine consultation. Therefore, I decided to abstain on the vote. I am sure Labour Members find it difficult to understand, but when this coalition Government say that they are undertaking a consultation, they are genuine, they listen. When businesses come back with figures and facts showing that the Treasury homework had not been done properly, they come up with a compromise. That is not just good for the Treasury, because it raises more tax, but good for businesses. 

I heard a lot from the right hon. Member for Delyn and the hon. Member for Vale of Clwyd regarding VAT, but I sat on my hands, as did my hon. Friend the Member for Carmarthen West and South Pembrokeshire. When there was a debate in the Chamber—a cross-party debate supported by hon. Members from Humberside, Yorkshire, Wales and Cornwall—where were they? Their concern about the caravan industry in Wales did not stretch to staying in Westminster on a Thursday night. That should be put on the record. The Conservative Members from north Wales—myself and the Under-Secretary of State for Wales, my hon. Friend the hon. Member for Clwyd West—fought our case in the way we can: within the correct channels for the Minister and, in my case, as a Back Bencher should, advocating what is important for his constituency and working with a Government willing to listen and change where the evidence says it is needed. That is a positive example of good government. 

Owen Smith:  When speaking to the Chancellor, did the hon. Gentleman suggest to him that next time he contemplates something that is going to hit an industry, such as the caravan industry in Wales, he might think of consulting business and the industry before making the announcement, rather than having to repent at leisure and in public afterwards? 

Guto Bebb:  If I remember correctly, the announcement was made that there would be consultation on the issue. The crucial thing here is the credibility of Government. That depends on a Government stating that a consultation is a proper one. I know that is difficult for Labour Members to understand, because for Labour consultation means stating what they are going to do, listening to the evidence and then doing as proposed in the first place. This coalition Government listen and, remarkably, that has gone down extremely well with the business community, because it feels it has the ear of Government and that it has a Government willing to listen to common-sense arguments. I am fairly proud of the fact that we did not put political self-interest and keeping face ahead of doing the right thing for that industry. That is something we should be pleased about, and I think most people involved with that industry will be pleased about it. 

Finally, I want to turn quickly to the Queen’s Speech and the number of important Bills it contained. The Energy Bill will be of huge interest to you, Mr Owen,

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and your Anglesey constituency. That Bill is crucially important and needs significant scrutiny. In north-west Wales we have the potential for a second nuclear power station in Anglesey at Wylfa. There are real concerns that the German investment in that proposal is unlikely to happen, so Horizon will possibly be sold. It is therefore absolutely crucial that for the economy of north Wales we look at the energy Bill extremely carefully, because we need to make sure that we come out with a Bill that will allow investment in the nuclear sector in north Wales. I know that that is a controversial thing to say, because a number of hon. Members have their doubts about the nuclear sector. However, looking at the way in which Horizon is working with the business community and education sector, it is crucial that we have that investment for the well-being of the economy—not just of Anglesey, but for north-west Wales in general. 

Mrs Gillan:  Does my hon. Friend agree that at this particular time, when we are considering the future of Wylfa, it is essential for all politicians to get fairly and squarely behind Wylfa, because that is the future for Anglesey and for the economy in that part of Wales? 

Guto Bebb:  Absolutely. I accept that point, and I am glad to say that I have regularly discussed the issue with the hon. Member for Ynys Môn—for Anglesey—and I have also been on television programmes with the right hon. Member for Dwyfor Meirionnydd, who has also stated his support for the investment required to ensure that we have a second Wylfa. So there is cross-party support on this issue. It is also pleasing to see that the leadership of Conwy council and Gwynedd county council, for example, are also supportive of the potential investment. The cross-party support is there. People understand that the efforts made by Horizon to work with the business community and the education sector bode well for good quality jobs in an area that desperately needs those jobs. The energy Bill needs to looked at. I do not think that it is perfect at this point in time, but there is a need to scrutinise it carefully to ensure that it delivers on behalf of the people of north-west Wales and other parts of the country. 

I will not go on at length in relation to the Groceries Code Adjudicator Bill, which has been touched on. That is a development that has certainly been supported and welcomed by the farming unions, but we need to see exactly how it will work. I am all for the free market working properly, but when we have an organisation the size of Tesco dealing with a farmer’s co-operative to buy milk, for example, we need to ensure that there is an equality in that relationship. We need to make sure that that Bill results in something that will be of value to the small-business community that we have in many parts of north Wales. 

I also want to warmly welcome the significant changes to the state pension in the Queen’s Speech. The coalition Government, who were elected at such a difficult time, are willing to do extremely brave things in relation to many aspects of public policy that have been ignored for far too long. One of the key things that we are doing is trying to change significantly the way in which the state pension system works. The proposals for a single state pension, which will be worth approximately £140 to £155, depending on when it is implemented, should be warmly applauded, not least because they will ensure

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that if anybody has been saving toward their retirement, their thrift and their sensible approach towards life will not be penalised by the system. 

The work being done by the Department for Work and Pensions to try to reform our state pension system should be applauded by all Members. We should all work towards ensuring that we end up with a change that will ensure that most pensioners will be better off in the future. I welcome the fact that we are moving quickly to deal with the issue of the state pension and I look forward to seeing the detail. At the same time, it is important to say that we are reforming the public sector pension deals made available to hard-working public sector workers. I know that that is a controversial issue, and in many parts of Wales where we are dependent on the public sector, people feel passionately about the issue of public sector pensions. Ultimately, we have to accept the fact that people are living much longer, which is a good thing, but as a result we can no longer have a situation in which one group of workers in society is treated very differently from others. 

The proposals that we have introduced for public sector pensions are still incredibly generous compared with what is available to anybody in the private sector. For example, our proposals in relation to the pensions regime for teachers would result in a teacher ending up with a pension that would require a private sector worker to invest 38% of their gross salary to have an equivalent outcome. The contribution expected from a teacher would be a maximum of 14%, so I fail to see what is unfair about a proposed change that will result in a teacher paying 14% for a pension that would require a private sector worker to contribute 38% of their salary to have an equivalent level of income at retirement. I think there is nothing at all wrong with a system that rebalances slightly the relationship between the contribution made by the employee and that by the employer. 

Nia Griffith (Llanelli) (Lab):  Would the hon. Gentleman accept that by unilaterally imposing a 3% rise, the Government have given away any goodwill they might have had and very much angered a lot of public sector employees, particularly teachers? They pointed out that their pension scheme was financially viable and was not making a loss. How can the Government repair that damage and bring in reforms in a way which would be collaborative and that people would accept? 

Guto Bebb:  That is a false argument, with all due respect. The only reason why public sector pension schemes that are not in deficit are still sustainable is because of the taxpayer contribution. At a time of real economic challenges, I find it simply unacceptable that there is an argument that people who are comparatively well paid—and, in a Welsh context, very well paid—should pay less for much better pensions than the equivalent available in the private sector. We need to tackle the public sector pension debt differential with the private sector, in a way that recognises the importance of public sector workers. 

If we end up in a situation where teachers pay in 14% of their salary and private sector workers have to pay in 38% to get an equivalent pension, that is still possibly unfair, but the unfairness is on the private sector worker not on the public sector employee. There is a differential

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because the state should acknowledge and appreciate the work being done by public sector workers. That is a positive element of the changes that we are proposing. In relation to the proposed strike by doctors and GPs tomorrow, the Labour party should be very careful in terms of expressing— 

The Chair:  Order. I remind the hon. Gentleman that we are discussing the Queen’s Speech. 

Guto Bebb:  The pensions reform is in the Budget. 

The Chair:  Order. No, the strike is not an issue for the Budget from the Chancellor of the Exchequer. 

Guto Bebb:  I accept the guidance. 

In relation to our proposed changes to the scheme for doctors, for example, they would result in the average GP, who earns £170,000 a year, retiring on a pension of £63,000. The average wage in my constituency is £22,000. If people in my constituency were told that people were going on strike about a proposed pension scheme that would allow them to retire on £63,000 a year, they would not believe it. That is a key point. Again, what we are trying to do is recognise the importance of the work of GPs, but also say that the balance between the contribution made by the employee—the GP in this case—and the contribution made by the taxpayer has to be addressed. I welcome that important change that we are proposing. 

Finally, I want to touch on Lords reform. We have heard an eloquent description of the concerns of the hon. Member for Carmarthen West and South Pembrokeshire. I share many of the concerns expressed about the impact on the House of Commons, for example, if we move to an elected Lords. Any change to the Lords is a de facto change to the House of Commons, and we should be careful about that. Just as important is the fact that 12 or 13 years after the establishment of the Scottish Parliament, the Welsh Assembly and the Northern Ireland Assembly, we have—from what I have seen—proposals for reforming the Lords that take no account of the devolved Administrations in the United Kingdom. That is even more surprising because in 2000, when we had a Royal Commission under the chairmanship of Lord Wakeham, he made strong efforts to ensure that reform of the Lords would take into account the need to provide a degree of scrutiny of the work undertaken by the Welsh Assembly and Scottish Parliament. I fail to comprehend how twelve or 13 years down the line, when the powers of the Scottish Parliament and Welsh Assembly have been extended significantly, I can see no reference to the way a reformed House of Lords would actually work with the devolved Administrations. This is a huge missed opportunity. Given that this issue was highlighted by a Royal Commission in 2000, it should certainly be part of the deliberations we have about reforming the Lords. 

I am not opposed to reforming the Lords. There is a need for reform, but reform without taking into account its potential to play a part in working with the devolved assemblies and the Scottish Parliament would be a missed opportunity that we might regret. If this issue

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was highlighted and understood back in 2000, surely we should understand and appreciate it and do something about it in 2012. 

The Chair:  Before I call Alun Michael, four Back-Bench Members are indicating that they want to speak. As I said earlier, we will call the Front Benchers at 3.35 pm, so that gives 35 minutes for the four Members to make their contributions. 

3 pm 

Alun Michael (Cardiff South and Penarth) (Lab/Co-op):  Mae’n bleser mawr fel bachgen o Ynys Môn yn enedigol i weld Aelod Seneddol Ynys Môn yn y Gadair prynhawn yma. It is a particular pleasure for me, having been born in Anglesey, to see my hon. Friend the Member for Ynys Môn in the Chair this afternoon. It is an absolute disgrace that that constituency will not continue as a single constituency, although I am sure that that will bring great blessings to constituents in Bangor who will join your new constituency, Mr Owen, if the proposed changes go ahead. 

It is a pleasure to follow the hon. Member for Aberconwy, who eloquently deplored attempts to rewrite history, and then gave a master class in that precise dark art. In campaigning right across south Wales during the local government elections, I did not meet any of the mythical beasts that he claims to have seen: those members of the public in Wales who think that the current Government are doing the right things on the economy. It is rather nice that at one point he acknowledged—some Government Members do not even do this—that it was a global crisis that brought about the problems in our economy. 

Regarding the hon. Gentleman’s criticism of the Opposition’s approach, he should read the words of Paul Krugman, a Nobel prize-winning economist, who stressed recently the importance of growth. When asked, he paid particular tribute to the path laid by the Prime Minister at the time, Gordon Brown and said that without the former Prime Minister’s leadership on the international stage, things would have been a great deal worse. If we have accusations of rewriting history, let them be accepted by the hon. Member for Aberconwy. 

Guto Bebb:  In relation to the contribution made by the former Prime Minister, does the right hon. Gentleman acknowledge that running a budget deficit between 2002 and 2008, when we had economic growth, was not clever economics? 

Alun Michael:  The hon. Gentleman acknowledged that the Labour Government were trying to deal with many, many years of Conservative misrule and failure of investment in the health service and education—[ Interruption. ] Of course he does not; he wants to rewrite history. 

The Minister asked Welsh Government Ministers to engage with their counterparts in Westminster. That was a disingenuous request, because we have sensible Ministers in Wales engaging constructively with their counterparts in Westminster on things such as rural affairs. I pay particular tribute to Carl Sargeant in relation to transport. He has spent time with Back Benchers across the parties and Ministers to look at the comprehensive needs of transport, particularly in south

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Wales. My hon. Friend the Member for Aberavon stressed recently that the question is not about a choice between rail in the valleys and the electrification through at least to Swansea, but a need for comprehensive investment along the lines planned by the Labour Government. 

I apologise for missing parts of the morning sitting; I was speaking at a conference on civil society. It was a pleasure to hear one of the other speakers explicitly celebrate the framework of partnership promoted and developed by the Welsh Government. A partnership, rather than a crude, competitive approach, is more constructive. It is no less challenging, as long as the Government are right, but it is far more constructive. 

We also talked about the considerable potential of mutuality and mutuals in the public sector. I refer to the report that I prepared for the Treasury in 2007 in demonstrating how they could work. We are hearing more rhetoric than reality from the Government, although I would, in one specific area, pay tribute to the way in which the Government have taken up something that was started under the previous Government—the creation of the Canal and River Trust, a sort of National Trust for the waterways. I pay tribute to the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Newbury (Richard Benyon), for the way in which he has pursued that activity. 

I mentioned earlier the importance of preventing and reducing crime and disorder. I draw particular attention to the Justice Committee’s report, which demonstrated that many of the things that actually affect levels of crime and disorder are not part of the criminal justice system or the police justice system. There is a complementarity. As we saw in Cardiff, a successful violence reduction strategy can be measured by the reduction in the number of people going to accident and emergency units for treatment. That is a reduction not only in reports to the police, but in real violence, and of course a saving to the NHS in terms of a reduction in the number and the seriousness of injuries. 

There is a complementarity in seeing crime and disorder and a partnership approach as things that should cut across the various levels of government. However, the level of policing is relevant. The Government are delivering a cut of £2 billion, instead of the £1 billion which was identified by experts as the outer limit of the level of cuts that would hurt, but not involve unacceptable risk. The cut has also been front-ended, which makes it even more difficult for the savings to be achieved without damage. We have seen experienced police officers—at senior levels and at the practical, on-the-ground level—leaving the service. That cannot but create damage over time.

Part of the answer is good legislation and preventative measures that work. In that context, I return to the issue of antisocial behaviour orders. This is a very simple concept: if it is pointed out to people who have been involved in a series of low-level events that they must stop that behaviour, it is nipped in the bud before it gets to the point where something really serious happens, major investigations have to be undertaken, and imprisonment becomes inevitable, which often means the destruction of a career and a family. It was a simple concept. Unfortunately, the bureaucracy that surrounded it was far less simple than the concept itself. I appeal to the Secretary of State to plead with her colleagues to do one of the things they said they would do, which is to

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simplify the bureaucracy, without losing that simple idea that if it is made easier to give evidence of a series of low-level events, and easier to use professional witnesses, it is easier to put something in place that says to people, “You are at risk if you continue with this behaviour,” and therefore, to reduce the level and the escalation of reoffending.

I welcome the fact that the Government have embraced and supported the continuation of youth offending teams, an integrated approach looking at how young offenders can be encouraged to come out of an offending pattern of behaviour. That has been a success, and we have fewer people going into residential centres as a result. That is to be welcomed.

I also welcome one of the U-turns made by the Government in not doing away with the Youth Justice Board, because that sort of strategic level of oversight and support to youth offending teams is crucial. A similar approach is needed now to the one that was taken with the youth offending teams—which I set up in the Crime and Disorder Act 1998—for the 18-25 age group, in order to take a strategic and integrated approach to them, too.

As I indicated earlier, I have an interest in the development of police and crime commissioners. The Minister for Policing and Criminal Justice has been particularly clear that the police and crime commissioners would not be accountable to him but to the electorate. However, it is very important that that accountability should focus on two aspects of police work.

The first is in the saying, from when the police were first established by Sir Robert Peel, that “The police are the public, and the public are the police”. There must be a closer identification between the police and the public, and an understanding that the priorities of the police and the priorities of the public, and their joint working on issues that are important at a local level, must be together and integrated.

Simon Hart:  Will the right hon. Gentleman give way? 

Alun Michael:  In view of the time, I must press on with a few other points. The second aspect is the fact that the first priority of the police is to prevent and reduce crime. That is what Sir Robert Peel said, and it is as true today as it was then. That requires a partnership approach. I am delighted with the election of— 

Simon Hart:  On a point of order, Mr Owen. I am waiting for the bit of this speech that relates to the Budget or the Queen’s Speech. I wonder if you could advise us on when that will come.

The Chair:  I am grateful to you for your intervention. I am sure that the right hon. Member for Cardiff South and Penarth will refer to the Crime and Courts Bill that is in the Queen’s Speech. 

Alun Michael:  Indeed. The Queen’s Speech and the Budget are relevant because of both what is in them and what is not. We need measures that develop the economy and provide the services that prevent and reduce crime, and we saw very little of those. 

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The responsibility of the community is also important, and I pay particular tribute to the Somali community in Cardiff. When two young men ended up on the borders of Kenya on their way to joining al-Shabaab, that Somali community responded by saying that the community needed to get together and plan for its future. That initiative has been supported by the Welsh Government, by the local authority, and by Assembly Members and MPs, but it is the community that is taking responsibility and demonstrating leadership. 

Finally, the role of the Welsh Government is of enormous importance. Out of the limited resources that they are given by central Government, they have managed to invest in an additional 500 community support officers across Wales; they are putting their money where their mouth is. At the heart of that approach is partnership with the local community and civil society. 

The Secretary of State for Wales has a responsibility to play her part in persuading Government—in developing their programme for government and implementing the Budget, and in future—to plan for growth; to plan for opportunities for our young people; to avoid and turn back the excessive austerity that they have adopted; to set aside the concept of regional pay, which would be so damaging to our economies right across Wales; and to stop the current approach, which is causing pain without gain. 

This morning, my hon. Friend the Member for Newport East pointed out the benefits of the public jobs that were brought into Wales in the time of my predecessor, the late Lord Callaghan, whose centenary we celebrate this year. He brought into Wales firms such as Ford, as well as the Royal Mint and the tax offices, so private sector and public sector both benefited our economy. The first step of the Thatcher Government was to stop the arrival of the British Rail offices in Cardiff—that is still regretted, even all these years afterwards—and we have reverted to much of the same under the present Government. They need to learn the lessons of the mistakes made under Margaret Thatcher and John Major, and they need to turn back excessive austerity, which is not helping growth. They need to consider the initiatives on growth that the Welsh Government, rightly, are taking. 

3.12 pm 

Roger Williams (Brecon and Radnorshire) (LD):  I apologise to you, Mr Owen, and to the Committee for my unavoidable absence this morning. I am sure I missed a great deal of good debate, questions and answers. It is a pleasure to follow the right hon. Member for Cardiff South and Penarth. I am sure that his speech was closely linked to the Budget and the Queen’s Speech, but it seemed to me like a preview of his campaign for another office. I am sure we were all thoroughly engaged by it. 

I will keep my remarks short and confine them to one point only, which is in the Budget. A number of the Budget proposals were well trailed and became obvious before the Chancellor got up to make his announcement, but other parts came as a surprise. I always thought that it was good political tactics to get the bad news out of the way and save the surprises for during the Budget,

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but I do not think that was achieved this time. I want to talk about the Chancellor’s proposal to refer to a commission the task of evaluating locally related pay to see whether it might be a way forward. I usually try not to respond to such questions until the evidence has gone in, or I submit my evidence to whoever is considering the proposal, but the conclusion has been widely prejudged. I have therefore decided to put forward my prejudice and make clear what I and all the Welsh Liberal Democrat Members of Parliament and Assembly Members believe on this point. 

Mrs Gillan:  I am sorry that the hon. Gentleman missed this morning, but I understand, and I am pleased to see him here this afternoon. I was reading the speech given by the Chief Secretary to the Treasury to the GMB the other day, in which he made it clear that the Government have invited the independent pay review bodies to consider whether there is evidence for making public sector pay more responsive to local labour markets. He went on to reinforce that by saying that there will be no change unless there is strong evidence to support it and a rational case for proceeding. The Chief Secretary was echoing what I was said earlier, and what the Chancellor was saying, and I hope that that gives him— 

The Chair:  Order. We had a statement from the Secretary of State this morning. 

Roger Williams:  I thank the Secretary of State for that help; I was going to mention the Chief Secretary to the Treasury’s speech to the GMB. I will be a little more direct and quote the Deputy Prime Minister from Monday 14 June: 

“There is going to be no regional pay system. I feel very, very strongly, as an MP from South Yorkshire with a lot of people in the public services, that we are not going to do anything which simply willy-nilly exacerbates a north-south divide.” 

People really do believe that. When small businesses come to talk to me, this issue is not at the top of their list. They want to talk to me about business rates, transport costs and various other pieces of legislation. I am afraid that this subject has got a bit out of hand. I am putting on record my thoughts now at the Welsh Grand, because I think that it may be difficult to catch the Speaker’s eye in the later debate on this topic in the Chamber. I am therefore taking this opportunity to say that, from the Welsh Liberal Democrat point of view, regional pay—regional pain, even—will not be part of our policies. 

3.17 pm 

Geraint Davies (Swansea West) (Lab/Co-op):  I will be brief. I apologise for not being here earlier this afternoon, but I am involved with the debate on the Floor of the House, and I will be returning to that. In the few moments available to me, I first thank my hon. Friend the Member for Aberavon for raising the issue of electrification for Swansea. I also thank the hon. Member for Carmarthen West and South Pembrokeshire for mentioning the important strategic link at Prime Minister’s Question Time. It underlines the fact that we are beginning to work as part of Swansea bay city region, with coherence between the four local authorities of Swansea and Neath Port Talbot, which has an urban footprint of something like 400,000 people. If Carmarthenshire and

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Pembrokeshire are added, that brings the total up to 750,000. There is also our relationship with Ceredigion, which brings us up to about 1 million people. We also have the co-operation of Bridgend, which I nearly forgot. 

Clearly, across the board, the party, and different sectors —industrial, academic, local authority and political—there is a unified voice on the need for electrification. Some of that is about the tactical need to have a network across south Wales, and some of it is about the massively important perception of the region and about confidence in the future. As I said earlier, the business community—companies such as Hewlett-Packard and others—is saying, “This is a signal to the market that we are in the game of growth, working together for a better future.” 

The brand of Swansea is now known to 600 million people in 200 countries, thanks to the football team’s premier league success. We are looking to use that brand and to attach various values to it. Those values are about inward investment, working with universities and partnerships, and the marvellous environment of south-west Wales, where people can live while access to broadband allows them to network into the global economy. 

Electrification is important, as is the need for more frequent trains. Importantly, there is the intrinsic link to the south-west economy. There is simply not the frequency and quality of link-up of rail and road to that local economy. 

There is a need for a balanced economy, because we are going through tough times in Wales. In Swansea, 40% of workers are in the public sector, and Wales has about a third of a million public sector workers, so regional pay is an issue that could deflate consumer demand in the country. There is a case for active management to help relocate industry to Wales and to help Whitehall Departments. My father, David Thomas Morgan Davies, who headed up on economic development in the Wales Office, took a leadership role in the relocation of the Driver and Vehicle Licensing Agency, Ford, and the Mint. 

In modern times, the politics of the current Government is to contract out some services; they are in the midst of looking into that. Specifically, the Department for Transport is considering contracting out some back-office and financial work—payroll and so on—which is certainly something that companies such as Hewlett-Packard would look to bid for. If work is contracted out—I am not a great supporter of that—the Government need to be cognisant of the regional impact of different decisions, in terms of what happens in Wales, in particular, and generally in Britain. 

On strategic procurement, investing more in small and medium-sized enterprises means more local employment and local tax, rather than work going abroad. The case I have just mentioned could enhance a strategic asset in IT skills in south Wales at Hewlett-Packard’s current hub in Swansea. That is part of the mix of decision making, in terms of rational economic judgment, the Exchequer and our strategic interest, and I hope that that approach will be taken. As I have mentioned to the Minister, I hope that he will discuss the opportunities for Hewlett-Packard, and for building investment in the Swansea bay city region through smart procurement. 

Time is of the essence, so I will leave it there. Thank you for the opportunity to make a contribution. 

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3.22 pm 

David T. C. Davies (Monmouth) (Con):  I am grateful for the opportunity to speak today, Mr Owen. I am sorry that I was absent for part of the sitting, but it was because I had a long-standing commitment to see, with some constituents, the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North West Norfolk (Mr Bellingham). 

I thank the Secretary of State for Wales for her sterling support for the Queen’s Dragoon Guards. In extending that support, will she speak to her colleagues at the Ministry of Defence, who I understand are reluctant to appear before the Select Committee on Welsh Affairs, which will be holding an inquiry into that very issue? It would be wrong for me to presume to take any view on what the Committee may feel about the matter, but I suspect that I speak for others when I say that a dim view is likely to be taken if the Ministry of Defence refuses to show up. 

Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC):  The hon. Gentleman carries with him wholehearted support from all corners of the Committee on the Queen’s Dragoon Guards. However, will he also include problems that might arise with the Royal Welsh, as there could be deep cuts there too? I am sure he meant to mention that as well. 

David T. C. Davies:  I am happy to do so, and the Committee will be looking carefully into that issue. Incidentally, we will not be expecting the Ministry of Defence to tell us what it intends to do, but we would like it to say what the rationale for its decision is. I think that request is perfectly reasonable. 

Owen Smith:  I want to take the opportunity to put on record our strong support for the campaign to retain the Welsh cavalry. The Opposition feel very strongly about that, and have been in contact with them throughout the process. We, too, are worried about any suggestion that the Royal Welsh might also be under threat, and we hope that the hon. Gentleman will be successful in prevailing on the MOD to appear before the Committee. 

David T. C. Davies:  I thank the hon. Gentleman for his support, and I am sorry, in a way, that he is not still on the Committee. He played a big role in it, but I warmly congratulate him on his new role. 

It must have been as disappointing for the hon. Gentleman as it was for me that in his speech, though he was able to spend time eloquently criticising the Government’s economic policy, I did not once hear him or any of his colleagues tell us what the Opposition intend to do that the Government are not able to do at the moment. We heard a lot of wild rhetoric about an anti-cuts agenda, austerity measures, and how the Government are not going for growth, but the Opposition did not tell us what they intend to do. What is it that we could be doing that we are not doing now? I am happy to give way, but I want to say to the Opposition that

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they and I know that what they really want to do is borrow large amounts of money. Why is it that they are not prepared to tell us that? 

Mrs Gillan:  I would like to reiterate that I am second to none in my support for the Welsh regiments, the Welsh Guards and the Welsh cavalry. I am sure that my colleagues in the Ministry of Defence will have heard what he said. Furthermore, I shall make sure that his remarks are brought to their attention. I am sure no impoliteness is meant. They are dealing with one or two things at the moment, but I will make sure that they appreciate the urgency of providing some evidence to your Committee. 

David T. C. Davies:  I am sure that the Secretary of State will make them well aware of the importance that Select Committees play in this House and in calling people to account. 

Owen Smith  rose—  

David T. C. Davies:  I am delighted to give way to the hon. Gentleman. 

Owen Smith:  I cannot ever resist a gauntlet when thrown down. I must say that we Labour Members have been very clear about what we would do. We would cut VAT as a temporary, credible stimulus to demand in this country. We would offer a national insurance holiday, using the unspent £900 million, to stimulate small businesses, and we would, of course, repeat the bankers’ bonus tax in order to fund youth jobs. 

David T. C. Davies:  The one thing that the Opposition could be offering, but that the hon. Gentleman has not offered so far, is pie in the sky, because that is what we see here. He talks about cutting VAT and other taxes, spending more on public services, putting back pensions and all the rest of it, but what he cannot and will not do is tell us how he will raise the money, except through the bankers’ bonus, which is being used to fund just about everything. In fact, we have instituted taxes on the banks that have raised far more money than his previous bonus tax did. What we are not prepared to do, given that when I last looked, the banks were supplying £50 billion of the £590 billion or so that the Government take in tax every year, is damage an industry that is providing us with almost 10% of our total spend revenue. 

Owen Smith:  Briefly, just to counter the calumny that has been laid at my door, if we were to cut VAT by 2.5% we would see an increase of around £3 billion to £4 billion in consumer household spending, which is what we saw when we last did this in 2009. The NI holiday is already funded, paid for out of the £900 million left over as a result of this Government’s botched NI holiday. 

David T. C. Davies:  The managing director of John Lewis, I am reliably informed— 

Owen Smith:  Who told you that? 

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David T. C. Davies:  These thing happen. The managing director of John Lewis has said that a temporary cut in VAT will make absolutely no economic sense whatever, and he is a man who should know what he is talking about. 

Let us look at the record of the last Labour Government. They came into office with a net Government debt of £350 billion, but to be fair they were paying it off for the first few years. For some reason, around 2002, as my hon. Friend the Member for Aberconwy informed us earlier, they started running up a deficit, so that even before there was any financial crisis from the banks, the Government’s debt had gone from £350 billion to £650 billion. If they truly believe this Keynesian theory that spending large amounts of money that one does not have will somehow generate enough money to pay back all the money that has been borrowed and the interest on it, what was going on for those six years? All we were left with was a larger debt, almost twice as high as it was previously. Then came the economic crisis, which everyone, including the hon. Member for Pontypridd, says was caused by the banks—incidentally, I do not accept that it was, entirely, but I shall come back to that in a moment—after which the Labour Government went on the biggest spending spree in economic history, leaving us with a debt of £1 trillion and a deficit that we have to borrow every year of £160 billion. 

To be fair to Opposition Members, they are not the only ones who got themselves into this position; under Governments from both the left and the right across the whole of the Western world, including America, politicians have always taken the view that “There is an election coming. What shall we do to save our jobs? Let us go and spend some money.” We have all been at it—a hospital here, a new school there, a motorway through this or that marginal constituency. That is why the Select Committee on the Treasury said that the most the banks had was £120 billion, much of which will come back to us anyway, because it was not simply given to them, yet the national debt is around £1 trillion. 

Indeed, if one takes into account all the private finance initiatives that were never paid for, the real size of the national debt is £2 trillion. It means, on rough figures, that the most we could blame the banks for is about 10% of the current problems. The rest of it is all down to politicians. We have all been doing it because it is always easier to spend money that we do not have, win an election, hang on to our jobs and hope that nobody ever looks at the figures. Up until now, nobody ever has. 

Instead of slogans such as “No more cuts”, “No to austerity” and “Give us a growth plan”, why cannot Labour Members and their union paymasters be a bit more honest and come up with some honest slogans that tell the public what they really plan to do? How about “Let’s borrow more cash”, or “Let’s make ourselves even more dependent on the banks”? Everyone blames the banks, but the politicians are far more dependent on the banks than the banks are on the politicians, because the banks have lent us far more money than we have lent to the banks. 

Alun Michael:  On this idea of honest slogans, does the hon. Gentleman suggest that his Government should have come into office determined to create such a cock-up in their administration of finances as to increase the amount of borrowing? 

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The Chair:  Order. I am sure that in the four minutes the hon. Member for Monmouth has remaining, he will return to the Queen’s Speech and the Budget. 

David T. C. Davies:  I shall indeed. Under that Budget, we know that the amount that the Government are borrowing now is roughly £120 billion, and Government borrowing when we came to office was roughly £160 billion. It is not true to say that the Government have increased borrowing. They are bringing it down—not quite as quickly as we would like, but it is certainly going in the right direction. 

I have three children under the age of seven. I am reading them a story at the moment called “The Folk of the Faraway Tree”, set in the land where everything is for free. It is a wonderful place. Children can go into this magic land and get sweets, toys and lollipops, and they never have to pay for anything. To me, it is just a fairytale by Enid Blyton, but I think it forms the basis of Labour economic policy. If we want to know what would happen if they got into power— 

The Chair:  Order. I reminded the hon. Gentleman that we have to speak to the motion, which is on the Queen’s Speech and the Budget and how they relate to Wales. That is the final time I will remind him. 

David T. C. Davies:  One of the most important things that the Budget, which has come via the Queen’s Speech, does is to ensure that the Welsh Assembly receives a large amount of money. Those people who have allocated that money, via the Queen’s Speech, will be wondering why we have longer waiting lists in Wales, why Wales has the worst education results of anywhere in the United Kingdom and why economic development has fallen off a cliff over the last few years. Those issues will be very important for all those who voted through the Queen’s Speech. I look forward to reminding hon. Members about them on many future occasions. 

3.33 pm 

Nia Griffith:  We have had a good and wide-ranging debate today. I certainly take issue with the hon. Member for Carmarthen West and South Pembrokeshire when he says that everything has been negative; there has also been a tremendously positive message about some of the initiatives that have taken place in people’s constituencies. Sadly, neither in the Queen’s Speech nor in the Budget do the Government offer any hope to the people of Wales. 

The Budget continues the Government’s assault on the standards of living of ordinary people in Wales. If we look carefully, we find that rather than contributing in any way to fostering a credible growth strategy to get out of the double-dip recession that the Government have created, parts of proposed Bills will reduce people’s job security and leave them with less opportunity for any redress against exploitation. 

The hon. Member for Carmarthen East and Dinefwr pointed out that now no one can take seriously the Tory Chancellor’s slogan “We are all in this together” after the Government have cut tax rates for the richest while reducing the disposable income for low and middle-income families. 

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We then heard from the hon. Member for Carmarthen West and South Pembrokeshire, who was not terribly sure whether he wanted to be here at all. However, he did get round to speaking about the Groceries Code Adjudicator Bill. He admitted that that Bill has been watered down and does not have the teeth that it should have and that farmers may be very disappointed when they realise that the powers of the adjudicator are very limited. 

Given your work on the Bill, Mr Owen, and the fact that we already have the 2009 groceries supply code of practice, I do not understand why the power to fine transgressors cannot immediately be given to the adjudicator. Giving the power to the Secretary of State so that she can hand it down to the adjudicator at some later date suggests that someone is hoping that the power will get lost somewhere, or put away in a cupboard, and that everyone will forget about it. Frankly, that is no way to treat our farming community. 

The other thing that worries me about the Groceries Code Adjudicator Bill is the position of third parties. I hope that third parties, such as the farming unions, will not lose the ability to take up cases on behalf of their members; the third parties have the skills to do so, whereas their members do not. 

The hon. Member for Carmarthen West and South Pembrokeshire also emphasised the benefits for west Wales of taking rail electrification west of Cardiff to Swansea. His words were echoed by my hon. Friends the Members for Aberavon and for Swansea West. I hope the Secretary of State will prevail on her colleagues in the Department for Transport to give us that marvellous, progressive move forward, which would be a fantastic legacy for her—probably a far better legacy than High Speed 2. 

Mrs Gillan:  I recall discussing the electrification of the valleys lines long before anyone else was talking about it in this place. I am grateful for the hon. Lady’s endorsement of everything I have been doing for our transport infrastructure in Wales. I remind her that not a single inch was electrified under her Government in 13 years. 

Nia Griffith:  Nor by any Government before that. I hope the Secretary of State’s words will enable her to put some pressure on the Department for Transport and help us to get that electrification for south and west Wales. 

The final point raised by the hon. Member for Carmarthen West and South Pembrokeshire was about House of Lords reform, on which he seems slightly out of step with some of the proposals in the Queen’s Speech. I am sure we will have more drama on that story as the Session progresses. 

Again, my hon. Friend the Member for Aberavon made a strong case for electrification, but he also brought to our attention Swansea university’s extremely exciting project for developing a second campus in his constituency. That campus will be a catalyst for some 10,000 jobs and will be a tremendous boost to the economy. The campus will bring in highly skilled and innovative industries that are already working with Swansea university and will have further opportunities to develop. 

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My hon. Friend the Member for Swansea West continued the theme of inward investment when he talked about Hewlett Packard, a company that we hope will invest in the Swansea area. He pointed out the tremendous benefits that that would bring to the region. He has many constituents who work in the public sector, but he is taking an active approach to creating more jobs in the private sector. Upping the pay rates for private sector jobs in Wales would be far better than going down any path of regional pay; raising the private sector median is far better than lowering public sector pay. 

The hon. Member for Brecon and Radnorshire told us that business rates and transport costs are the main concerns of his constituents, and the hon. Member for Monmouth, the Chair of the Welsh Affairs Committee, made a strong plea to the Secretary of State to ask the Ministry of Defence to come before us to talk about the Welsh regiments. I know that many members of the Committee, certainly Opposition Members, would back those words; I am not sure about the rest because the comments were ruled out of order—something about flying away to far away places, or something of that nature. 

My right hon. Friend the Member for Cardiff South and Penarth drew attention to the violence reduction strategy in Cardiff. He also reminded us of the damage done to the police service through the loss of experienced personnel. He urged an extension of the youth offending team-type strategy and made the case for growth strategy, in particular to help our young people. 

The hon. Member for Aberconwy welcomed the Government’s raising of the personal tax allowance threshold as a way to help those running small businesses. He also explained his support for the mamgu and tadcu tax, or perhaps I should say the nain and taid tax. He made a general case for lower taxation and said he had for some time wanted a debate on the simplification of VAT and the issues facing small businesses regarding the VAT registration threshold. He claimed that the Government listened. I hope he is right, particularly in the case of regional pay. I do hope that the Government will listen and not embark on the absolutely mad and damaging policy of regional pay, with the knock-on effect it would have in Wales. 

I would like to make a few points about the Bills brought forward by the Government for consideration. I have already mentioned the Groceries Code Adjudicator Bill; I would now like to mention the Enterprise and Regulatory Reform Bill. In that Bill, the Government attempt to make it easier to sack people. That is in spite of the fact that both the Secretary of State and the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for North Norfolk (Norman Lamb), have stated that they do not think that would help growth at all, and that it is a complete nonsense to think it would. It is worrying that the Government have not ruled out bringing in amendments from the Beecroft report into that Bill. 

The other disappointing element of that Bill is the Green investment bank. We still do not know where we are with that. We do not know how the borrowing powers will work. We do not know whether by 2015-16 the Government will deem that the deficit has been cut enough to allow that to happen. What message does

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that send to business? Business above all needs stability. We saw the fiasco with the feed-in tariffs. I would like to see a much more positive thrust on the Green investment bank, particularly as today the Deputy Prime Minister is in Brazil at the Rio plus 20 earth summit. We should as a nation take a lead on green issues. 

Moving on to the Electoral Registration and Administration Bill, I worry that the resources might not be put in to enable proper individual registration of voters. That is worrying because, again, it means that some of the most disadvantaged people in our society will lose their voice altogether. We do accept that the Government have made some changes. They have made the timetable a bit more workable and have agreed penalties if people do not register. Nevertheless, I worry that if this is not done properly, many people could lose their right to vote. 

I turn to civil service reform. Yesterday’s statement by the Minister for the Cabinet Office made it quite clear that he had not ruled out regional pay. That policy would have a very detrimental effect on the Welsh economy, as has been shown by the excellent report commissioned by the Welsh Government. The issue has been mentioned by many hon. Members today. 

We also heard the Minister speak of changing civil servants’ terms and conditions of employment, implying that they were too generous. The direction of travel is clear: turn the clock back and reduce decent terms and conditions, rather than improve them. No wonder the morale of civil service workers in Wales is at rock bottom, with the prospect of 20% cuts in staffing and the inevitable increase in work load for those remaining; with the spectre of regional pay hanging over them; with plans to make their conditions of service worse; and proposals for a punitive system of norm-referenced performance management, which will pit worker against worker—dog eat dog—vying to keep out of the bottom 10%. 

I now turn to the Public Service Pensions Bill. As I mentioned to the hon. Member for Aberconwy, it seemed a bad start to have a unilateral imposition of a 3% increase, particularly for those workers who can hardly afford it—not at the top end, but at the bottom end of the scale. The Government should take a leaf out of the Welsh Labour Government’s book and look at what they have done on the Welsh jobs growth fund, on providing loans and grants to business and on trying to put community safety officers on to the street, where the Government are slashing police numbers. 

Those are the priorities of our Welsh Government. How much more could we do for the economy of Wales if the UK Government were prepared to use strategies for a growth economy? That would help, together with the Welsh Government, to foster a much more thriving economy in Wales. Unless they do that, I am very sorry but we on the Opposition side have to express our disappointment both with the Queen’s Speech and the Budget. 

3.45 pm 

Mr David Jones:  I welcome you to the Chair, Mr Owen. This has been a very useful debate on the key elements of the Chancellor’s Budget statement and the Government’s legislative programme as outlined in the Queen’s Speech as far as they relate to Wales. The second programme of

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this Parliament builds on the achievements of the first Session, bringing forward 15 Bills and four draft Bills over the next 12 months, with further additions likely. Nothing could be clearer from an examination of the Government’s second Session programme than that Wales is absolutely central to our aims and ambitions for our country. 

All but one of the proposals contained in the Queen’s speech affect Wales. Fifteen of the measures apply wholly to Wales, and three others partly to it. It is clear from this that, notwithstanding the recent referendum result on additional powers for the Welsh Assembly, most law affecting Wales will continue to be made here in Westminster, which is why Wales needs a strong voice here and why events such as Welsh Grand Committee sittings are so important. 

The first contribution to the debate was, of course, that of the shadow Secretary of State, the hon. Member for Pontypridd. I welcome him to his position. He was formerly my shadow; he has now, in shadow terms, leapfrogged me and is, I understand, second only to the First Minister in the Welsh Labour hierarchy; he has done awfully well. 

I pay tribute to the right hon. Member for Neath. My right hon. Friend the Secretary of State has also mentioned him, but I would like to say that he was always personally very kind to me, very considerate, and I am sure he will be a huge loss to the Labour Front Bench. 

The hon. Member for Pontypridd made, I think it is fair to say, a somewhat Eeyoreish, downbeat contribution to the debate, contending that only two of the Bills, the banking reform Bill and the Enterprise and Regulatory Reform Bill, pertain to the economy, but the most cursory examination of the programme would show that this is not the truth. A number of measures in a host of Bills relate to the economy and are aimed at improving national economic performance and stimulating growth. There is the ring-fencing of banking services, the Green investment bank, a new competition and markets authority, a reformed electricity market, an independent nuclear regulator, reform of employment laws and so on. They may not be measures that the hon. Gentleman approves of—I am sure he does not—nevertheless, it is illusory to suggest that they are not aimed at promoting economic growth. 

The hon. Gentleman mentioned what is clearly Labour’s theme for the day—because, of course, it is the subject of today’s Opposition day debate—and it was picked up by various other hon. Members, including the hon. Member for Carmarthen East and Dinefwr and my hon. Friend the Member for Brecon and Radnorshire; it is what the hon. Gentleman persisted in calling regional pay. 

I must reiterate that what the hon. Gentleman refers to as regional pay is not, in fact, regional pay at all. The Government are, quite simply, giving consideration to making public sector pay more responsive to local market conditions. It is not about scrapping national bargaining frameworks, as he suggested. It is perfectly possible, as he knows, to make pay more responsive to local conditions within such a framework, which is precisely what the previous Government did in 2007, when the Courts Service introduced a system of zonal pay, with five national bands. The zones did not conform to regional boundaries; they took into consideration

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local economies. In fact, the right hon. Member for Delyn was a Minister of State at the Ministry of Justice at around the time that the system was put in place, so it is a bit rich for Labour to criticise something that it implemented and introduced in the first place. I could call it disingenuous and I probably shall. 

The hon. Member for Pontypridd also mentioned foreign direct investment, which is extremely important because it is a key component of the Government’s plan for growth. As I pointed out in an intervention, before the abolition of the Welsh Development Agency, Wales was routinely the No. 1 or No. 2 destination for foreign direct inward investment. I am sad to say that it is now routinely bottom or next to bottom. To encourage more FDI, it is necessary for the Welsh Government to work closely with Her Majesty’s Government and, particularly, with UK Trade and Investment. 

There is a tremendous opportunity coming over the course of the next few weeks to encourage FDI with the establishment of the British business embassy at Lancaster house, which will exist for the currency of the Olympic games. Movers and shakers from every corner of the world will be visiting London and going to Lancaster house, and they will be anxious to do business. The Scottish Government are setting up a Scottish embassy in the Army and Navy club, which is within walking distance of Lancaster house, with a view to networking with individuals who are coming over here and who want to do business. When one compares that with the limp and flaccid response of the Welsh Assembly Government, who, as far as I know, are not intending to participate at all, it is very depressing. If the Welsh Assembly Government do not participate in the British business embassy, it will amount to an act of shameful and wanton negligence. I hope that if there is one thing that the hon. Member for Pontypridd can do, it will be to speak to the First Minister, with whom he tells us he has regular dialogue, and encourage him to get representatives of the Welsh Assembly Government into Lancaster house and networking with those overseas investors to ensure that Wales does not lose out yet again. If he indicates that he will perform such a service, he will also being doing an enormous service to Wales. 

The hon. Member for Carmarthen East and Dinefwr made a typically engaging contribution. I am sad to say that I disagreed with almost every word, but he will probably be quite pleased to hear that. It would appear that Plaid Cymru is now even more unreconstructedly socialist than almost any other party in Parliament and maybe even any individual in Parliament—with the exception of the hon. Member for Aberavon, to whom I must pay tribute for using the word “socialist” more times in one sentence than I have ever heard. Spend and borrow while interest rates are low appears to be the advice of the hon. Member for Carmarthen East and Dinefwr, which ignores the fact that if borrowing were to be allowed to let rip, interest rates would shoot up, with devastating consequences for every section of the economy and every house buyer in the country. 

We heard a good contribution from my hon. Friend the Member for Carmarthen West and South Pembrokeshire, who spoke of the groceries code adjudicator. I think that he tended to agree with Plaid Cymru in wishing that the adjudicator had a few more teeth. I, however, tend to agree with the Secretary of State; we should allow the adjudicator to do his work and see

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whether the supermarkets respond. If they do not, we can then think in terms of compulsion. 

My hon. Friend also spoke, as did many others, including the hon. Member for Swansea West, of the importance of the electrification of the main line to Swansea. The hon. Member for Aberavon praised the Government of François Hollande for their focus on infrastructure, but, frankly, I will not yield to the hon. Gentleman over this Government’s record on infrastructure. Over the 13 years of the Labour Administration, not a centimetre of electrified line was laid in Wales. We have now proposed electrification of the line to Cardiff. We are extremely enthusiastic about the electrification of the Cardiff valleys lines. Indeed, if the people of Swansea could make as compelling a case for electrification as has the hon. Member for Swansea West, it might be the case that electrification would continue to that end of the line. We certainly are extremely enthusiastic about it, and the Wales Office is strongly engaged with the Department for Transport. 

We had an excellent contribution from my hon. Friend the Member for Aberconwy, who spoke of the need for the Government as well as individuals to carry out good housekeeping. It is true that individuals fully understand that the measures that the Government are implementing may not be comfortable, but nevertheless they are absolutely necessary to repair the damage done to the economy before the end of the previous Labour Government. 

My hon. Friend also spoke about the simplification of VAT and about the static caravan tax, which of course was an issue that engaged a lot of Members with constituencies in holiday areas, such as mine and my hon. Friend’s. He is right to say that it is a strength of Government to listen to criticism and to points made by people who understand their own industry. If the previous Government had listened to the criticism about the 10p tax band, perhaps they would not have got into such a pickle. It is a sign of strength when Governments listen to sensible criticisms from those who know what they are talking about. 

We had a very interesting contribution from the right hon. Member for Cardiff South and Penarth. He is a candidate for police and crime commissioner, and his speech tended to reflect that. Congratulations are due

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also to his son, Mr Tal Michael, who is standing for police and crime commissioner in north Wales, making family-friendly policing an objective in Wales. I look forward to campaigning with the Conservative candidate for commissioner and assisting in their defeat. 

Finally, we had an excellent contribution from my hon. Friend the Member for Monmouth, who possibly did not speak entirely within order, but it was there or thereabouts. It was hugely entertaining. Importantly, he spoke of the concern throughout all sections of Welsh society about the future of many loved Welsh regiments, particularly the Queen’s Dragoon Guards, whose former officers I met last week. As a consequence of what my hon. Friend said about the apparent reluctance of the Ministry of Defence to appear before his Select Committee, I have no doubt that my right hon. Friend the Secretary of State will make the appropriate representations to the appropriate persons. 

The measures announced in the Budget and the legislative programme outlined in the Queen’s Speech show that the coalition Government are determined to restore prosperity to Britain and to Wales after Labour’s failed 13 years. In Wales, of course, we have to work with the Welsh Assembly Government, which we are happy and indeed anxious to do. That of course means, as I put it to the hon. Member for Aberavon in an intervention, that we expect positive and businesslike engagement from that Government. 

In Wales there are two Governments. Unless those two Governments work closely together, which we are prepared to do, Wales will be the loser and the poorer. We and the Welsh Government certainly have our philosophical differences, but we should not and must not let that get in the way of a businesslike approach to the problems of Wales. We are prepared to play our part and we look forward to the Welsh Assembly Government doing likewise. 

Question put and agreed to.  


That the Committee has considered the matter of the Government’s legislative programme as outlined in the Queen’s Speech and the Budget statement as they relate to Wales. 

4 pm 

Committee adjourned.  

Column number: 77 
Questions Not Answered Orally

The Chancellor of the Exchequer was asked—

Funding Formula  

10. Jonathan Edwards :  

What recent progress has been made in discussions on the funding formula for Wales.



Mr Gauke:  The UK Government have been discussing all proposals arising from the Holtham commission—including funding reform—in the course of ongoing engagement with the Welsh Government. Those discussions are taking place alongside the work of the Silk commission on the financial accountability of the Welsh Assembly. 

Budget (Cost of Living) 

11. Mrs Moon :  

What assessment he has made of the effectiveness of measures announced in the Budget and Queen's Speech in helping families in Wales with the cost of living.



Mr Gauke:  Budget 2012 maintains the Government’s plans to restore public finances to a sustainable path, ensuring that families and businesses across the United Kingdom continue to benefit from low interest rates. Budget 2012 announced further support for families, increasing the personal allowance by a further £1,100 in April 2012. This will lift an additional 42,000 people in Wales out of income tax and benefit 1.1 million individuals. 

Public Sector Jobs 

13. Dr Francis :  

What assessment he has made of the effect of his policies on the number of public sector jobs in Wales in the next five years.



Mr Gauke:  The Government face the largest budget deficit in history and have had to take tough decisions to reduce the deficit. Delivering high quality public services remains hugely important to the Government. The Government have taken measures such as pay restraint to reduce the number of public sector job losses. Deficit reduction will inevitably impact on the public sector work force, including in Wales. 

The Treasury does not centrally manage changes to public sector work forces, and the Office for Budget Responsibility has not produced a forecast for public sector job losses by region. However, the OBR forecasts that the total employment will increase by 1 million between 2011 and 2017, and the overall employment rate in Wales has risen over the past two years. Employment in Wales is 26,000 higher today than two years ago. 


14. Kevin Brennan :  

What representations his Department has received from individuals and organisations in Wales on its consultation on VAT and borderline anomalies.



Mr Gauke:  Her Majesty’s Revenue and Customs will shortly be publishing on its website a summary of responses to its consultation “VAT: Addressing VAT borderline anomalies”. The response document will contain a list of those who contributed to the consultation. 

Column number: 78 


15. David T. C. Davies :  

What fiscal steps he is taking to reduce unemployment in Wales.



Mr Gauke:  The Work programme has been underway since June, delivering personalised support to long-term and vulnerable jobseekers. After the first five months, 332,000 people across Great Britain were receiving specialist support to move back into work. 

The youth contract was launched in April to help support half a million young people across Great Britain into employment. As skills and education is a devolved issue, £13 million has been allocated to Wales to fund this part of the scheme. 

Public Sector Jobs 

16. Martin Caton :  

What assessment he has made of the effect of his policies on the number of public sector jobs in Wales in the next five years.



Mr Gauke :   The Government face the largest budget deficit in history and have had to take tough decisions to reduce the deficit. Delivering high quality public services remains hugely important to the Government. The Government have taken measures such as pay restraint to reduce the number of public sector job losses. Deficit reduction will inevitably impact on the public sector work force, including in Wales. 

The Treasury does not centrally manage changes to public sector work forces, and the Office for Budget Responsibility has not produced a forecast for public sector job losses by region. However, the OBR forecasts that the total employment will increase by 1 million between 2011 and 2017, and the overall employment rate in Wales has risen over the past two years. Employment in Wales is 26,000 higher today than two years ago. 

Barnett Formula 

17. Ann Clwyd :  

What recent representations his Department has received on the Barnett formula.



Mr Gauke:  While the Government recognise concerns expressed over the Barnett formula, as set out in the coalition programme for Government, we believe that at this time the priority must remain the reduction of the deficit. The UK Government have been discussing all proposals arising from the Holtham commission—including funding reform—in the course of ongoing engagement with the Welsh Government. 

Regional Pay 

18. Mr Hanson :  

What his policy is on regional pay for the public sector in Wales.



Mr Gauke :   Public sector pay in devolved areas is a matter for the Welsh Government. For non-devolved areas, the independent pay review bodies are considering how public sector pay can be made more responsive to local labour markets and will report from July. UK civil service Departments are also considering their approach. 

Column number: 79 

The Government believe that more local, market-facing public sector pay has the potential to result in more public sector jobs for the same level of spending, and to help local businesses become more competitive and expand. 

Housing Revenue Account 

19. Hywel Williams :  

What discussions he has had regarding the effect of the housing revenue account subsidy scheme on Wales.



Mr Gauke:  Discussions between the UK Government and the Welsh Government on the reform of the housing revenue account subsidy system in Wales are ongoing. Ministers have agreed that any reform to the system should be fiscally neutral. 

The Secretary of State for Wales was asked—

Local Pay Bargaining 

8. Geraint Davies :  

What assessment she has made of the likely effect on employment in Wales of the introduction of local pay bargaining.



Mr David Jones:  The Government’s 2011 autumn statement asked independent pay review bodies to consider how public sector pay could become more responsive to local labour markets. These bodies are expected to report by July 2012, so until then we cannot assess the effect on Wales or any other part of the UK. 

Budget Measures (Unemployment) 

9. Dr Francis :  

What assessment she has made of the effectiveness of measures announced in the Budget and Queen's Speech in tackling unemployment in Wales.



Mr David Jones:  The measures announced in the Budget and Queen’s Speech provide a much needed boost for enterprise and business in Wales, supporting sustainable growth and employment in the private sector. 

The Census  

10. Hywel Williams :  

What discussions she has had on the future of the census in Wales.



Mr David Jones:  The Beyond 2011 Programme is examining options for the future census across the UK before developing final recommendations in 2013 and 2014. 

Budget Measures (Cost of Living) 

11. Ian Lucas :  

What assessment she has made of the effectiveness of measures announced in the Budget and Queen’s Speech in helping families in Wales with the cost of living.



Mr David Jones  One of the key principles of the Budget was fairness and the need to support working families. We announced measures that will lift an additional 42,000 people out of tax altogether and benefit 1.1 million

Column number: 80 
individuals in Wales. In addition, we raised the threshold for the withdrawal of child benefit to £50,000, benefiting 21,000 households in Wales. 

Local Pay Bargaining  

12. Chris Ruane :  

What assessment she has made of the likely effect on employment in Wales of the introduction of local pay bargaining.



Mr David Jones:  The Government’s 2011 autumn statement asked independent pay review bodies to consider how public sector pay could become more responsive to local labour markets. These bodies are expected to report by July 2012, so until then we cannot assess the effect on Wales or any other part of the UK. 

Regional Pay 

13. Jessica Morden :  

What her policy is on the introduction of regional pay for the public sector in Wales.



Mr David Jones:  The independent pay review bodies are expected to report by July 2012 on how public sector pay can be made more responsive to local labour markets. Until formal proposals have been made by the review bodies and civil service departments, it will not be possible to make an assessment of the impact in Wales. 


14. Chris Evans :  

What recent assessment she has made of the effect of the changes in funding for policing on the number of front-line police officers in Wales.



Mr David Jones:  We have set a challenging but manageable funding settlement for the police service. It is a matter for the chief constable and the police authority in each force to determine the number of police officers that are deployed within the available resources. 

Budget Measures (Unemployment) 

15. Mrs Moon :  

What assessment she has made of the effectiveness of measures announced in the Budget and Queen's Speech in tackling unemployment in Wales.



Mr David Jones  The measures announced in the Budget and Queen’s Speech provide a much needed boost for enterprise and business in Wales and will be a key element in our strategy to support sustainable growth and employment in the private sector. 

Local Pay Bargaining 

16. Martin Caton  

What assessment she has made of the likely effect on employment in Wales of the introduction of local pay bargaining.



Mr David Jones  The Government’s 2011 autumn statement asked independent pay review bodies to consider how public sector pay could become more responsive to local labour markets. These bodies are expected to report by July 2012; until then we cannot assess the effect on Wales or any other part of the UK. 

Prepared 21st June 2012