AUTUMN STATEMENT
The Committee consisted of the following Members:
† Bebb, Guto (Aberconwy) (Con)
Brennan, Kevin (Cardiff West) (Lab)
† Bryant, Chris (Rhondda) (Lab)
† Buckland, Mr Robert (South Swindon) (Con)
† Cairns, Alun (Vale of Glamorgan) (Con)
Clwyd, Ann (Cynon Valley) (Lab)
† Crabb, Stephen (Parliamentary Under-Secretary of State for Wales)
David, Wayne (Caerphilly) (Lab)
† Davies, David T. C. (Monmouth) (Con)
† Davies, Geraint (Swansea West) (Lab/Co-op)
† Davies, Glyn (Montgomeryshire) (Con)
† Doughty, Stephen (Cardiff South and Penarth) (Lab/Co-op)
Edwards, Jonathan (Carmarthen East and Dinefwr) (PC)
† Evans, Chris (Islwyn) (Lab/Co-op)
† Evans, Jonathan (Cardiff North) (Con)
† Flynn, Paul (Newport West) (Lab)
† Francis, Dr Hywel (Aberavon) (Lab)
† Griffith, Nia (Llanelli) (Lab)
† Hain, Mr Peter (Neath) (Lab)
† Hanson, Mr David (Delyn) (Lab)
Hart, Simon (Carmarthen West and South Pembrokeshire) (Con)
† Irranca-Davies, Huw (Ogmore) (Lab)
† James, Mrs Siân C. (Swansea East) (Lab)
† Jones, Mr David (Secretary of State for Wales)
Jones, Susan Elan (Clwyd South) (Lab)
† Kawczynski, Daniel (Shrewsbury and Atcham) (Con)
† Llwyd, Mr Elfyn (Dwyfor Meirionnydd) (PC)
† Moon, Mrs Madeleine (Bridgend) (Lab)
† Morden, Jessica (Newport East) (Lab)
Morris, David (Morecambe and Lunesdale) (Con)
Mosley, Stephen (City of Chester) (Con)
† Murphy, Paul (Torfaen) (Lab)
† Newmark, Mr Brooks (Braintree) (Con)
† 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 )
Fergus Reid, Committee Clerk
† attended the Committee
Welsh Grand Committee
Wednesday 22 January 2014
(Morning)
[Mr Dai Havard in the Chair]
Autumn Statement
9.30 am
The Chair: I have a list of about eight speakers who wish to contribute. I make the usual appeal for this morning’s sitting. We are likely to be disturbed in the afternoon sitting because of today’s business in the Chamber where there will be votes. You are in your own hands in terms of discipline and getting time to make contributions. I will allow the Front-Bench spokespeople to discharge their function this morning, but get some of the Back-Bench speeches begun before we finish at 11.25 if that is possible.
The Secretary of State for Wales (Mr David Jones): I beg to move,
That the Committee has considered the matter of the Autumn Statement as it relates to Wales.
Welcome to the Chair, Mr Havard. I am sure that we will all pay due heed to those strictures. It is gives me great pleasure to open the debate on the autumn statement as it relates to Wales.
When this Government came to office in 2005, we inherited from the party opposite—
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC): First mistake: they came to office in 2010, not 2005.
Mr Jones: Forgive me; the right hon. Gentleman is quite right. The deficit was at the highest level in our peacetime history at 11% of GDP. It was frankly an appalling legacy.
Owen Smith (Pontypridd) (Lab): Will the Secretary of State confirm what the deficit is scheduled to be at the end of this Government’s term in 2015? Is it £80 billion?
Mr Jones: It will be significantly less than it would be if the Labour party had remained in power.
Mr Brooks Newmark (Braintree) (Con): The Opposition keep forgetting that when there is a deficit, that is a negative number. Unfortunately, when there is a large negative number, no matter how fast it is decreased, it still adds to debts.
Mr Jones: That is self-evident, except apparently to the hon. Member for Pontypridd.
Owen Smith: Will the Secretary of State also confirm that the Government will have broken their rule of getting net debt down as a proportion of GDP by the end of the period?
Mr Jones: I would say no, but given the circumstances we inherited and those that prevailed after we came to power, we are doing remarkably well. To repeat, we are doing significantly better than we would have been had the Labour party remained in power and continued spending at a profligate rate.
Geraint Davies (Swansea West) (Lab/Co-op): The Secretary of State is being generous with his time. Does he agree that, when he took office, the amount of debt as a share of the size of the economy was 55%? It is now 75% and tracking to be between 80% and 85%. That is complete failure on his watch.
Mr Jones: It is far from failure. The question that I put to Labour Members, which will no doubt will be fully addressed by the hon. Member for Pontypridd when he makes his contribution, is what would that deficit have been if they had continued with their profligate spending pattern? Clearly, the country by now would probably be bankrupt.
Mr Newmark: I am sorry to keep pressing this point, but the Labour party’s economic illiteracy beggars belief. To get out of our deficit and debt problem, Opposition Members proposed borrowing even more than this Government propose. I do not know why they keep pressing that point.
Mr Jones: As I said, I am looking forward to hearing the explanation from the hon. Member for Pontypridd. [Interruption.] I would like to progress to my second paragraph.
The Government are committed to ensuring that Britain lives within its means. The autumn statement continues our efforts to secure a sustained, responsible recovery for the long-term security of our country and its people. Although we have had to make difficult decisions to stabilise the country’s finances, we have made resources available for policies that will make a real difference to those hardest hit by Labour’s recession and to Wales.
Huw Irranca-Davies (Ogmore) (Lab): On the Secretary of State’s point about living within our means and the impact of policies, why have the Government refused for nearly nine months to publish a report that they themselves produced on the impact of food aid in the UK? The Bridgend food bank in my constituency is the busiest in the whole of Wales. Why will he not urge his colleagues to publish that report, which has been sitting on Ministers’ desks for nearly nine months?
Mr Jones: It is interesting that Labour Members make constant reference to food banks. The fact is that when Labour was in power, food banks increased tenfold. Even more shamefully, the previous Government refused to refer jobseekers to food banks, which we are doing.
Owen Smith: The Secretary of State is being generous in giving way. He repeats the line that we hear endlessly from the Government about the tenfold increase in food banks under Labour. Will he confirm that, when Labour left office in 2010, there were two, soon to be three, food banks in Wales, but now, in 2014, there are north of 35?
Mr Jones: Clearly there will be, because the activities of the Trussell Trust are increasing. I find it interesting that Labour Members constantly criticise the activities of charities such as the Trussell Trust, with which I am proud to be associated.
The Labour party’s profligacy was simply not sustainable, and it continues to lack any coherent economic policy, preferring to engage in empty sloganising. We have made difficult decisions to bring down the deficit, and Labour has contested and opposed them at every turn.
Labour presided over the largest economic downturn of any major economy in the world, with a fall in GDP of a staggering 7.2%—nearly twice that of the United States. By making difficult decisions, we have rebuilt the United Kingdom’s fiscal credibility, and today the deficit is down by a third as a percentage of GDP, and is forecast to halve by next year.
However, there can be no room for complacency. There are still challenges, and the task is far from finished. That is why we have a five-point economic plan, to which we propose to adhere, and why the first part of the plan is to continue to reduce the deficit and deal with this country’s debt. The alternative—a return to the economic mismanagement of the past, which would imperil our security and that of future generations—is simply not an option. We have consistently rejected, and will continue to reject, calls from Labour Members to increase borrowing and spend more. Those who predicted that there would be no growth until we increased public spending—I can see a few in the room today—have been proved unequivocally wrong.
The UK has seen the fastest growth in GDP in the G7. What is more, that growth is balanced across all sectors of the economy, and is not based on unsustainable overheating in the housing market or on over-reliance on financial services, which we saw in the early part of the past decade.
Geraint Davies: Does the Secretary of State agree that bank lending for mortgages and consumer debt is now at the 2008 level, which is fuelling a housing bubble, but bank lending for business and construction is 30% down? That is why productivity in the UK is down 5%, while it is up 8% in the US. It is a complete catastrophe.
Mr Jones: The hon. Gentleman ought to catch up with what the International Monetary Fund said yesterday, which is that Britain is the fastest growing major European economy. It is raising its 2014 growth projection from 1.9% to 2.4%.
Mr Peter Hain (Neath) (Lab): The Secretary of State cannot stop peddling the big deceit in British politics, which is that Labour spent too much before the banking crisis. If we had done that, why did his party—the shadow Chancellor and shadow Leader of the Opposition at the time—sign up to Labour’s spending plans for the
next two years? We brought the deficit down. We brought debt down. We brought borrowing down from the 1997 levels we inherited. Then the banking crisis blew every economy out of the water, and the right hon. Gentleman was advocating less regulation of banking.Mr Jones: May I remind the right hon. Gentleman who presided over the banking regime that caused that crisis? The tripartite regime that his Government implemented was largely the cause of the banking crisis in this country and he, of course, would prefer to forget that.
Growth is set to continue. Forecasts predict a sustained recovery. The Office for Budget Responsibility has more than doubled its growth forecast for 2014 from 0.6% to 1.4%. This is the largest in-year upward revision since 1999. We have just heard from the IMF that it has increased its growth forecast to 2.4%.
Owen Smith: Although the Secretary of State is being generous in giving way, I cannot help but intervene to ask whether he accepts that the overwhelming majority of the growth we are seeing, which is welcome and which he said was sustainable, is predicated on a consumer spending boom, which has seen the savings ratio worsen, and a house price bubble. There has been negligible impact on business investment and negligible impact on manufacturing. That is not my view but that of Ernst and Young and PricewaterhouseCoopers. That is the truth.
The Chair: Order. There have been lots of interventions. Interventions need to be short.
Mr Jones: The hon. Gentleman is himself peddling a fantasy.
Owen Smith: No, it is the truth.
Mr Jones: We have seen manufacturing strongly up and services strongly up. [ Interruption. ] So far as overheating of the housing market is concerned, he knows that that is not the case. Growth is—
Mr Jones: Well, quite interestingly the hon. Gentleman disputes that it is driving growth. Growth is up to 2.4%. [ Interruption. ] Labour Members’ difficulty is that they told us consistently, year after year, that we were going too far, too fast and there would be no growth. They have been proved comprehensively wrong.
Owen Smith: Growth is 1.8%, not 2.4%.
Mr Jones: Argue with the IMF. The figures confirm that the economy is on the right track, delivering more jobs and more security for families across Britain, not least Wales.
Jonathan Evans (Cardiff North) (Con): Is it not a bit rich to hear the hon. Member for Pontypridd say from a sedentary position that growth was encouraged by consumer spending? As I remember it, the Labour Government
cut VAT to 15% and introduced a completely useless car scrappage scheme that was widely derided as wasting millions of pounds.Mr Jones: I could not agree more with my hon. Friend. The figures confirm that the economy is on the right track. Three and a half years on from the general election, more people are in work now than ever before in Wales and economic inactivity is at a record low.
Hywel Williams (Arfon) (PC): I am listening to the statistics with some interest. Is the confidence that the Secretary of State expresses shared by his constituents who are struggling on low benefits and low wages and are working on insecure and short-term contracts?
Mr Jones: I talk regularly to my constituents, and I am sure the hon. Gentleman talks regularly to his. They take the strong view that this Government are doing entirely the right thing—paying down the deficit and ensuring low interest rates—and, of course, they fully understand that we are giving them the security of long-term jobs which would be frittered away had the Labour party been allowed to remain in power.
We have seen from today’s labour market figures that the trend is continuing. Over the past year, the employment rate in Wales increased by 45,000.
Mrs Siân C. James (Swansea East) (Lab): I have had the figures for Swansea East today. My concern is about the employment of women. We have seen a growth in job opportunities for men in Swansea East, but 34% of our jobseeker’s allowance claimants are women. We have seen a 16.5% increase in jobs for men but an overall decrease in jobs for women. What does the Secretary of State have to say to women in my constituency who are employed in low-paid jobs for short hours—on zero-hours contracts—and cannot make ends meet?
Mr Jones: Employment is improving throughout Wales. In due course, one hopes that we will also see improvement in the hon. Lady’s constituency. However, I was glad to hear what she said about employment among men improving.
Mr Hain: Has the Secretary of State seen the report published by the TUC on Monday—he laughs.
Mr Jones: I am not laughing at all.
Mr Hain: Good. It is an independent report, and the TUC does not publish made-up figures. The report showed that the recovery had not reached Wales and that employment opportunities were worse than, or at least as bad as they were 20 years ago—
The Chair: Order. We have got the point, Mr Hain.
Mr Jones: I find that extraordinary. If one looks at today’s labour market figures, they are incredibly encouraging. The employment rate in Wales has increased by 2.5%, the largest rise of all the UK nations and
regions, and more than three times the increase throughout the UK as a whole. Frankly, I do not recognise the TUC figures that the right hon. Gentleman cites.Mr Newmark: On that point, we can put in some real numbers, rather than percentages. Real numbers are real jobs. Since 2010, about 80,000 new jobs have been created in Wales and unemployment has fallen by about 20,000.
Mr Jones: Employment has never been higher in Wales—again, that is why I do not recognise the TUC figures.
Glyn Davies (Montgomeryshire) (Con): I thank the Secretary of State for giving me the opportunity to ask him to comment on unemployment in my constituency falling by 25% in the past 12 months, from more than 900 to 680. There has never before been such a fall in unemployment in Montgomeryshire in 12 months.
Mr Jones: I am pleased to hear that, and it is being replicated throughout Wales.
Huw Irranca-Davies: I ask the right hon. Gentleman for his view as Secretary of State for Wales of the impact on earnings. Is it acceptable that any growth in employment, welcome as it may be, is achieved by sacrificing earnings, with an impact on the poverty of working people? I refer in particular to zero-hours contracts.
Mr Jones: The hon. Gentleman pre-empts my next point, which is that earnings are in fact rising in Wales. People in Wales have seen their earnings increase by 4.4% in 2013, which is twice the increase in the UK as a whole and more than twice the rate of inflation. That increase provides a real boost to living standards and shows that our economic plan is delivering security to those who struggled through Labour’s recession—[ Interruption. ]
Jonathan Evans: Will my right hon. Friend reflect on the fact that the noise from the Opposition demonstrates that they are in complete denial about what is happening?
Mr Jones: I agree entirely and find it fascinating that the Opposition appear to be disputing the labour market statistics that have been produced this morning by the Office for National Statistics.
Mr David Hanson (Delyn) (Lab): Will the Secretary of State confirm that prices have risen in 42 of the 43 months since the general election? Whatever the rise in wages, prices rising faster than wages means a real cut in the incomes that feed people throughout Wales.
Mr Jones: Prices have indeed risen, but as I just said, the increase on average in Wales is 4.4%, which is twice the rate of inflation.
Mr Hanson: If the Secretary of State has just admitted to the Committee that prices have risen, will he indicate by how much more prices have risen than the figure he has given for wages?
Mr Jones: I clearly do not have those figures—
Owen Smith: Will the Minister give way?
Mr Jones: Let me deal with the point made by the right hon. Member for Delyn. The current increase in wages, on average, is twice the rate of inflation. I find Labour Members’ constant tendency to dispute hard statistics from the ONS extraordinary.
Mr Hanson: The Secretary of State so far has indicated that prices have risen more than wages. He has indicated that wages have risen, but he cannot give the Committee an indication of what the differential will be. He knows that that differential affects my constituents. At the same time, will he indicate, if he can, how many people in Wales who earn more the £3,000 per week have had a tax cut?
Mr Jones: Let me repeat the point: earnings are increasing by 4.4% on average, which is twice the current rate of inflation.
Owen Smith: Will the Minister give way?
Owen Smith: Even to correct that disingenuous statement?
Mr Jones: The hon. Gentleman can deal with it in his speech.
Through our determination to protect health and education in England, the Welsh Government’s budget has been largely insulated from the full extent of the reductions faced by many Whitehall Departments. We are providing the Welsh Government with an additional £100 million-worth of spending power over the next two years and the Welsh Government’s capital budget is increasing in real terms by 8.4% next year and 2.4% the year after. That has enabled the Welsh Government at last to pursue vital initiatives such as the Help to Buy scheme, emulating the highly successful scheme we have introduced in England, which is making a real difference to people’s lives.
The autumn statement reinforces the Government’s commitment to fairness. We are building on previous autumn statements and Budgets, ensuring that households with the highest income make the greatest contribution towards lowering the deficit. Before the Government took hold of our country’s finances, the richest 20% of households contributed around three and a half times as much tax as they received from public spending. That has now increased to around four times as much. The poorest 20% of households receive more than five times as much support as they contribute in tax.
The second part of our plan is to cut income tax and freeze fuel duty, to help hard-working people feel more financially secure. We have announced increases to the personal allowance to £10,000 from April, which will benefit 1.1 million taxpayers in Wales, taking 130,000 people in Wales out of income tax altogether. The Government have also made it a priority to help families
with the cost of living by freezing fuel duty. The autumn statement continued that process. By cancelling the fuel duty rise planned for later this year, petrol will be 20p per litre cheaper than under the previous Labour Administration’s plans. That is a real help for the owners of the 1.75 million vehicles in Wales.We are also helping families with the cost of their energy bills. We are establishing a rebate, saving domestic electricity consumers £12 on their bills for the next two years. By reducing the cost of the energy company obligation, we will also reduce bills by an average of £30 to £35 this year. We continue to ensure a responsible recovery for all. Our economic plan is a plan for jobs and growth, and to support hard-working families.
The third part of our plan is backing small business and enterprise to create jobs with better infrastructure and lower taxes on jobs. Throughout Wales, I see countless examples of small businesses that are not just surviving, but thriving. Businesses such as the Village Bakery in Wrexham—winner of the Fast Growth 50 award last year—continue to go from strength to strength.
The most effective way to support businesses is to reduce the burden of tax imposed on them. We have already provided for a reduction of corporation tax to 20% from April next year, but at the autumn statement, we also announced that employer national insurance contributions will be abolished for under-21s, supporting the jobs of 64,000 young people in Wales. We have extended small business rate relief for a further year and have capped increases in business rates for 2014 at 2% in England, which will benefit almost 200,000 SMEs. I am pleased to see that the Welsh Government have committed to doing the same for Wales. I hope that that will ensure that Welsh businesses can also benefit from the discount we are applying in England, which is worth £1,000 for small businesses.
Businesses repeatedly tell me that some of the biggest problems they face are with Wales’s inadequate infrastructure. In the autumn statement, the Government updated the national infrastructure plan, emphasising our priority of improving infrastructure across the UK. Infrastructure investment is central to our plans for growth, and the scale of investment needed in energy infrastructure dwarves that of any other area. The truth is that, for about a decade, the previous Government had no credible energy policy and no coherent plan for how we would meet our increasing energy needs. We have a plan to create the right conditions for much-needed investment in our energy infrastructure.
Members on all sides of the House welcomed the announcement of the investment by Hitachi in Wylfa Newydd. The development of a new nuclear power station on Anglesey is vital for the north Wales region and presents enormous opportunities for local businesses. Recognising that, the Government are entering into a co-operation agreement with Hitachi and Horizon, with the aim of securing an in-principle guarantee to support the financing of Wylfa Newydd—something that has been widely welcomed right across north Wales.
Hywel Williams: How does the Secretary of State think that the electricity from Wylfa Newydd—and from the arrays in the sea and Ireland, for that matter—should be carried? Should there be an undersea cable or pylons across north Wales again?
Mr Jones: I fully recognise that this is an issue of concern in north Wales. As yet, the route has not been determined, but I am sure that the hon. Gentleman would agree that Wylfa Newydd is immensely important to Anglesey and also that there will have to be transmission cables of some sort. I hope that, overall, he will support that investment in that important piece of infrastructure.
Hywel Williams: Does the Secretary of State share my dismay that the route so far proposed by the National Grid is across Anglesey, the Menai straits and my constituency—all on pylons? The undersea option does not seem to have been considered at all.
Mr Jones: I do not think it is fair to say that it has not been considered. The hon. Gentleman raises an important issue that will no doubt be a matter of continuing debate. This Government are also investing more in upgrading the transport infrastructure in Wales than at any time in the last century. Wales is set to benefit directly and indirectly from almost £2 billion of investment in rail, with the Great Western main line extended to Swansea.
Chris Bryant (Rhondda) (Lab): The electrification of the route to Swansea—and, for that matter, into the valleys—is great. I hope that it will make a significant difference in enabling people to get to work. However, because the Government have completely and utterly messed up the west coast franchise, all the franchises are running on for an extra period of time, which means that there is still no wi-fi available on rail routes to Swansea and will not be until the new franchise. Can the Secretary of State make sure that this is changed?
Mr Jones: I expect that the hon. Gentleman will be pleasantly surprised.
Mr Jones: In the fullness of time—which I imagine is not likely to be that full.
Upgrading the M4 is a key priority for Government and business in Wales. For too long the M4 around Newport has been—as my right hon. Friend the Prime Minister put it—a foot on the windpipe of the Welsh economy. That is why we have confirmed that we are enabling the Welsh Government to use their existing limited borrowing powers to begin the process of upgrading that important piece of infrastructure as soon as possible.
Providing high quality internet access is also fundamental to growth, particularly in a rural area such as much of Wales. Only a fortnight ago, BT announced that 100,000 Welsh homes and businesses now have access to superfast speeds as a result of the roll-out of broadband.
Chris Bryant: I hope I might get a bit more joy out of the Secretary of State. Villages like Blaencwm and Blaenclydach, right at the top end of the Rhondda Fawr, have real problems where local businesses desperately need high-speed internet. There is no prospect at the moment, because BT has a complete stranglehold, thanks, basically, to the bung it has been given by the Government, who made it virtually impossible for anybody other than BT to compete and be able to secure these contracts.
Will the Secretary of State guarantee that full high-speed broadband will be available right to the top end of the valleys in the next 18 months, as would have happened if there had been a Labour Government?Mr Jones: I gently remind the hon. Gentleman that the roll-out of broadband in Wales was actually devolved to the Labour Welsh Government. Nevertheless, to give them credit, I believe they are doing remarkably well. I am quite happy to give them that credit, but by 2015 we will have achieved a truly remarkable transformation, with 96% of homes and businesses in Wales receiving that level of service. The national infrastructure plan includes a new £10 million fund to identify innovative projects to connect the last hard-to-reach areas. There will be further announcements in due course.
Alun Cairns (Vale of Glamorgan) (Con): I want to underline the point that the responsibility for the roll-out of broadband in Wales will fall to the Welsh Government, albeit—we must underline—with the use of UK taxpayers’ money. Does the Secretary of State share my concern about the areas that may have been prioritised? There seems to be a certain disparity between those constituencies that have received superfast broadband with public money at this stage and those that have not.
Mr Jones: Indeed, £57 million of UK government money has already been provided to the Welsh roll-out. On my hon. Friend’s last point, I sincerely hope that that is not the case and that all areas are being treated even-handedly. In total, five out of the top 40 priorities in the national infrastructure plan include projects in Wales, demonstrating our commitment to the Welsh economy.
As we build infrastructure fit for a modern economy, we also need to ensure that we have a work force that is ready to support business growth. However, there remain far too many families in Wales where at least one member is out of work. It is frankly appalling that there are 200,000 people of working age in Wales who have never had a job. It is shameful that such a level of worklessness has been allowed to take root. It is hard to think of anything more dispiriting than a life of dependency on benefits.
We are not prepared to stand by and allow that state of affairs to continue. The fourth part of our plan therefore focuses on curbing welfare and reducing immigration so that our social security system delivers for those who want to work hard and play by the rules. Our much-needed reforms to the welfare system are designed to ensure that work pays, to address benefit dependency in Wales and our historic legacy of worklessness. Our reforms will bring back aspiration and support those who want to work.
Chris Bryant: One of the reforms that the Government have introduced to welfare is the bedroom tax. The Secretary of State will know that the Labour party wants to abolish the bedroom tax. He will also know that, because of the ludicrous way in which the Government introduced the legislation, they had not spotted a loophole that means that anybody who was in council property or supported housing prior to 1996 and claiming housing
benefit all the way through until today is not covered. How many people in Wales does the Secretary of State think will be exempted by this loophole?Mr Jones: I find it interesting that the hon. Gentleman says he wants to abolish the spare room subsidy legislation that we introduced. The plain fact is that this applies to social housing but does not, for some reason—as I understand it—apply to private sector housing. I am looking forward to hearing an explanation from his hon. Friend the Member for Pontypridd on the Front Bench of why the Labour party proposes to discriminate against private sector tenants. That will be extremely interesting.
Chris Bryant: I am asking a very straightforward question. It is important because there are potentially hundreds, if not thousands, of some of the poorest families in Wales who have had to pay an extra £600, £700 or £800 over the past few months who should be getting that money back. I hope the Secretary of State has done his job properly and has tried to ascertain the facts in relation to Wales. How many people in Wales are covered by the loophole?
Mr Jones: I will say again that we believe that the spare room subsidy is fair. We believe it is fair to the taxpayer and to the tenant. As we have seen from today’s labour market figures, more and more people in Wales are finding work and the dignity of work. We are creating a new welfare system in Wales based on flexibility, simplicity and fairness.
Geraint Davies: Will the Secretary of State give way?
Mr Jones: No, I will continue.
We want a system that can respond to the modern and flexible labour market, while ensuring that no individual is worse off by accepting a job.
Nia Griffith (Llanelli) (Lab): Will the Secretary of State give way?
Mr Jones: I will continue for a while.
We want a system that is easy for people to use, but makes certain that customers receive all benefits to which they are entitled. Finally, we want a fair system reflective of the values of this nation—a nation that looks after those who need to be looked after, while ensuring fairness to hard-working taxpayers.
Nia Griffith: Will the Secretary of State give way?
Hywel Williams: How is the roll-out of universal credit going in Wales?
Mr Jones: It is progressing. As the hon. Member for Arfon knows, a pilot is starting shortly in Shotton. We believe that universal credit is an important innovation because it will ensure that it always pays to work and there is no penalty for doing so.
Chris Bryant: Will the Secretary of State give way?
Mr Jones: No, I will continue.
Mr Jones: I have been terribly generous.
As the private sector continues to generate more jobs, we are committed to ensuring that young people are not left behind. The fifth part of our plan is to deliver the best schools and skills for young people, so that we can help the next generation to succeed in the global race.
Chris Bryant: Will the Secretary of State give way on that point?
Chris Bryant: It is not really on that point but on the previous point. The Secretary of State says he wants to make sure that it pays to work. We entirely agree with that—it is important—and one of the things that makes it possible is when children of those receiving out-of-work benefits get free school meals. When universal credit comes in, will everybody get free school meals or will it be only some people?
Mr Jones: The provision of free school meals is a matter for the Welsh Government to determine. If the hon. Gentleman really believes that work should always pay, why has he voted against every single reform that this Government have introduced? [ Interruption. ] I do not think that Labour Members want to hear this, but the recent results from the programme for international student assessment in Wales were a huge disappointment. Children in school in Wales today will be the work force of our future, and the standards identified by PISA were simply too low—they were shamefully low. We need to be able to reassure our future and current investors that we are able to deliver a world-class environment in all parts of the UK, with world-class employees.
Alun Cairns: Has my right hon. Friend had any advice or suggestions from Opposition Members for why the PISA results were so low in Wales or what the core underlying reasons for those results are?
Mr Jones: No, but I am sure that we are going to be enlightened. I look forward to that explanation from the hon. Member for Pontypridd.
The PISA results in Wales do not show investors a world-class environment and give them reason only to look to our competitors. Simply put, Wales risks being left behind in the global race if young people do not have access to an education system that provides them with the qualifications and skills training they need to compete for the jobs of the future. Wales must make that link.
I have seen first hand the wealth of talent that exists in Wales’s young people when they are given the right skills and the right opportunities, such as high-quality apprenticeship programmes—I was delighted to attend the graduation ceremony for GE Aviation apprentices in October last year. It is vital that young people are given every opportunity to find programmes that are right for them. That is why we are providing for Jobcentre Plus to extend its services to provide support for 16 and 17-year-olds who want help to find apprenticeships and
training. We hope and expect that the Welsh Government will work closely with Jobcentre Plus to help to deliver the highly skilled work force that Wales needs.Chris Evans (Islwyn) (Lab/Co-op): I am sure that the Secretary of State will share my concern about apprenticeships. We talk about investing in apprenticeships, but we must make sure that they are real apprenticeships that last for five years and give young people proper qualifications, rather than some of the so-called apprenticeship schemes that last only six months, with no prospect of getting a job at the end.
Mr Jones: When I visited GE Aviation, I saw young people who were given world-class apprenticeships and came out with qualifications that were portable in any country in the world. At the moment in Wales we have qualifications that increasingly are not portable and not recognised anywhere else in the world—certainly not in the UK.
Mr Newmark: I am struck by the comments of the hon. Member for Islwyn. Apprenticeships are the first step in getting full-time employment. Does my right hon. Friend agree that apprenticeships give young people the opportunity to get on the ladder of full-time employment?
Mr Jones: I agree entirely. To be fair to the hon. Member for Islwyn, I think he was agreeing with that proposition.
To conclude, this is a Government who live within their means.
Mr Llwyd: Is the right hon. Gentleman going to tell us anything about the prison facility in north Wales in his speech?
Mr Jones: Is there any particular aspect of the prison facility in north Wales that the right hon. Gentleman wants to raise?
Mr Llwyd: Will the right hon. Gentleman give way?
Mr Llwyd: My first point is that a senior professor of criminology told the Justice Committee yesterday that prisons of that size are an absolute disaster. My second point is that there will be a conference a fortnight tomorrow in Cardiff at which the economic figures and the proposed job benefits will be shattered by academics. Is it not time to look at a scaling down and at a reasonable-sized prison for north Wales, for which I have campaigned for more than 20 years?
Mr Jones: I find that criticism extraordinary, particularly given that I have recently spoken with the leader of the right hon. Gentleman’s own local authority, who welcomes the prison in north Wales. In fact, it is welcomed by
every local authority in north Wales. The new prison in Wrexham will have decent, modern facilities to house, train and rehabilitate prisoners. I find the right hon. Gentleman’s criticism quite extraordinary. He is completely out of kilter with the rest of north Wales.To conclude, this is a Government who live within their means. The package of measures announced in the autumn statement is fiscally neutral and will be delivered through reductions in spending, not by increasing taxes. We will not follow the calls for more spending paid for by higher taxes or more borrowing: 2014 will be the year of hard truths. There is still a long way to go to rescue our economy. It will take time to repair the damage we inherited from Labour.
Huw Irranca-Davies: Does the right hon. Gentleman agree with the estimate from Consumer Focus Wales and others that as many as one in six people in Wales live on off-grid energy? Approximately 126,000 people would benefit from bringing the winter fuel payment forward to the summer months, when it is cheaper to buy off-grid fuel. Does he agree that we should put that within the regulatory regime, which is Labour’s policy? Will he support that?
Mr Jones: I will certainly investigate bringing the winter fuel payment forward. I am grateful to the hon. Gentleman for making that point.
The long-term economic plan is about more than restoring this country’s finances. It is about building confidence in Britain and I want the confidence of Welsh businesses to continue to grow throughout 2014.
Geraint Davies: Will the Minister give way on business confidence?
Mr Jones: No. I am coming to an end. I want Welsh businesses to access opportunities that exist both domestically and internationally, to take on more staff and to create more high-quality jobs for the people of Wales. I am glad to see that that process is continuing, because it is the only sustainable way of increasing living standards in the long term, which is precisely what this Government are determined to do.
The Chair: Order. Before I call anybody, we have just spent 47 minutes of our allotted time. Effectively, 13 people wish to speak after the Front Benchers. You are cutting into your own time. The majority of interventions came from people who have not applied to speak in the afternoon—I just remind you of that. This is your own self-discipline. I tell you about it now and I said what I said at the start. I would like, if possible, the Front Bench speeches to be concluded and the Back-Bench speeches to start before we finish at 11.45 am, but I am in your hands.
10.13 am
Owen Smith: Thank you, Mr Havard. I guarantee you that we will have started Back-Bench speeches before 11.25 am. It is a pleasure to serve under your chairmanship today.
I thank the Secretary of State for acceding to our request for a debate on the impact on the autumn statement on Wales. It is important to have such a debate because the autumn statement is important for Wales. Today’s speech from the Secretary of State was equally as enlightening and important as the autumn statement. They both expose the Government’s dearth of ideas and imagination on how we deal with the scale of the crisis we face in our economy, and the selective and complacent way in which the Government deal with the statistics that tell the true story of the economic crisis we and Wales face—Wales has an even greater degree of hardship than anywhere else in the UK.
The Secretary of State used an enormous amount of arid statistics, but it was a clear indication of the extent to which the Government are hiding behind some of those statistics and using them selectively in order to—dare I say it?—mislead the British public, if not this House.
The Chair: Order. Mr Smith, can we please be careful about language? I heard earlier, from a sedentary position, words like “dissembling”, “misleading” and so on. Let us be careful about the language we use when disagreeing with other people’s arguments.
Owen Smith: Certainly, Mr Havard—I stand corrected.
I will correct, if I may, some of the statistics we heard from the Secretary of State. Three or four times, he used the number for average wages growth—average median wage growth—in Wales in 2012-13. The number is accurate—there was 4.3% growth in average median wages last year in Wales—but my right hon. Friend the Member for Delyn asked what the number was in respect of inflation. The point he was making was on the discrepancy between average wages and price inflation. The Secretary of State did not have those numbers to hand, but I do, and I might be able to give the House an accurate picture for the Government’s time in office.
The 4.3% wage growth last year was preceded by 0% wage growth in 2011, and 0.6% wage growth in 2010. During those three years, counting backwards from last year, inflation was 3.1%, 3.2% and 4.5%, meaning that, over the entire period of this Government, wage growth in Wales has been 4.9% while inflation has increased by 10.8%, which is more than double. That makes the point accurately and compellingly that people in Wales have seen prices outstrip wages over the entire period of this Tory Government.
Glyn Davies: Does the hon. Gentleman recognise that these difficult circumstances are consequences, and almost wholly a result, of the incompetence with which the previous Government ran the economy?
Owen Smith: No, I do not recognise that for a moment. We have heard an extremely accurate and eloquent rejoinder to that endless Tory argument by my right hon. Friend the Member for Neath, who pointed out that British Government expenditure largely tracked resources for the vast majority of the Labour period in office. We saw growth in more than 36 quarters. In September 2008, when Lehman Brothers collapsed in America, we saw a banking crisis across the world. We decided as a Government that we would seek to stop that banking crisis turning into a recession in Britain. We spent money in order to shore up our banks. That is the reason for the deficit and that is what we are seeking
to deal with, but Government Members need to understand that the measures they have put in place have compounded those problems. Having inherited growth and a stable situation, they have made things worse by employing ideology and driving austerity into our economy. That is the truth.Alun Cairns: I am enjoying the hon. Gentleman’s selective history, but remind him that no Labour Administration have ever left office with unemployment lower than when they entered it. The situation was exactly the same in 2010, but let us bring this up to date to this morning and last month. Does he welcome the latest fall in unemployment? It has fallen by 12,000 in Wales, down to 7.2% of the population.
Owen Smith: Absolutely and unequivocally, Opposition Members welcome any fall in unemployment and increases in employment. [ Interruption. ] I do welcome it, clearly. I absolutely welcome it. Why would we not?
Alun Cairns: Will the hon. Member give way?
Owen Smith: Let me finish my point. I would ask that the Government are straightforward—as the Opposition will be—about the make-up of those jobs and the nature of the changes. The reality is that almost a third of the job changes are to do with shifting people who were previously categorised as public sector workers into the category of private sector workers. We have seen, particularly in further education, a huge number of people deferring retirement—the largest numbers in the history of Britain. The vast majority of the jobs that have been created are low-wage, low-hour jobs in retail, in hospitality, in cleaning and in other business services. That is the truth. If the hon. Gentleman is telling the people of Wales that there are lots of well-paid jobs like those at GE or elsewhere, I think he will find they will not believe him.
The Parliamentary Under-Secretary of State for Wales (Stephen Crabb): What the hon. Gentleman is saying is total nonsense. The vast majority of the new jobs created in the economy are full-time jobs and average wages are increasing at twice the rate of inflation in Wales. I know the Opposition do not want to believe the independent statistics, but they should start to recognise that good things are happening in Wales.
Owen Smith: The Minister repeats the economical version of the comparison between wages and prices that I thought I had killed off a minute ago. Prices have twice outstripped wages over the three years of the Tory Government. That is a plain and simple fact and neither the Minister nor any one else can contest it.
Geraint Davies: According to the Joseph Rowntree Foundation, the cost of energy in the last five years has increased by 39%, the cost of food by 24% and the cost of child care by 37%. Does my hon. Friend agree that the rate of increase in prices at a time when, until recently, wages are at a standstill, is crippling Welsh families? There is a cost of living crisis and something must be done.
Owen Smith: I entirely agree. Opposition Members have made that point straightforwardly. The Government have been selective in their picture of the economy and misleading, in my opinion, on the economics of the debate—they have not, of course, been misleading to the House. We could do with a clear understanding of what is happening in our economy.
Alun Cairns: Will the hon. Gentleman give way?
David T. C. Davies (Monmouth) (Con): Will the hon. Gentleman give way?
Owen Smith: I will in a moment, after I have made a bit more progress. The fundamental point my hon. Friend makes is that the Government’s argument completely misses any understanding of the real lives of working class and middle class people in Wales, who are finding an enormous squeeze on their wages and finding it harder to make ends meet at the end of every week.
That has not happened overnight. The reality is that, since 2004, average median wages in Britain have stagnated, but that has been compounded by the austerity of the past three years, with things getting more difficult more quickly than necessary. Average wages in Wales have decreased by £1,600 during the Tory period in office and by a higher proportion than anywhere else in Britain.
The hon. Member for Vale of Glamorgan, to whom I will give way in a moment, said that no Labour Government in history succeeded in getting unemployment down, which I think is deeply—I will not say misleading—inaccurate. If he wants an historical comparison, this will be the only Government—[ Interruption.].
Alun Cairns: On a point of order, Mr Havard. On the accusation that the hon. Member for Pontypridd has made—he questions the fact I stated and calls my statement misleading—that fact can be easily proven by official data.
The Chair: Thank you, Mr Cairns. I made a statement earlier on the need to be careful with the language we use. Everyone gets excited and has passionately held opinions, but let us be careful how we express those opinions one to another. The facts will be the facts, Mr Cairns, and doubtless there will be statistics. I do not have them now, so I cannot make any comment, but I appreciate your point. We should have civilised discussion in a proper way that represents the issues. We should not get too drawn away from that by emotive language. Let us all be careful about that.
While I am speaking, may I say that the debate is about how the autumn statement applies to Wales? Context—economic, social and otherwise—is important, but can we please start to think about how we address the issue? Thank you.
Owen Smith: Thank you, Mr Havard. I dispassionately note that it was 23 minutes before the Secretary of State mentioned any of the substantive issues in the autumn statement. Equally, I dispassionately point out that if the hon. Member for Vale of Glamorgan wants an historic comparison, here is one for him: when this Government leaves office in 2015—I sincerely hope that
they do for the good of the people of Wales—they will be the first to have seen average living standards decline over their period in office since the Franco-Prussian war in the 1870s. That is an historic analogy that the Government should be ashamed of.Chris Bryant: Is there not another problem about the autumn statement? It says absolutely nothing about house building, which is at its lowest level since the 1920s. Whereas an apprentice brickie 40 years ago would have been on £60 a year and could have bought a house for £180—three times his pay—an apprentice brickie today is on £8,000 a year, and the average house price is £180,000. That means that it is almost impossible for ordinary people to buy an ordinary home. That is what has to change in this country.
Owen Smith: It does. That is the third point I want to make today. Not only are the Government complacent about the state of our economy, they are deeply complacent and, in my view, wrong about the prescription for change to those systematic and long-running but increasingly compounded problems that we see in income inequality, access to a secure job, and people being able to live decent lives and enjoy things such as decent housing and reward at work, which previous generations have come to enjoy and expect. That is the true shame of this debate, and that is why we need to address the substantive issues, not the sort of fripperies that I suspect I am about to give way to.
Mr Newmark: On complacency, will the hon. Gentleman at least acknowledge that the Government have been trying to help the lowest paid by raising the personal tax allowance? Some 130,000 people have been taken out of tax altogether. Will he at least acknowledge that the Government are doing some good by raising the personal allowance?
Owen Smith: Yes, I acknowledge that, but myriad other things that the Government have done—my hon. Friend the Member for Rhondda mentioned increasing VAT, and I will simply cite that one example—have militated against those changes having any real benefit, particularly for the least wealthy people in Britain.
Mr David Jones: On what the hon. Member for Rhondda said about housing, I am sure that the hon. Member for Pontypridd will be aware that Persimmon Homes has decided to withdraw holdings from certain areas of the south Wales valleys. It said that the regulatory burden in Wales makes it uneconomical to build there. Does he agree with that assessment? Will he be seeking assurances from his friends in the Welsh Assembly Government about reducing the regulatory burden on house builders in Wales?
Owen Smith: No, I do not agree with that sentiment. I suspect that there are lots of other reasons why Persimmon and other house builders have decided that they cannot realise what they seem to see as an adequate profit in order to invest, as they ought to be, in the communities that support them and in the society that licenses them as companies. Those companies ought to be looking at demand, and if necessary, trimming their profits to provide houses at prices that people can afford.
Jessica Morden (Newport East) (Lab): I was contacted last week by a constituent whose son was looking to buy a house in Magor. His offer was refused, but the company rang him back the next day to say that he would be made a special offer: if he put in the full asking price, he could get the house, because the next day, all the prices on their properties were going up by £5,000 due to the Help to Buy scheme and the interest in it. Does my hon. Friend agree that developers should not be profiteering, but increasing their efforts to meet demand through the scheme?
Owen Smith: I agree. The Labour party has recently talked about markets that we think are not serving consumers, such as banking and energy. Housing is another sector in which there is far too great a concentration of power in the hands of too few companies. Ordinary people are being priced out of housing. This Government should acknowledge that and do something about it.
Mr Llwyd: The hon. Gentleman mentioned banking. Does he agree that the small and medium sector is extremely important to the Welsh economy? Time was when 90% of Welsh employment was in SMEs. I am sorry to say that the banks have not played that game very well. They closed down viable businesses because they could not be bothered to take on even minimal risk. The Government have failed to tackle the banks, because they are peopled by people who support them.
Owen Smith: I wholly agree. The Public Accounts Committee published a report not long ago saying that since the Government introduced funding for lending and other schemes designed to improve lending to small businesses, it has fallen by £2.3 billion in Britain. Far from getting on with fuelling that part of the economy that still provides so much employment, but not as much as it should, small businesses are suffering under this Tory Government, who are ostensibly the friend of small businesses.
Geraint Davies: Does my hon. Friend agree that under the funding for lending scheme, for every £100 that a bank gives to a small business it receives ten times that to do what it likes with, and it gives it to mortgages? As I said earlier, the banks are giving money at 2008 levels, and the money to small businesses is down by 30% or 40%. House prices are going up, real wages are going down because productivity is not going up, and when interest rates go up there will be a sub-prime debt disaster. That is intentional to inflate house prices for Tory voters in the south-east, and it is ruining the economy.
Owen Smith: The Secretary of State seemed to deny that current growth, which is entirely welcome, is 1.8% and not the 2.4% that he suggested, which was a projection from the International Monetary Fund yesterday. Real actual growth last year was 1.8%, not 2.4%.
Alun Cairns: Will the hon. Gentleman give way?
Owen Smith: For the last time.
Alun Cairns: As we are talking about projections of economic growth, would the hon. Gentleman prefer the projection for the UK or other parts of Europe to be part of the debate?
Owen Smith: I would obviously prefer to have what we have right now, which is some growth in our economy. I welcome that with open arms. Would that it were greater, would that it had happened at some time in the last three and a half years, and would that the growth that the Tory Government inherited from Labour been maintained. We would not then have seen the crisis in our communities and we would not have seen a 1,400% increase in food bank usage or £1,600 wiped off average wages.
Jonathan Evans: Will the hon. Gentleman give way?
Owen Smith: No, I will not. I will keep going.
The Secretary of State denied the point made by my hon. Friend the Member for Swansea West that the growth that we are seeing, welcome though it is, is largely driven by what I suspect may be unsustainable consumer spending. We have seen the savings ratio go down from 8% to 5%, and economist after economist has commented on the fact that the manufacturing and business investment contribution to that growth is negligible, and indeed negative. The real driver has been a house price bubble, house price investment and investment by consumers.
Mrs Madeleine Moon (Bridgend) (Lab): Is my hon. Friend aware of a housing problem for social landlords that the bedroom tax has created? Many social landlords do not have enough one and two-bedroom properties and are finding it difficult to let their three-bedroom properties because Welsh families are failing to have the right age children of the right sex, which is the only way in which they can become eligible for a three-bedroom property. Three-bedroom properties are going to families who would otherwise not be eligible.
Owen Smith: I can only agree with my hon. Friend. The figures provided by our capital’s council in Cardiff show that at one point last year 2,000 people were applying for a move to a one-bedroom house, no doubt as a result of the ill-judged and ill-thought-through bedroom tax. The number of available one-bedroom houses in Cardiff then was one—one house for 2,070 people. That is a measure of how ill thought through that policy has been. It is equally ill thought through for the Government to bank on a house price bubble in a consumer splurge to rescue our economy, but they have to do that because they failed so abjectly to live up to the promises they made when they came to power.
Let us be clear and remember what the Chancellor proposed in his emergency Budget in 2010 when he came to power. He said that by now growth in the British economy would be 7.7%, but the reality is that it has been 2.4% over that period. That is versus 4.4% in Germany and 6.4% in America. That is the scale of failure by this Government. They used to talk about personal debt. I remember the hon. Member for Monmouth talking at some length, even in this Committee, about
the mountain of personal debt that used to be added up with public sector net debt to highlight the trillions that we owed.What has happened to personal debt in the Tory narrative? We do not hear about that any longer. The reason is because personal debt is at record levels: £1.43 trillion is the net personal debt on households in Britain today. That is up—up!—from when Labour left office, not down. Not only have the Government failed to tackle the deficit with anything like the vigour that they said they would; they have failed to deal with the personal debt bubble that they are now compounding.
David T. C. Davies: Does the hon. Gentleman think that much more should be done to cut the deficit? Therefore, does he think that there should be much bigger cuts in public spending than there have been?
Owen Smith: No. [Hon. Members: “Oh!”] No, I do not. I think we need to see the deficit brought down but we need to see—[ Interruption. ]
The Chair: Order. Let the Minister explain—sorry, let the shadow spokesman explain.
Owen Smith: It will not be long, Mr Havard; I am measuring the curtains. Based on this performance, we will be there sooner than we imagined.
Of course, we want the deficit reduced; we have always said that. Nobody has contested that we need to get the deficit down. The question has always been whether one gets the deficit down more efficiently through growth in our economy, as we were seeing in 2010, or whether the right thing to do is to pursue a self-defeating programme of austerity, cutting down on the things that matter to working people in Wales.
Mr Hain: I commend my hon. Friend for eloquently rebutting the juvenile economics from the Government Benches. On his point about our two major trading partners—the US and Germany—the truth is that their recovery started more than three years ago. It has taken us six years to get to the point. We have lost in all of that time hundreds of billions of pounds of national wealth and income. It is a devastating failure. If the Government had continued with our policies that were promoting growth and bringing the deficit down in 2010, we would not be where we are.
Owen Smith: The US comparison is well worth making. The truth is that the United States spent money in a period when the private sector was contracting—as it has done in this country—in order to pursue a stimulus to its economy. The net result has been 6.2% growth in its economy over the period and a lesser rise in joblessness than we saw in this country in the first three years of the Tory Government. Those facts cannot be disputed.
This Government compounded the problems of the British economy with self-defeating austerity, cutting back at the very period at which the private sector was contracting. The private sector is still not investing. Private sector asset sheets are at a higher level than ever before.
Mr David Jones: Will the hon. Gentleman give way?
Owen Smith: I will give one more statistic from 2010 to the Secretary of State before I give way. It is a reminder of the utter, abject failure of this Government in economic strategy. In 2010, the Chancellor said that business investment in Britain would be at 27.2% this past year. What was it? 0.2%. Not 27.2% but 0.2%. It is forecast to be 5% next year. Business is not investing in Britain, because they have no faith in this Tory Government.
Mr Jones: Does the hon. Gentleman agree that the structural deficit that we inherited from his party was significantly worse than in either Germany or America and, indeed, was actually the worst in the whole of the G8?
Owen Smith: I will tell you what I would agree with, Mr Havard. I would agree that working families in Wales, whom we are meant to be representing and speaking for today, have endured the highest rises in energy prices anywhere in Britain. I would agree that Wales has had the largest increase in underemployment—people needing more hours than they have got to pay their bills. I would agree that the increase in measurable job insecurity has been greatest in Wales, with 50,000 people on zero-hours contracts. I would agree that the largest proportion of the increase in food banks anywhere in Britain has been in Wales, at 1,400% over the past three years. I would agree that the bedroom tax in Wales is having a bigger impact on disabled people in my community and that of the Secretary of State’s than anywhere else in Britain. I would agree that every day there is a new statistic to measure the depth of the failure of the Government.
Owen Smith: I can give the Secretary of State another statistic from today before he intervenes by pointing to how many people aged between 20 and 34 in Wales are now forced to live with their parents. It is a higher number than ever before in Britain, and the part of Britain that has seen the biggest increase in the past three years is Wales.
Mr Jones: To repeat my question, does the hon. Gentleman agree that his party presided over the greatest structural deficit in the western world? It fell to the Conservative party and its Liberal Democrat partners to fulfil the historical role that we have always taken on, which is to clear up the mess left by the Labour party.
Owen Smith: If that is the historical role of the Secretary of State’s party, the Conservatives are failing on that measure, too. By the end of the Parliament, we will have a deficit of £80 billion—£79 billion, to be precise—and public sector net debt will not be falling as a proportion of GDP. Those are the two measures that his Government said would be the arbiters of success for his party. On those measures, they have failed completely.
Geraint Davies: Does my hon. Friend agree that borrowing under this Government over three years is now more than the total cumulative borrowing of the
13-year Labour Government? We are seeing a pressure-cooker economy driven by house prices in the south-east and London, which is totally unbalancing any future growth plan for Britain. We want infrastructure spending brought forward, rather than set back, and spread more evenly, in particular into Wales, where we should for example have an extra £2 billion—our share of High Speed 2. The situation is completely unfair and unbalanced, and everything is going wrong.Owen Smith: I agree with my hon. Friend.
Stephen Crabb: I am grateful to the hon. Gentleman for giving way. He is being incredibly generous with his time.
Opposition Members today keep repeating that we have unbalanced growth somehow, but growth is being driven across all sectors of the economy. Last year, we saw production output increase by more than 3% and construction output by nearly 9%. We are seeing balanced growth throughout the economy. It is simply not true that growth is confined to housing in the south-east. They should not get away with repeating that line.
Owen Smith: I am loth to fall into endless bandying of statistics, but if the Minister continues to repeat things that do not give us the full picture of our economy, I will be obliged to provide some more statistics.
Let us look at the regional balances in our economy and be sincere about the scale of the problem that faces Wales, a peripheral economy in a Britain that is bottom heavy and south-east and London-centric. Welsh GVA as a proportion of UK GVA is about 3.4%; only the north-east is lower, at 3%, with London and the south-east on 35% of the entire GVA of Britain.
What are the Government doing to reverse that imbalance? I put it to the Minister that it is very little. Equally, all Governments—the previous Labour Government included—need to accept that we have not done enough to correct that imbalance. During our period in government, the proportion of growth enjoyed by London and the south-east, in terms of GVA per capita, was around 37% of all the growth in Britain. Under this Government, that figure has gone north of 50%. The imbalance is getting worse, not better, and in Wales, the part of Britain for which the Ministers present are responsible, it is getting worse, not better. It is macroeconomic policy, not twiddles that the Assembly might be able to do, that can change this.
Stephen Crabb: I am grateful to the shadow Minister again. There is a point of agreement here. Yes, under Labour the gap between Wales and the rest of the economy grew wider. But I encourage him to believe and look at the stats which show that job growth in Wales is faster than the UK average. Average wage growth in Wales is faster than the UK average. GVA growth in Wales is faster than that of all the devolved nations and the English regions. Wales is starting to catch up with the UK average. There is a long way to go yet but that is the path we are on.
Owen Smith: I do not dispute those numbers, but the reason for them is that we are coming from an incredibly low base and a base that has got lower under the Tories. It got lower in the 1980s and it has got lower again. There is another fundamental measure of this which is the degree of income inequality that we see in Britain.
Stephen Crabb: And that is going down too.
Chris Bryant: Is not one of the dramatic differences between Wales, run by Labour, and the rest of the country run by the Tories and the Liberal Democrats—we should not forget the Liberal Democrats—Jobs Growth Wales, which has meant that 7,748 young people in Wales have got a job and 18% of those jobs are in the private sector? Businesses that desperately want to take on more staff have been helped to do so. So it is Labour in Wales who are making the difference that the Tories are trying to boast about.
Owen Smith: Jobs Growth Wales has been four times more effective than the Work programme at getting people into work and twice as effective as the Work programme at getting people into private sector employment.
Alun Cairns: Will the hon. Gentleman give way?
Owen Smith: No, I am going to keep going. I will give way to the Secretary of State, of course.
Mr David Jones: I am happy to commend the efforts of the Welsh Government over Jobs Growth Wales.
Mr Jones: No, I am happy to do so. Every new job is welcome. Does the hon. Gentleman share my concern that the Welsh Government will not allow clients of the Work programme to enter Jobs Growth Wales initiatives? Does he agree that it is about time that they realised that the only way that we will get young people back into work is if the Work programme and Jobs Growth Wales are allied and work closely together?
Owen Smith: The reality is that Jobs Growth Wales is far more effective than the Work programme in Wales and we have all seen it in our constituencies. I presume that he has seen it in his. I accept that there is a problem about the way in which the money that is provided for Jobs Growth Wales might impact on resourcing for the Work programme. I accept that that is an issue that needs to be resolved, as is the way the two programmes work together. I equally accept that we need to ensure that the devolved Administrations work hand in glove with the Government, of whatever colour, in trying to provide jobs. Finally, I repeat, Jobs Growth Wales has been far more effective than the Work programme in getting people back into work—
Owen Smith: And therefore, I give way to my hon. Friend.
Chris Bryant: And therefore, because one of the most difficult bits of economic recovery across the whole country is long-term unemployment, which has grown dramatically, it would be a good idea if we had a jobs
guarantee that matched Jobs Growth Wales across the whole of the country for everybody who is unemployed for two years.Owen Smith: That is entirely right. Equally it would be a good idea if, as Labour proposes, we had training for people once they had been out of work for, say, six weeks as opposed to two or three years. It would be a good idea if we did something to tackle youth unemployment. We still have 47,000 young people unemployed in Wales and almost a million across the whole of the UK.
Alun Cairns: I am grateful to the hon. Gentleman for giving way on that point. Is this is a new financial commitment from the Labour party?
Owen Smith: I am not entirely sure what the hon. Gentleman is referring to. If he means the commitment in respect of providing training places and a jobs guarantee, yes, we have been making that for the last couple of years, so he needs to catch up with what the Labour party proposes. Frankly, he would do well to copy some of that. Equally, I recommend that he take a really good look at Jobs Growth Wales and the Work programme to decide which scheme he wants to sign on to in May 2015.
Mr Newmark: I have listened carefully to what the hon. Gentleman has been saying, particularly about the low-paid in Wales and throughout the United Kingdom. I acknowledge that as the economy has grown the rich have benefited more than the poor from an increase in pay. Will he support the Chancellor’s proposal to raise the minimum wage to £7?
Owen Smith: I am entirely grateful to the hon. Gentleman for acknowledging that the richest people in Britain have benefited more under the Tories than they did previously. ’Twas ever thus. Let us look back at the previous Tory Government. In 1979, the richest 1% of people in Britain controlled liquid assets of about 6% of GDP. What is the number today under this Tory Government? It is about 15%. What has happened to the assets of the richest 0.003% of people in Britain under the Tories? They have increased by £155 billion.
Mr David Jones: And the minimum wage?
Owen Smith: I am going to get to the minimum wage.
Mr Newmark: Will the hon. Gentleman give way?
Guto Bebb (Aberconwy) (Con): Will the hon. Gentleman give way?
Owen Smith: On the minimum wage?
Guto Bebb: No, on the ramble before the minimum wage.
Owen Smith: I shall repeat my point, in case the hon. Gentleman thought I was rambling. Under the Tories the richest always benefit. Under the previous Tory Government a massive amount of money went to the richest, and under the current Tory Government £155 billion have gone to the richest 0.003%. The Tories in Wales
have proposed to give the richest further benefits with a further tax cut. Laughably, that is Tory ideology for driving our economy.Guto Bebb: And the minimum wage?
Owen Smith: I will get to the minimum wage. [ Interruption. ] The Secretary of State is chuntering away. The supreme irony—[ Interruption. ]
The Chair: Order. Mr Smith will answer the question. [Hon. Members: “Hooray!”] And we will listen to it.
Owen Smith: The supreme irony of a Tory party that opposed the introduction of a minimum wage—
Mr Newmark: Answer the question.
Owen Smith: Does the Labour party think that the minimum wage should go up? Yes, absolutely. I think that the minimum wage should rise. We should ask the Low Pay Commission to determine what the precise amount should be, but the minimum wage should go up. We have been calling for that endlessly for the past three years. Perhaps it should be £7 or higher, or perhaps the Low Pay Commission should pursue a living wage. I think that should be the direction of travel it undertakes. Nobody can suggest that the Labour party will do anything other than provide a greater proportion of our national wealth to working people. It is risible to suggest that Labour would oppose a rise in the minimum wage. However, equally risible is the tragic attempt of a Tory party scrabbling around for an economic and political strategy to set cheap traps for the Labour party. That is what it is doing on the issue of the minimum wage.
Mr Newmark: On a point of order, Mr Havard.
Hon. Members: It is not a point of order.
Owen Smith: People have seen through it.
Mr Newmark: On a point of order, Mr Havard. When one asks a straightforward question, would not a simple “yes” be better than a long, rambling answer?
The Chair: Order. Let me stop you there. It is not for me to give you the answers. I could give you an answer, but it is for Mr Smith to be responsible for the answers that he gives. I hope that fairly soon we will give the Plaid Cymru spokesman an opportunity to speak.
Owen Smith: I am grateful, Mr Havard. For the record, I gave the hon. Gentleman an answer. Perhaps he can read it later. Yes, we are in favour of increasing the minimum wage.
Owen Smith: We should allow the Low Pay Commission to determine what it should be. That is why we have a Low Pay Commission. I hope it will conclude that it should be at least £7—in fact, I hope it thinks that we should go for a living wage.
The crucial issue is how much of our wealth is going to the richest people in Britain. The answer is more and more and that the Tory party is compounding the
income inequalities that are at the heart of some of the crisis that we face across our economy. Unfortunately, we see in Wales that the Tory party not only has failed to learn the lesson of the 50p tax cut debacle, but wishes now to afford an even greater of our national wealth to the wealthiest people.Mr Newmark: Will the hon. Gentleman give way?
Owen Smith: No, I am coming to a conclusion. The reality is that we have 89,000 top-rate taxpayers in Wales from a total population of taxpayers of 1.38 million. The policy of the Tory party, led in Wales by its leader there, is to make a cut to that top rate of tax. They have all gone silent on the Government Benches, because they cannot justify that.
Mr Newmark: Will the hon. Gentleman give way?
Owen Smith: I will give way to the hon. Gentleman. I am not sure whether he knows what his party’s policy is in Wales, but it is, just for the record, to give a tax cut—
Mr Newmark: I am just trying to be helpful.
The Chair: It is for you to decide whether to give way, Mr Smith.
Mr Newmark: The hon. Gentleman said we were silent. I would like to—
The Chair: Are you giving way, Mr Smith?
Owen Smith: No. The hon. Member for Braintree can respond on whether he thinks it is sensible that in a country of 1.38 million taxpayers, his party proposes giving a further tax cut to the 89,000 wealthiest people.
Guto Bebb: Will the hon. Gentleman give way?
Mr Newmark: Will the hon. Gentleman give way?
Owen Smith: The amusing thing is that the rest of the country is ignoring that, because they happen to know that the Tory party in Wales is an irrelevance, but I would be very grateful if either of the hon. Gentlemen could tell me why giving a tax cut to the wealthiest 90,000, and nothing to 1.3 million others, is justified.
Mr Newmark: I remind the hon. Gentleman that the Government have been helping the most worst-off by raising the personal tax allowance, which has enabled 130,000 people in Wales to be taken out of tax altogether, and I remind him that his party removed the 10p tax rate. He should not forget that, and nor should the people of Wales.
Owen Smith: There used to be something called the one nation Tory party, which used to speak for people right across Britain and understand that the duty of Government in Westminster was to try to deliver a
fairer, just and equitable distribution of resources across this country. We no longer have a one nation Tory party. We have a Tory party that stands up for the wealthy and for corporate vested interests, and fails to invest in the people who deserve its support.Jonathan Evans: Will the hon. Gentleman give way?
Owen Smith: I will conclude with an anecdote. I went to Milford Haven last week to visit a food bank in the constituency of the Under-Secretary of State for Wales, the hon. Member for Preseli Pembrokeshire. While I was there, I heard an extraordinary story about the volume of people who were using the food bank. The increase in the number of people using it over the past two years is eye-watering. The worst story I heard—it happened while I was there—was of a young man attending the local secondary school who had been brought in by his teacher, I think it was, to get a pair of shoes, because the family could no longer afford to supply him with shoes. There are three food banks in my constituency that provide similar services, and that shames me. That that is happening in Wales or anywhere in Britain should be a matter of shame for us all. A one nation Tory party would understand that and do something about it. It will not, so a one nation Labour party will need to.
10.59 am
Hywel Williams: I am delighted to be able to address the Committee at last, and to serve under your chairmanship, Mr Havard. The UK economy is returning to growth. Even the International Monetary Fund says so: it confidently avers that there will be growth of 2.4% this year, up from the growth of 1.9% that it foresaw with equal confidence last October.
I claim no particular expertise in economics, having gleefully abandoned the study that Carlyle called
“dreary, desolate and, indeed, quite abject and distressing…what we might call, by way of eminence, the dismal science”
in my second year at university. However, even I understand that economies eventually return to growth of sorts. To think otherwise, Jeremiah-like, would be to share the self-delusion of a former Chancellor, who, with even greater and growing confidence, proclaimed an end to boom and bust—that is, until the bust. To deny the possibility of an eventual return to growth of sorts would be equally delusional.
I share, however, the layman’s natural suspicion of obvious, confident assurances of future prosperity. As I made clear to the Secretary of State, the experience of my constituents in Arfon has been somewhat different. I understand entirely that Clwyd West might be a haven of prosperity, but Arfon is not.
Let us look at some of the statistics on growth. In June 2010, the Office for Budget Responsibility projected that the UK economy, after growing by 1.2% in 2010, would expand by 2.3% in 2011 and 2.8% in 2012. That has not been the case. Mind you, the IMF forecast in July 2012 that UK growth would be down by more than that of any other developed nation, and that it would all but evaporate in 2012, with a rise in gross domestic product of about 0.2%, compared with its previous forecast of 0.8%.
In June 2010, the OBR was estimating growth of 2.9% in 2013 and 2.7% in both 2014 and 2015—I am sorry to burden the Committee with all these statistics—but the UK economy grew in 2010 by 1.7%, slowing to 1.1% in 2011 and 0.3% in 2012. The growth rate for 2012-13 was put at 0.1%, and then revised by the Office for National Statistics last month by 0.2%. Some of those statistics have already been quoted this morning, but, as I have said, they do not always match the experience of some of our constituents.
Jonathan Evans: Has the hon. Gentleman read the OBR’s commentary on why, in its judgment, the forecast for 2010 proved incorrect? It said that the changes in the forecasts were due to higher-than-expected commodity prices and the eurozone crisis, and specifically said that it did not think it was anything to do with the Government’s austerity programme.
Hywel Williams: The hon. Gentleman makes a very good point. My point is that however one looks at the percentages, the experience of many of our constituents is somewhat different, but I accept what he says entirely. I defer to the economic experts in both their measurements and their predictions, but they are variable.
Some coalition Members are cock-a-hoop, claiming that they were right all along about austerity. Other people—including some Government Members, but mainly people from elsewhere—say that growth has returned despite austerity, rather than because of it. They point to the fall in savings—people are using their nest eggs—and say that we are facing a consumer-led bubble. Whether that is true is another matter, but the perception is that people are having to dip into their savings to meet everyday costs. That is the experience of some of my constituents. Those savings will burn out eventually, perhaps even sooner than the feel-good factor that has come with the Government-engineered jump in house prices.
It has already been pointed out that growth has been unevenly distributed, although I accept the point made by the Under-Secretary of State for Wales that there has been varied growth across certain sectors. In Wales, as ever, we are speculating endlessly on how equitably that growth will be shared, and the answer is becoming clearer every day: growth is strong in London, the south-east, and a few outposts elsewhere. As ever, Wales lags far behind. On Monday, the Financial Times ran yet another story about the chasm between London and the rest of the UK. We have all seen that this time the recovery is likely to widen the Welsh gap.
Jonathan Evans: Much has been made of the growth in London and the south-east, but the next area, in terms of growth, according to the statistics, is Wales. That is a new situation. Allowing for the fact that Wales starts very well behind, it is placed third behind London and the south-east for growth.
Hywel Williams: The hon. Gentleman foresees the point that I was about to make: we start from a very low base. I will make that point later, when I refer to the employment and unemployment statistics, the economic inactivity statistics and others.
As I was saying, the Financial Times ran a story noting that the recovery is likely to widen the gap between London and the south-east and the nations and regions. As for the increasing gap between the south-east and Wales—and other parts of the UK, not least the north-east of England—that story could have been written at any time in the last 16 years or so.
Much of the UK economy’s return to growth is based on ever-rising personal debt, credit and inflated house prices, primarily in London and the south-east. Despite the Government’s proclaimed good intentions—they wanted to rebalance the economy just two short years ago—they have resolutely failed to do so. They have, I am afraid, returned to a growth-at-any-cost strategy—the strategy which, of course, failed so spectacularly in the past. It is a return to a new-ish British disease of basing growth on personal credit and inflated assets, and risks yet another housing crash.
The effect on the Government finances of the failure of growth is quite clear. Targets for reducing the deficit have been pushed ever further into the future, with promises of even greater cuts to social security affecting some of the most vulnerable people in society. That is particularly pertinent in Wales. However, it must be a greater concern to many of us that the Labour party has signed up to the Tory and Lib Dem spending plans. I suppose that it has little choice, but it certainly dismays some people in Wales. They see that there is a race for votes in the mainly marginal seats in England, and that bodes ill for the people of Wales. They will suffer ever harsher cuts to public services and social security as those spending plans are implemented. At the same time, our private sector suffers from low demand and low investment.
Plaid Cymru has always acknowledged that the deficit and debt have to be tackled, but we have always advocated a longer-term reduction strategy, focused on stimulating growth, rather than relying mainly on cuts. Of course, there are some cuts that we would be very glad to see—£100 billion off the lifetime of Trident springs to mind very easily, as does tackling the £35 billion that continue to go astray each year through tax avoidance and evasion. By the way, this £35 billion is a conservative estimate of the loss to Her Majesty’s Revenue and Customs. We would also like the introduction of a treth Twm Sion Cati, as we call it—a Robin Hood tax on financial trading—to bring in an estimated £20 billion.
Employment in Wales is improving, as Government Members have said. I have to say, much of that improvement is due to part-time work, and much of it is insecure. The number of long-term young unemployed in Wales has quadrupled.
Geraint Davies: Does the hon. Gentleman agree that to cut the deficit, there needs to be a balance between savings and growth? On growth, does he share my massive concern that Unilever has added its name to those of Ford, Nissan, Airbus and others and said that it will leave Britain if Britain leaves the EU? In Wales, we have 150,000 jobs dependent on EU trade. Does he share my concern about the Tories’ reckless promise to hold a referendum, which is making all inward investors second-guess whether we will be in Europe at all?
Hywel Williams: I share the hon. Gentleman’s position on Europe, I think. If we have a referendum, I am not sure that the outcome that the polls predict now is the
same as it would be if people were actually staring down the barrel of a gun. They might see things somewhat differently, but that is for the future.Pay for Welsh workers fell by 7.3% between 2007 and 2012—a period in which both Labour and the Conservatives were in government. The TUC provided those statistics. The Secretary of State said that there has been growth in earnings of 4.4%, but I am not sure whether I heard him tell the Committee what period that was over. As I said earlier, we are starting from a low base.
I said that I had no expertise in economics, and I would be grateful, as would other hon. Members, for full Welsh statistics. One problem is that many of the statistics are for the UK or England and Wales; they are infrequently Wales-only. They are often late as well. Today, however, we have had an inkling of what is in the labour force survey for Wales. The figures are out on Friday, but are available this morning. I will enlighten the House a little with them, because they are interesting, and so that we understand what is happening. I will make one predicable Plaid Cymru point at the end.
Employment in Wales over the past year for 16 to 64-year-olds is up by 2.5% to 71.1%. It is 72% in the UK—a full percentage point higher. Unemployment is 7.2% in Wales, which is down 1.2% over the year, but in the UK, the figure is 7.1%—0.1% lower. Economic inactivity for 16 to 64-year-olds in Wales is, again, down at 23.2%—a point made by Government Members—but it is 22.2% in the UK, which, again, is a full percentage point lower. Lastly, the claimant count in Wales is 4.9%—down 0.9%—but 3.7% in the UK, which is down an equal 0.9%. That rate for Wales and the UK is identical.
I promised a Plaid Cymru point at the end. The point about all those statistics is that the rates are worse in every way for Wales. Differences in rates of 0.1% or even one full percentage point might not seem a great deal to some people, but they show the consistent experience of our constituents, and things have been that way for a very long time.
Jonathan Evans: The hon. Gentleman ought to cheer up a bit. Although there are gaps, they are much smaller than they were in previous years. On economic inactivity and unemployment, the gap compared with the rest of the country is narrowing.
Hywel Williams: I take that point and sincerely hope, irrespective of our political differences, that that continues, but I have my suspicions and doubts.
Mr Llwyd: Probably the biggest challenge we have in Wales is ensuring that wages go up to somewhere near the British average. For example, in the constituency of the hon. Member for Aberconwy, the wage levels are low; that is similar to what is happening in my constituency. One challenge for all of us is to ensure not only good employment, but that it pays well, so that our young people can stay in Wales, if they wish to, and set up home.
Hywel Williams: I agree entirely. We need high-quality, well-trained and well-paid jobs in Wales. Sadly, that is not the case. The point about quality has already been
made, so I will not repeat it in detail, but new jobs in particular are characterised by under-employment and uncertainty.There is also uncertainty in the changes to conditions. I came across a case the other day of someone who works for a personal, home help-type service. The company is now rolling holiday pay, sickness pay and travel into the hourly rate. The hourly rate looks attractive—it is something like £9.50—but there will be no holiday pay, and people working in rural areas to provide services to elderly people will not get paid for any travel. If someone is working in a town, a city or even a village, that is all fine and good, but if they are travelling 15 to 20 miles to provide home help, they will be paid no differently from the person who works within the town. Such wheezes are going on continually, unfortunately. The point has been made, but it is serious: the quality of jobs leaves much to be desired.
If we look at business confidence, investment and lending, the UK is one of the worst performers—it is 159th out of 173 in the world in terms of investment as a share of GDP. Plaid Cymru advocates a business and public development bank—a real bank of Wales—to lend to businesses and support local industries, particularly small and medium-sized enterprises.
Guto Bebb: The hon. Gentleman’s comment about a bank for Wales is interesting. Is that indicative of the fact that Plaid Cymru has lost confidence in Finance Wales?
Hywel Williams: We want to establish a bank for Wales that would be a consistent and certain source of money for SMEs. I will give an example of the current situation. Recently, one of my constituents obtained finance from a bank—not from Finance Wales. There were two people involved in a viable building project, and they invested £120,000 apiece, raiding their own savings and one of them remortgaging his house. As is inevitable with building projects, there were delays, and the bank insisted on pulling the plug and getting its money back. The loan was a small proportion of the total value of the project, but the bank insisted that the project was sold on. The people who bought it eventually completed the work and made huge profits approaching £1 million. My constituent lost £120,000 because long-term, secure finance was just not available from a bank. She has moved house because her home was threatened under the terms of the loan.
Mr David Jones: I am pleased to hear the hon. Gentleman talking about the importance of supporting SMEs in Wales. Does he agree that large-scale infrastructure projects in Wales, such as at Wylfa and the prison in Wrexham, have brought enormous opportunities to Welsh SMEs? Does he support those developments?
Hywel Williams: The right hon. Gentleman knows full well our position, but I will rehearse it. If the Wylfa project goes ahead, which it probably will, we are keen that local businesses should be able to take full advantage, although we have our concerns. I hope I am not straying too far from the topic, Mr Havard, but I am particularly concerned about waste at Wylfa, the finance for dealing with it and its long-term security. That is where I come from on that issue.
The right hon. Gentleman will know that I campaigned vigorously, alongside him and my right hon. Friend the Member for Dwyfor Meirionnydd, for a prison for Caernarfon. Alas, that idea met an untimely end because of fears about pollution from asbestos, and its removal. By the way, I thought that some of the figures for that were—
Hywel Williams: I am grateful to my right hon. Friend for such a choice term; they were exotic.
I share the fears of many people involved in the criminal justice system that the prison in Wrexham will be just too big. My right hon. Friend has visited the United States recently and tells me that very large prisons of that type are now being closed because they just do not work. Perhaps that, too, is a debate for another day, but that is my view.
We are in favour of local procurement wherever possible. My own local authority, Gwynedd, has enabled local business people and local contractors to group together in consortia so that they can bid at least for chunks of very large projects. I commend that way of doing things to other local authorities in Wales. At least the one-man bands and the small partnerships are then not so disadvantaged by having to compete with huge companies, often from England, that are hungry for contracts and will go more than the extra mile to secure contracts in Wales just to keep going—just to kick the can down the road, as they say.
Guto Bebb: I welcome the comments in relation to local purchasing. That is indeed an important component of economic development in an area such as north-west Wales. Therefore, could the hon. Gentleman ensure that officers at Gwynedd council have words with the university of Bangor, which recently decided to let significant contracts for new student accommodation to three companies from across the border?
Hywel Williams: Of course I agree with the hon. Gentleman. Perhaps Gwynedd could also have a word with Anglesey county council—again, I hope that I am not straying too far. For the school meals that Gwynedd council provides, 70% of the goods come from local suppliers. Ynys Môn county council lets the contract to a company from Essex and apparently it is struggling at the moment. In an agricultural county such as Ynys Môn, Môn Mam Cymru, the breadbasket of Wales,
30% of the goods going into school meals comes from the local area. Presumably the 70% comes from far away, perhaps even from Essex.I want to speak briefly about the bedroom tax. It has been mentioned. I did not intend to mention it this morning, but I had a very interesting meeting the other day with an organisation that promotes the swapping of public sector housing. It calls itself a dating service or dating database for swaps. The Government contend that there are large numbers of people in very large houses who want to move—presumably spurred on by the bedroom tax—and that there are equally large numbers of people in very small houses. We know that there is huge overcrowding.
In Gwynedd, 1,400 people are subject to removal of the spare room subsidy, or bedroom tax as I prefer to call it. According to the agency that I mentioned, 200 people have signed up. Gwynedd council has signed up to the scheme—it is a willing partner—but only 200 tenants have signed up, and of those how many have actually moved? The answer is 20. Fourteen hundred and 20 are the figures that one should bear in mind.
Let me return to the point that I was making about the economy. The Plaid Cymru group, our colleagues in the Assembly, have put forward a comprehensive package of proposals aimed at boosting the Welsh economy. They include the reduction of business rates and ensuring that public procurement is tailored towards home-grown companies, as I said a moment ago.
We also have a policy of reducing VAT. Much has been said this morning about personal income tax, but reducing value added tax in labour-intensive industries, such as tourism and construction, would be a substantial and quick boost to the Welsh economy. That has been allowed for since 2009. I asked the previous Labour Administration whether they would cut VAT on labour-intensive industries because of the employment effect and because putting money into construction and tourism is a very quick and effective boost to the economy—it is a kick in the pants, almost, to the economy. The previous Labour Government were not interested, although I understand that, up to now, 14 members of the EU have implemented such VAT cuts, mainly in tourism and construction but also in some other fields.
I will make this plea to the Secretary of State for Wales while he is here. Will he give consideration to this matter and also take it up with his colleagues?
11.25 am
The Chair adjourned the Committee without Question put (Standing Order No. 88).
Adjourned till this day at Two o’clock.