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4.5 pm

The Parliamentary Under-Secretary of State for Social Security (Mr. Hugh Bayley): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

Every right hon. and hon. Member will have been shocked by the devastating announcement made by Corus last week. The company has made a short-term decision that is bad for Wales and I believe that it will look back on it and regret it. Our steel industry has achieved magnificent productivity gains over the past 20 years, averaging 10 per cent. a year. We have the greatest output per employee in Europe: 571 tonnes per man, compared with 543 tonnes in Germany and 534 tonnes in France.

There is strong evidence of the underlying strength of the economy. Employment grew by 239,000 last year, and, as my hon. Friend the Member for Newport, West (Mr. Flynn) pointed out, it grew in Wales, too. Manufacturing output rose by 0.7 per cent. and manufacturing exports, despite a high pound, grew by 7 per cent. Many other companies recognise that underlying strength in the economy. In the past two

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months, many companies have announced important investments in Wales, including Wireless Systems International, which is investing to create 264 new jobs at a high-tech telecommunications project in Cwmbran, and Ford, which announced 500 new jobs at Bridgend today.

The Government urge Corus to reconsider its decision. The company should be working with the trade unions, the National Assembly for Wales and the Government. The Secretary of State for Wales had meetings in Cardiff today with the First Minister and the Finance Minister of the Assembly, and he will also have meetings with Cabinet colleagues today, including the Secretary of State for Trade and Industry and the Secretary of State for Education and Employment. At this moment, he is having a meeting with the Prime Minister.

Mr. Alun Michael (Cardiff, South and Penarth): Would my hon. Friend care to contrast the behaviour of Corus with that of Ford when jobs at Bridgend were threatened? Over a considerable period, the management of Ford in the UK--right up to Ian McAllister--and the local trade unions at Bridgend worked closely with Ministers, particularly with me when I was Secretary of State for Wales. The battle was taken to the management, and the door was open for negotiations as far away as Detroit. Is it not sad that Corus will not take such a positive approach and work with us on such difficult issues in these difficult times?

Mr. Bayley: My right hon. Friend is absolutely right and his experience gives real weight to his comments. It is in the interest of Wales, of the work force, of the Government and of the company for Corus to work with the Government to look for ways forward in circumstances such as these.

Mr. Ieuan Wyn Jones (Ynys Mon): Does the Minister accept that if Corus had wanted to announce in Holland the kind of redundancies that it has just announced in Wales, it would not have been able to do so because the Dutch Government have adopted the EU regulation on consultation between trade unions, the Government and other bodies? Will the Minister give us an assurance that the Government will reconsider the introduction of those regulations? We do not want any company to treat Welsh workers in this way again.

Mr. Bayley: I do not accept that, because the redundancy package in the Netherlands is broadly the same as the severance arrangements here in the United Kingdom. Furthermore, there has been dialogue between the Government and the company. We have raised the question of a package of measures, including assistance with business rates, environmental projects--[Interruption.] The hon. Gentleman shakes his head, which shows that he is not interested in tackling the real issues. It is right that the Government made those offers to the company and it is unfortunate that the company did not respond, but we still want to work with Corus. The Government urge it to think again.

Mr. Wigley: Will the Minister give way?

Mr. Bayley: No, I must make progress.

Across the board, the Government are making progress in tackling poverty and social exclusion. The Corus announcement is a painful reminder that obstacles will

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continue to get in our way and that the Government have more to do, but let us consider the facts. When the Government came to power three and a half years ago, the problems of poverty and social exclusion in Wales were stark and the gap between rich and poor had been widening for two decades. One child in three in Wales lived in a low-income household; one child in five lived in a household in which no adult was in work; about one pensioner in four in Wales lived in a low-income household; and the poorest communities in Wales had high unemployment, high levels of poor housing and high crime. After years of neglect by the Conservatives, whole generations and whole communities in Wales had been written off.

Those problems are deep and complex, interlinked and inter-generational. They span people's lives, from childhood through working age to retirement. New solutions were desperately needed to challenge years of Conservative complacency and inaction. My right hon. Friend the Secretary of State for Social Security announced in February 1999 that we would publish not a vague wish list, but an annual report setting out the action that we were taking to tackle poverty, backed up by indicators against which we would be judged.

In March 1999, the Prime Minister put tackling child poverty right at the heart of that strategy with his historic pledge to halve child poverty in 10 years and eradicate it in 20. Alongside that, we set goals to end long-term unemployment, to help adults into work when they can work--while providing more support for those who cannot work--to ensure that pensioners live secure, active and fulfilling lives and to ensure that we rebuild communities crippled by years of inaction by the previous Government.

Those goals are challenging, not easy, and cannot be achieved overnight. There is no simple way to brush aside two decades of high unemployment and growing poverty. As the Corus announcement shows, there will be setbacks even when progress is being made, but the Government remain determined to make a difference, and we are making a difference because we are following policies that make a difference. Our first annual report on poverty, which was published in September 1999, examined the problems that we faced and outlined what we would do to overcome them. In September last year, we published our second annual report, which provided a detailed account of the actions that we have taken in Wales and elsewhere since we announced our strategy in September 1999.

The motion stresses the importance of benefit levels and take-up. Those are indeed important, but the motion ignores what the Government have done to improve benefits in real terms for those who cannot work and what we have done and are doing to promote take-up. We introduced a minimum income guarantee for pensioners in 1999 to target more help on those who need it most. Last year, we launched the most comprehensive take-up campaign ever run to help more pensioners to claim the minimum income guarantee, but poverty and exclusion are much wider ranging and more complex than just a lack of cash. Therefore, the Government strategy set out in the "Opportunity for All" reports focuses not simply on low income, but on access to education and quality in child care, housing and health.

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Instead of focusing only on benefits and income, our strategy is to address the causes of poverty as well as the symptoms and to tackle in the round the problems that can drag people down into poverty and social exclusion at different stages in their lives.

Mr. Edwards: Will my hon. Friend confirm that the success of the Government's welfare-to-work policies has led in part to a reduction in expenditure on social security? Will he acknowledge the concerns of citizens advice bureaux and other advice agencies and the recommendation in paragraph 69 of the Select Committee's social exclusion report that, as a result of those savings, the Government could centrally fund independent advice agencies like the citizens advice bureaux and thus improve the take-up of benefits and other services?

Mr. Bayley: Let me pay tribute to my hon. Friend, and to my hon. Friend the Member for Clwyd, South (Mr. Jones) and all the members of his Committee, for producing an important piece of work. The Government are considering it and will respond in the normal way to the report and its recommendations. The fundamental point that my hon. Friend raises is absolutely right: we promised in our manifesto to reduce spending on the costs of economic failure and instead to make pathways back into work for people who could work. We have done so, and unemployment is now at its lowest level for two decades. That has released resources that we are able to spend elsewhere, not least on making substantial increases in pensions, which will be introduced in April this year.

Children are a special priority in our poverty strategy, because they have only one opportunity to get a good start in life. That is why £11 million a year has been spent on sure start in Wales, on programmes approved by the Assembly and delivered by a partnership of local authorities, health services and voluntary organisations, to provide better services in the crucial early years of a child's life. We are investing in education, too, to give children the tools they need to succeed in the 21st century. An extra £12 billion was announced in the spending review for education and training in the UK over the next three years.

If we are to raise children out of poverty we need to raise family incomes, and we are doing that. Measures in the past four Budgets will lift some 50,000 children out of poverty in Wales. Those measures include a significant increase in child benefit--now £15 a week for the eldest child and £10 a week for other children. Plaid Cymru, in its manifesto at the last election, promised to link child benefit with the cost of living. We have linked child benefit with the cost of living and done more--26 per cent. more--than that. There has been a 26 per cent. real-terms rise in child benefit since 1997. If hon. Members want to do something to relieve child poverty, here is something that the Government are doing. Some 650,000 children in 360,000 families in Wales gain from those increases.

The introduction of the working families tax credit and the minimum wage together guarantee families with children, with one person in full-time work, a minimum income of £208 a week, which rises to £214 a week in April of this year. Some 67,000 families in Wales are benefiting from that. We also increased the sure start maternity grant from £200 to £300 in September last year.

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Thus all families with children in Wales will be better off by on average £15 a week. A couple on income support with two children under the age of 11 will be better off by nearly £30 a week compared with 1997. Families on the working families tax credit receive on average £30 a week more than they received on family credit, which it replaced. More than 30,000 lone parents in Wales receive benefit from the new working families tax credit.

However, we can and should do more for parents and their children by encouraging parents into work, which we are doing through the new deals and the ONE service. Children are benefiting from being in families with higher incomes and from seeing at first hand that work is the route out of poverty and the way to a better life. The new deal for young people has helped some 35,000 young people in Wales so far. Half of those have found work, while a further 11,000 have entered training or education.

Another barrier to work is the difficulty in getting affordable child care. That is why we have introduced the child care tax credit, which is now claimed by 5,600 families in Wales. The average gain from the child care tax credit is about £32 a week, compared with £22 a week with the family credit.

The Tories used to say that they wanted wealth to cascade down the generations. It always has, but poverty is inherited, too. If people are poor, their children grow up in poverty and are more likely to be in poverty in adult life. We want to break that cycle of deprivation. We are helping people of working age to rise out of poverty and social exclusion.

The system that we inherited was designed 50 years ago and is no longer up to the job. Our goal is clear: we want a modern, active welfare state that creates opportunities and incentives, and is based on the fundamental principle of work for those who can work and security for those who cannot. We are making progress towards that goal. Employment is up by more than 1 million since the election. More people are in work than ever before. Since 1997, we have more than halved the number of long-term unemployed in Wales: it went down from 27,000 in May 1997 to around 12,000 in May 2000. We have reduced youth unemployment, which went down from 22,000 to about 15,000 in the same period. We have also cut the overall level of unemployment in Wales from 6.5 per cent. to 4.6 per cent. We are investing £89 million in the ONE service to bring together benefit and employment services in 12 pilot areas, including south-east Gwent, which will help the unemployed to work.

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