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7.49 pm

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy): Last Thursday, that famous Welsh organ of truth, the Western Mail, quoted the Chancellor as saying:

Having read that, Plaid Cymru Members read through the Budget's detail expecting to see something about a regional economic policy. Unfortunately, we saw nothing about that. I have yet to see anything in the Budget that will cheer Wales's main industries--agriculture and manufacturing. I have no doubt that Britain's economy

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is doing well, as the right hon. and learned Member for Rushcliffe (Mr. Clarke) said earlier in a very interesting speech. However, that is all the more reason for formulating and implementing a targeted regional economic policy.

The hon. Member for Watford (Ms Ward) described the situation in Hertfordshire, where I am sure various economic levers will have to be operated. None the less, in relation to the United Kingdom economy overall, Wales's economy is undeniably slipping way behind. Since new Labour took office, Wales's gross domestic product has decreased by 3 per cent. relative to that of the UK generally. Although Wales's GDP has recently grown by 0.3 per cent., compared with the overall UK GDP it has been decreasing. As for the Chancellor's huge surplus of some £23 billion, surely some of it could be used to assist the less prosperous parts of the United Kingdom, including Wales.

The Budget was a missed opportunity for Wales, which has yet to receive additional funding and full match funding for objective 1. However, before it sounds like I am whingeing too much, I should say that some of the Budget measures are most welcome, such as simplification of the VAT and tax regime for small businesses. Additionally, some red tape was cut. Although more could have been done, it will help.

Nevertheless, in recent years manufacturing industry in Wales has been hit by a series of crises. Plaid Cymru Members believe that Wales is a strong and vibrant country with plenty of talent and some of the most hard-working communities in Europe. Our nation's strengths should be appreciated and used to their full potential. There is no reason why we in Wales should not share in the type of prosperity that is apparent in the south-east of England. Although I say good luck to that region, the fact is that, despite all the efforts that are being made, Wales is not as prosperous.

I do not think that the tax incentives announced by the Chancellor to regenerate coal-mining and steel areas will help places such as Ebbw Vale and Llanwern. Although he said that he will abolish stamp duty, that will not help places such as Ebbw Vale as they do not have the capital to benefit from it.

The Chancellor also announced tax relief for cleaning up contaminated land. Such measures make me think of Corus, which has been totally oblivious to Wales's cries to reconsider ending the steel industry in Wales. A package should have been offered to Corus early in the proceedings. It is still not clear whether such a package was offered. Nevertheless, the alarm bells should have gone off 18 months ago, when it was first learned that Corus was losing £1 billion annually.

Plaid Cymru Members call on the Government to find a way of regenerating steel communities, not only in Wales but across the border. We estimate that the measures necessary to regenerate those communities would cost about £200 million. That sum is not wildly extravagant or imprudent when one considers the damage that would be done to those communities by the loss of their steel jobs. It also accords with the objective 1 benchmark of about £55,000 per new job in deprived areas.

New Labour is always keen to cite figures showing how many new jobs have been created, and--new deal or not--there are some good success stories. New jobs have

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been created, and it would be boorish of me to say that that is not a good thing. Of course it is good. However, although job creation is essential, job retention needs to be emphasised equally. In the past three years, 20,000 manufacturing jobs have been lost in Wales. Measures such as cutting employers' national insurance contributions in order to make more capital available to employers to secure jobs could act as an incentive for employers to recruit more employees.

Plaid Cymru Members have also said that incentives such as corporation tax cuts should be considered as a means of increasing investment. Although we have long been making such proposals, hitherto, the Chancellor has not accepted them.

Other hon. Members have mentioned the rural economy, which is struggling under new Labour. The agriculture sector is vital to Wales's economic development and to the sustainability of many of our rural communities. Agriculture is in the grip of the worst crisis for generations. It has been hit by disasters such as BSE--which clearly is nothing to do with the Government--and, more recently, by foot and mouth, which is also nothing to do with the Government. Nevertheless, agriculture is on its knees. It has had to battle against an unfavourable exchange rate, and it has been unable to export stock. It has also not been receiving the full value of its subsidies because of the pound-euro exchange rate.

We should not lose sight of the fact that, even before the foot and mouth crisis, 73 Welsh farming jobs were being lost each week. That is the equivalent of a major factory closing each year. Average income from farming activity in the UK was recently assessed at £4,500. The average for upland farmers--80 per cent. of whom are in Wales--was even worse, at £3,800. I dread to see the figures once the full impact of the foot and mouth outbreak is felt.

Let me make it clear that the Chancellor's announcement on agrimonetary compensation has nothing to do with the foot and mouth crisis, but is an attempt to bail out the industry after last year's losses. I call on Ministers to rethink compensation, as there must be a properly funded package. The other day, I read with some pleasure that the Agriculture Minister has said that there will be proper compensation and that the Government will consider consequential losses, outside the immediate boundaries of agriculture.

We have to realise that agriculture is not an isolated industry but encompasses the whole rural economy. Its problems affect other rural businesses and can trigger a drastic downturn in the whole rural economy. I therefore hope that Ministers will consider proper and consequential compensation both for farmers and for others who operate rural businesses.

The tourist industry, which is substantial across the United Kingdom, has probably become Wales's largest industry. It, too, has been hit by the crisis. I ask the Chancellor and his colleagues to consider and deal with that aspect of the crisis. Various hotels and villages in my constituency depend on tourism. A renowned Plas y Brenin Outward Bound centre at Capel Curig has just laid off 26 workers. That is a pretty bitter blow in a rural area. I am not blaming the Government for that; I am simply saying, "This is a crisis. Can you please act accordingly?" I hope that Ministers will consider the matter, and act urgently and in the short term to put it right.

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The failure to guarantee the objective 1 match funding to which Wales is entitled is a glaring omission in the Budget. The Government say that obtaining objective 1 funding was their success, but the credit belongs to all parties. However, for the sake of argument, let us say that Labour obtained the funding. Why are the Government being so stubborn in agreeing to provide the additional funding and match funding?

The Government's delay means that the £600 million needed for match funding must now be taken out of the block grant, which is the money already set aside for running ordinary public services in Wales. For example, robbing Peter to pay Paul means that health spending in Wales will have to be reduced. The health problem in Wales is already much more serious, across the board, than it is in England. I shall not bore the House with statistics, but it is an established fact that people in Wales, by and large, are less healthy than our friends in England. That is a matter of great concern, and it derives from bad housing, socio-economic problems, the types of industry that exist in Wales, and so on.

Health spending in Wales recently received an 8.6 per cent. increase, but our colleagues in England are getting a rise of 9.3 per cent. The proportions should be the other way around, given the greater needs in Wales. Robbing the health budget to make up match funding for objective 1 funds will make the situation even worse. Had Wales received the same percentage health spending increase as England, the health service in Wales would have an additional £22.2 million.

The shortfall in education is even worse. Spending per head in England in 2000-01 is 2.3 per cent. higher than in Wales, but the gap is set to widen rapidly and will be at 9.7 per cent. by 2003-04. Over the four years of this Parliament, total education spending in Wales is £600 million less than it would have been had the same amount of money been spent per head as in England.

The hon. Member for North Tayside (Mr. Swinney) spoke of the Barnett formula, which has served Wales and Scotland for some time, although it was meant to be a temporary solution. Surely the time has come to be thinking carefully about rescheduling Barnett? We should start with a new, needs-based formula that acknowledges that there are different needs in different parts of the United Kingdom. That is long overdue. The disparities will continue unless the formula is reconsidered. There is no reason why less should be spent on education or health in Wales than in England.

The Budget gives Wales £100 million extra for education and health over three years. That is a help, but we must get matters in perspective: the £33 million a year that is being given amounts to £10 per person. I do not know how that can be expected to make great inroads into the health problems in Wales.

The Government have made the welcome promise to reduce hospital waiting lists. That was a Labour pledge in 1997, when 6 per cent. of patients in Wales had to wait longer than six months for their first outpatient appointment. The equivalent figure for this month is 714 per cent. higher. That is some increase. It will not wash for the Government to say that it has something to do with the Welsh Assembly. I have given the bare facts about a great problem which concerns us all.

The Chancellor announced a package of £200 million to aid teacher recruitment. That is welcome, but a considerable amount of money was spent on paying off

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early retirees. The Government are now talking about bringing the same people back into the profession. That does not make a great deal of sense.

It would be wrong of me to deny that there were some good measures in the Budget. I differ from Conservative Members in regard to the working families tax credit, which I think has a lot going for it. The Government have given some firm indications about child care and other matters, and money has been targeted at those most in need. Only a fool would deny that, but the Budget lacks a proper, overall examination of the macro-economic problems facing Wales. Those problems are affecting agriculture, tourism and manufacturing, but the Budget contains nothing that will give any cheer to those sectors. That is a great disappointment.

Another disappointment is the lack of movement on student tuition fees. In Scotland, applications for further and higher education have risen by about 14.5 per cent., but in Wales over the same period they have fallen by 4.5 per cent. One of the reasons for that 20 per cent. difference is the fact that students are burdened with debt as they try to secure their education.

I read law as a student. I would not have qualified as a lawyer if my father had not been a retired police officer, which meant that I had a full grant and did not pay tuition fees. It is appalling that today's young people of student age must choose whether to pursue further and higher education based on whether they have the money to do so. That is a step back to Victorian days, and I am appalled that this of all Governments should be sitting on their hands and doing nothing about the problem. I believe that the Government will find that their inaction has made them grossly unpopular with people when they go to the polls in the next few months--and rightly so.

I said earlier that the Government have been following previous spending plans. Public expenditure at 38 per cent. of GDP has led to lower health and education budgets. Some bribes are now in prospect, but I want to make one final plea, on behalf of the miners fighting for compensation following the High Court case brought by the National Association of Colliery Overmen, Deputies and Shotfirers.

Even at this late stage, I hope that the Government will reconsider the immoral and unfair clawback of compensation that has already been paid to miners. The need for a rethink is underlined by the surplus of £23 billion--or whatever the true amount is--on which the Government are sitting.

All in all, although the Budget contained some good measures, it offers no cheer at all for Wales. The main structural problems remain and objective 1 funding has not been matched. Moreover, the Government are not delivering what the people of Wales are looking for. They are turning their back on Wales. Their main objective is to look after the economy of the south-east and of middle England. For them, Wales does not really count.

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