Budget Statement and its Implications for Wales

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Mr. Jon Owen Jones: It is Liberal Democrat policy that the minimum wage in Wales should be lower than in the rest of the United Kingdom. Does the hon. Gentleman agree with that policy, and will he answer my question with his usual frankness?

Mr. Livsey: That certainly is not Liberal Democrat policy. As I recall, we debated the matter about 12 years ago and the policy of a variable minimum wage was thrown out. The hon. Gentleman should bring his knowledge up to date. It is extremely important that there should be a standard minimum wage throughout the United Kingdom. As we know, low pay exists in many parts of Wales and has been an endemic problem in terms of stimulating our economy.

There is no doubt that the Chancellor left out some important matters, especially tuition fees. The Welsh Assembly has proposed banishing tuition fees, and the matter has been successfully dealt with in the Scottish Parliament. Getting rid of tuition fees throughout the UK would cost a further £0.7 million; a sum that is surely affordable at the moment. We also want free care for the elderly, which is very important and is being achieved in Scotland by the partnership Government. The rural community and farming, which I shall deal with later on, is another issue to which the Budget perhaps paid insufficient attention. I note that the temporary cut in fuel tax, which I welcome, ends on 16 June, which tells us something about the date of the general election.

The Budget is balanced and follows fiscal rules, but it should be noted that the first two of the four Budgets since 1997 followed Tory Budget projections that have since been disowned by the previous Tory Chancellor. In reality, there have been only two years of Labour Budgets, which presents a problem in terms of the management of the economy. On being elected in 1997, the Government did not invest quickly enough in health and education in particular, and even the most recent Budget invested five times as much money in tax cuts as in health and education.

The Government have a huge majority and a record surplus; the latter in particular, which is the result of good economic management, is a fantastic achievement. Inflation, interest rates and unemployment are low. Everything is going in the Chancellor's favour, but where is the investment to regenerate manufacturing industry? I accept that aspects of the Budget address that issue, but they are not necessarily radical enough to save the day in Wales, where there are particular problems. We need to regenerate manufacturing in Wales in a big way, especially in areas that have not been particularly well favoured.

We must also invest in rundown steel areas and reverse rural decline. We should not seek to prise apart urban and rural areas. Many problems require an overall strategy to put matters right. The loss of 3,000 jobs at Corus, to which reference has been made, is tragic. We need to consider a comprehensive system to save the industry, and I hope that the Select Committee on Welsh Affairs will shift Sir Brian Moffat's views on the prospect of diversifying and securing worker and management buyouts of some plants.

Mr. Simon Thomas: The hon. Gentleman's comment on the importance of presenting a united front to both urban and rural areas is especially important in light of difficulties in steel and farming. The key economic question that unites the two areas is whether Britain enters the euro. The Budget did not signal the Government's policy on the euro and they seem unwilling to discuss such matters before a general election.

Mr. Livsey: There is no doubt that the Government have been extremely timid about the euro. We know that Wales depends upon manufacturing industry and agriculture more than other parts of the UK. Indeed, the failure to enter the euro on 1 January 1999 is the root of many Welsh problems. Commodity prices for both steel and farm products were hit for six by export difficulties and the many imports that resulted from the skewed exchange rate between the pound and the euro. We must pay more attention to both steel and agriculture.

The third industry that is suffering is tourism, which has been severely damaged by the foot and mouth restrictions of the past 10 days. I hope that the Secretary of State will help the Wales tourist board to push the Government to implement a code of responsible tourism.

I note that the Secretary of State visited my constituency at the weekend. There is nothing wrong with visiting Welsh places such as Llandrindod Wells or Hay-on-Wye as long as one does not enter the countryside and contravene the security rules to prevent foot and mouth.

Hotels in my constituency are laying off workers. Many hon. Members will know Llangoed hall in the Wye valley. It laid off 18 people during the past week; I could name many similar examples. One would be able to visit towns, leisure centres, museums and other places in Welsh country towns if we had a code of responsible tourism. There is no doubt that responsible tourism is vital because anyone who has visited a Welsh market town in the past week will have noticed that it is deserted. I congratulate the urban public on respecting the foot and mouth rules, but if they are responsible they can visit the many towns that are suffering. Responsible tourism can proceed if ground rules are laid down.

Of course, foot and mouth affects not only big hotels, but bed and breakfasts. Farmers who cannot sell their stock and hoteliers who cannot let their beds are confronted by the same problem; cash is not coming in. There will be huge losses in those two interrelated sectors.

Mr. Ipik: Does my hon. Friend agree that the Government might want to find the money to enable local abattoirs to reopen? That would keep capital in the local area, which would be good in budgetary terms, and it would be easier to contain foot and mouth because the distance between the factory and the consumer would be reduced.

Mr. Livsey: My hon. Friend is correct. On most evenings I receive telephone calls from constituents about foot and mouth; other Members will be having the same experience. Last night, I spoke to a farmer who said that during the previous outbreak in 1967, he had to take his stock only three miles down the road to the local abattoir, but now he has to take them much further. He is in a zone where he cannot move his stock, although he is about 20 miles from the nearest outbreak.

Mr. Win Griffiths: This morning, I heard on the radio that the Government have decided to pay abattoir owners money to cover the additional costs of the scheme. Given that the Government have already applied for agri-money compensation to help farmers with their cash flow during this crisis, that shows that they are responding to the representations that have been made. They are a listening Government, and I am sure that they will respond to the cares of rural, as well as industrial, areas.

Mr. Livsey: I thank the hon. Gentleman for his comments, although I do not agree with everything that he said.

Mr. Ruane: Why not?

Mr. Livsey: I shall explain why in a moment.

There is no question but that the Government have managed the crisis well. As the hon. Member for Bridgend said, they have made arrangements for abattoirs to be given help with additional costs. However, he was wrong to mention agri-money compensation, which is money for livestock sold over the previous 12 months. One of the disappointments of the Budget was that no additional money was made available for the foot and mouth outbreak. However, I am confident that the Government will come up with special funding from the Treasury's contingency funds to address this huge problem. They should do so, because analysis of the announcements about compensation shows that it is intended to deal with previous shortfalls resulting from discrepancies in exchange rates.

The Parliamentary Under-Secretary of State for Wales (Mr. David Hanson): The hon. Gentleman would assist me tremendously in winding up the debate if he clarified his points relating to tuition fees, rural areas, compensation for foot and mouth, steel and the need to invest more in education and health. If he were a Liberal Democrat Chancellor of the Exchequer, how much money would have gone to Wales to meet those costs and, on the other side of the balance, what taxes would he have changed to fund them? I have heard nothing about where the money is to come from and how resources are to be allocated.

Mr. Livsey: That is a classic pre-election question. As the Under-Secretary of State knows, we have costed our alternative Budget in great detail. For example, we are prepared to tax those who earn more than £100,000 at a 50 per cent. rate of income tax, we are sticking to our promise of an additional 1p on tax to fund education and we are prepared to put 6p on a pack of cigarettes to support our programme.

The Chancellor has a record, massive surplus and he ought to use more of it. He does not have to increase taxation, but he should be a less tight in his management and produce more money to solve some of the problems. For example, in relation to foot and mouth, the reopening of one or two abattoirs would not go amiss, which would not cost much. There is no doubt that the original outbreak of foot and mouth stemmed from pig swill, and its banning is long overdue. The importation of meat is not properly controlled. The previous Government reduced the number of inspectors at ports and that must be sorted out, because illegally imported meat was the origin of the present outbreak, as it was of the 1967 outbreak.

Mrs. Thatcher's Government halved the number of vets at Ministry of Agriculture, Fisheries and Food centres and closed several veterinary investigation centres, and we are reaping the harvest. We are having to import vets from New Zealand, Australia and elsewhere to help out. They are doing a fantastic job, as are private vets, and they deserve our congratulations and thanks. This huge crisis will be overcome because safety measures have been put in place, but this is a virulent strain of foot and mouth disease.

The failure of the past four years to spend enough on health and education is the reason for the increase in waiting lists and class sizes in comprehensive schools. That must be addressed. There is an element of double-counting in some of the more optimistic statements that have been made here and in the Chancellor's speech. He said that he has provided £2 billion of extra spending, but the figure is only £1 billion, because half of the extra spending on public services that he announced is simply money that he failed to spend in the previous financial year. Given that and the size of the surplus, more could have been done to make an impact on the problems in the steel industry, tourism and agriculture.

In their four years in Government, Labour's spending on health as a percentage of gross domestic product is almost exactly the same as that of the previous Government, and education spending has fallen by 0.4 per cent. That is what we should be examining. There has been too much caution. More doctors and nurses are needed in the national health service, as well as resources for free long-term care.

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