Pre-Budget Statement (Implications for Wales)

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Mrs. Lawrence: Will the hon. Gentleman give way on that point?

Mr. Llwyd: I have no time.

With reference to partnership, the Secretary of State will know that the National Assembly wrote to him with something of a shopping list that included national insurance credit and capital allowance. Some of those things were mentioned by the Chancellor but several were not. In the interests of the partnership that we are discussing, I hope that there will be further developments in the coming months. Of course, during the past five years gross domestic product has grown in absolute terms in Wales. However, GDP growth has been poor in Wales compared with the rest of the UK.

With respect, the Secretary of State's speech was something of a retread of previous speeches. [Hon. Members: ``Oh.''] It was a retread and contained nothing new. None the less, we all welcome the provisions for pensioners, which, I am sure, will help those who need them. Likewise, tax credits, and we have already discussed the abolition of stamp duty and the various other matters referred to by the Chancellor yesterday.

The big problem—this has been acknowledged by several hon. Members in the debate today—is that the UK economy might be doing well, but there are hot spots and black spots. Wales has too many black spots, and there are no provisions designed specifically to deal with them. That is why I hope that the partnership can be developed, so that we can assist our colleagues in Wales to deliver on some of those issues. Of course, we are responsible for delivering on several of them, but we expect our colleagues to work to deliver others.

The hon. Member for Montgomeryshire made a speech that was typically helpful to new Labour in its historical analysis of the obvious, references to Tory underspend, and so on. He mentioned the figure of £2.7 billion and graciously thanked the Government for no new money. Obviously, he had done his homework once again.

As the hon. Member for Brecon and Radnorshire said, the hon. Member for Newport, West, made a thoughtful and thought-provoking speech, which was also informative and well researched. He declared an interest in that he is nearer to a pensionable age than most of us—

Mr. Nick Ainger (West Carmarthen and South Pembrokeshire): Past it.

Mr. Llwyd: Perhaps we are all past it, but the hon. Gentleman made a thought-provoking speech.

On the same theme, the hon. Member for East Carmarthen and Dinefwr gave a great performance in his maiden speech to a Welsh Grand Committee. He dealt with public services generally and mentioned that spending on UK education as a proportion of GDP is at a 40-year low. The Institute for Fiscal Studies reports a 25-year low in public investment in Wales, so there is much to be done. The hon. Gentleman made a lively speech and took many interventions, as was appropriate in the circumstances. We hope that the National Assembly for Wales will have the power to borrow to invest because that is important. We should also be considering operating aid, a real issue affecting businesses. The hon. Gentleman also mentioned tax incentives in his constructive contribution to the debate.

The hon. Member for Cardiff, West (Kevin Brennan) made a tub-thumping, optimistic speech, in which he talked up the economy with little regard to the facts. He acknowledged regional variations in the economy but said that everything was fine in his constituency. A little later, in the afternoon, he said that he welcomed the pilot scheme because of long-term heavy unemployment. I know that he has a duty to the Government as well as to his constituents but he seemed to be a little confused.

The hon. Member for Preseli Pembrokeshire spoke about paying back the national debt. The bulk of the businesses in her constituency—as in mine—are small to medium enterprises. There are measures in the statement that will help, such as VAT simplification, and I welcome those. I am sure that we all share the hon. Lady's goal of full employment. That is the real way to do away with social exclusion, as has been pointed out.

The hon. Member for Cardiff, Central made a long and interesting speech. He served in the Welsh Office and was the Minister in charge of health, and I have no doubt that he was speaking from experience. His remarks were thoughtful and thought-provoking and they will no doubt engender further discussion along the useful lines that he set out.

The hon. Member for Ribble Valley—who is not in his place, but that is nothing new—referred to the reduction in the manufacturing base in Wales, from the December 1997 figure of 218,000 people employed in manufacturing jobs to the latest figure of 197,000. He referred to Alcoa, in my constituency, and the job losses in Waunarlwydd, although I am not sure what Government intervention is called for. The hon. Gentleman showed concern about job losses, referring to the CBI, and also made a strong and impassioned plea for Swansea airport, which I expect all hon. Members present supported. He referred to the proposed reorganisation of the health service in Wales—[Interruption.] The hon. Gentleman is now in his place. He also criticised the Government for their handling of the foot and mouth outbreak.

The hon. Member for Vale of Glamorgan, in a bravura performance, referred to his constituency about 12 times. It was a well-crafted marginal seat speech.

Mr. John Smith: Marginal? Not any more.

Mr. Llwyd: In that case, perhaps the hon. Gentleman should change his style. His plea for better links with Cardiff airport was right, of course. He is persistent and correct in his approach to something that would benefit not only his area, but all Wales.

The hon. Member for Caerphilly (Mr. David) referred to the national economic strategy document and the partnership that we need to build with our Cardiff colleagues. He referred to unemployment problems in Wales and what he called the macro-economic success of the Labour Government. I am sure that we all agree with his statement that the way to deal with social exclusion is to aim for full employment.

Just before yesterday's statement we approached the Government to suggest various operating aids for objective 1 areas. I hope that we can proceed with that. Our party's view on the matter is now echoed by the National Assembly for Wales. We need to build on that consensus. Large areas of Wales have objective 1 status, so we are in a position to consider operating aids. Those are important tools which we have not used so far, although clearly we should. We are interested also in the creation of designated enterprise zones.

Cuts in corporation tax have been mentioned. Of course they are most welcome, especially in the small and medium sector. However, we would also like an increase in regional selective assistance, which was not mentioned yesterday; I doubt whether it will be mentioned today either. We called for a fairer and simplified VAT system. That, apparently, will be introduced, and it is also welcome.

We shall still differ over the old chestnut of full matched funding for European structural funds. We continue to take the view that we have been sold short. We need to step up our efforts—unless we are careful we shall have missed an opportunity.

Besides job creation, a purpose of objective 1 is job enhancement and the protection of jobs. We are now in an era when we need to protect jobs in Wales. I am personally involved in the case of the Dolgarrog Alcoa redundancies, which involves 189 jobs in a rural area. It is a devastating blow, as I am sure hon. Members will realise. I welcome the rapid reaction idea, which is of course helpful. However, we would not support the use of operating aids and all the tools available with respect to objective 1 to enable us to approach businesses that were showing signs of being in difficulty and tell them, ``We can give you a corporation tax holiday or incentives; we can enable you to carry on''.

I know that Corus would not have accepted that approach in any circumstances. It was hell bent on moving out. However, there must be firms in Wales in a precarious position. We should be able to help them. Politics is the art of the possible, and we ought to utilise every economic and fiscal tool that we can to assist them.

Mr. David: The hon. Gentleman referred to operating aids on several occasions. Does he not recognise that the European Commission frowns on any attempt to derogate parts of individual member states from operating aids? There is a presumption in favour of uniformity.

Mr. Llwyd: The Commission may frown on that, but a huge area outside Barcelona has every operating aid on God's earth. Why do we not have them as well?

The National Assembly for Wales should have the right to borrow money to invest. We have asked for that, and we hope that it will be considered. We would like the link between pensions and average earnings to be put back as it should be.

Rural areas have again been given no comfort. I shall not discuss the £2.7 billion announced yesterday, which the hon. Member for Brecon and Radnorshire generously acknowledged. It is not new money: it is money that has been spent or is committed to be spent. It will give no joy to thousands of Welsh farms and rural businesses, which I am afraid are being sold down the river yet again. The manufacturing base is also shrinking. [Interruption.] I will complete my remarks. I apologise to the hon. Members for Brecon and Radnorshire and for Monmouth (Mr. Edwards) for not dealing with their speeches in detail, but I have run out of time.

The overall impression of yesterday's speech is that it dealt with the macro-economic picture of the rosy south-east, but there was nothing in it for parts of the UK that are faltering, including Wales, the north-east and Liverpool. The clear message from the Committee should be that we need to work on regional economic policies.

5.46 pm

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