Spending Review and Autumn Statement: Wales

(Limited Text - Ministerial Extracts only)

Tuesday 15th December 2015 Westminster Hall

[The Parliamentary Under-Secretary of State for Wales (Alun Cairns)]

It is a pleasure, Mr Hollobone, to serve under your chairmanship once again. I thank the hon. Member for Neath (Christina Rees) for securing this debate on the Government’s spending review and autumn statement. It is an opportunity to try to answer many of the questions that have been put, and to clarify the great opportunities that the autumn statement brings for our nation.

The Chancellor set out in the spending review and the autumn statement how the Government will deliver economic security, national security and opportunity for Welsh families. In Wales, the Government’s economic plan will build on the improvements made during the last Parliament. Since 2010, only London has grown more per head than Wales; unemployment in Wales has fallen by 26% since 2010; and in the last year alone, employment in Wales grew by more than 43,000. This investment continues to be made in this Parliament. Hopefully Labour Members will agree that the increase in capital funding for the Welsh Government—an increase of more than £900 million, or 16% in real terms, over five years—will support investment projects that matter to Wales and the Welsh economy.

It is interesting that the hon. Member for Neath focused on revenue expenditure, and at the close of her speech she talked about the lack of infrastructure investment. A 16% increase in capital spending certainly allows any infrastructure deficiency to be fixed by the Welsh Government. I suggest that all Members focus their attention on delivery, including the delivery by the Welsh Government of many projects, such as the M4 relief road, the electrification of valleys lines and other capital projects around Wales. When the hon. Lady’s predecessor, Peter Hain, was the Member for Neath, he cancelled the M4 relief road back in 1997. It is hard to believe that despite there being a Labour Administration in Cardiff Bay since 1999, we are still debating the same project, which is vital for the prosperity of Wales, given the commercial opportunities that it would create.

[Jonathan Edwards]

I am very grateful to the Minister for giving way, and his reply will be very useful to me as somebody who represents the communities in the west of our country. When the borrowing powers were awarded to the Welsh Government, was there a caveat that enhanced borrowing powers would only become available if the money was invested in the M4 relief road, or has that decision been made by the Labour Members in the Welsh Government independently?

[Alun Cairns]

I will happily write to the hon. Gentleman with further details. I can confirm now that the Welsh Government’s power to borrow up to £500 million for capital spending was initially due to start wholesale in 2018. The UK Government recognise that those powers are integral to the delivery of the M4 relief road, so early access to the borrowing powers was facilitated. The hon. Gentleman will know that that happened some years ago, but we are yet to see those borrowing powers being exercised to deliver that vital road project.

The hon. Gentleman will also know that during the recent rugby world cup, many demands and calls were made for that relief road. That is why, as I have pointed out, it was sad that that project was cancelled in 1997, following the previous Government’s decision to deliver that road.

[Craig Williams]

This is not just about the big projects. Our capital city is still without a ring road, and the eastern bay link has been on the cards for many a year. Even when it comes to smaller capital projects, the Welsh Government just do not get on and deliver.

[Alun Cairns]

My hon. Friend highlights another infrastructure project that has been called for. I can certainly remember that project from before the turn of the century. Businesses would welcome it. Bear in mind the resources available: the 16% increase in capital spend gives the Welsh Government the opportunity and the power. Instead of focusing on some of the issues raised today, this debate should focus on delivery by the Welsh Government, because all the resources have been put in their hands. The spending review saw more than just economic investment in skills and infrastructure.

[Glyn Davies]

On the implications of the autumn statement beyond economic development, one of the consequences that was not, I think, specifically announced in the Chamber on that day was a very big cut to the support for Sianel Pedwar Cymru, the Welsh language channel, from the Department for Culture, Media and Sport. Does the Minister share the disappointment that those of us who love the Welsh language—I know that that includes him—feel about that huge reduction in support? It may have an implication for the BBC’s support for S4C. It is particularly disappointing for the Minister and me because of our party’s record in stimulating the Welsh language and S4C over the past 30 years.

[Alun Cairns]

My hon. Friend raises an important point. S4C is crucial for the vitality of the language, and it creates social, cultural and economic opportunities. It would be wholly improper for me to provide a running commentary on the charter renewal negotiations. They are ongoing, but I am pleased to hear that Tony Hall said that broadcasting in the nations needs to be protected by the BBC, and I would hope that that would extend to S4C.

[Susan Elan Jones (Clwyd South) (Lab)]

The Minister seems to have forgotten a line from his party’s general election manifesto, which said that if elected, his party would safeguard the funding and editorial independence of S4C. How does he square that commitment with what happened in the comprehensive spending review?

[Alun Cairns]

The hon. Lady needs to recognise that the amount of funding from DCMS is relatively small. The proposal to cut from £7.6 million to £5 million over an extended period of time provides an opportunity for S4C to make its contribution to the savings. The spending review proposed £400,000 of funding savings from S4C in the first year, but she needs to recognise that negotiations with the BBC are ongoing, and to recognise the statements coming from Tony Hall. We welcome those statements and hope that the BBC will be able to deliver on them.

The Welsh Government’s total funding is underpinned by our commitment to introducing a funding floor, as the hon. Member for Neath said. I would have hoped that she would have welcomed the funding floor, because it was only two weeks before the autumn statement that there was a debate in this Chamber about the need for a funding floor. There was doubt that it would be delivered, but a funding floor of 115% will be introduced. That is well within the Holtham commission’s fair funding range, and I would have hoped that that would be welcomed by the hon. Lady.

[Christina Rees]

I did welcome it, but there are too many provisos in there.

[Alun Cairns]

The surveyor and architect of fair funding for Wales, Gerry Holtham, analysed the position and came up with a range of solutions. After the autumn statement, he said that it was a fair settlement. That is the fundamental point. There will be political commentary from all around, but the person commissioned by the Welsh Government to provide the assessment and establish the financial relationship between the UK Government and the Welsh Government has said that it is a fair settlement, and that is testament to the strength of the Administration in Westminster, which has delivered on something that has been talked about, but never delivered, by the Opposition.

[Huw Irranca-Davies (Ogmore) (Lab)]

My apologies, Mr Hollobone, for arriving a minute into the debate. On the 115% Barnett floor, why is it only for the term of the Parliament? What is the Government’s thinking behind that? The Minister will be aware of the worry that there is no long-term commitment. I am sure he will say, “Governments can only bind one Parliament”, but what is his thinking, long term?

--- Later in debate ---

[Alun Cairns]

Having been a Minister, the hon. Gentleman will know that no Government can bind another Government, though I would largely welcome a Government that could bind a Labour Administration, hopefully in the long-term future, to prevent them from pursuing the sorts of policies that they would want to introduce. Clearly, that is not how democracy works. It is obvious that this Administration can only plan for this Administration, and it would be wholly wrong and inappropriate to come up with commitments that bind any future Administration. The hon. Gentleman tried hard to draw something from me, but I hope he will respect the argument that he would be making, were he standing in my position.

I hope that Opposition Members recognise the commitment. The surveyor and architect of fair funding said that this was a “very reasonable” and fair settlement. Any political rhetoric on the issue needs to recognise the comments of that independent commentator.

Another element of the autumn statement enabled the Welsh Government to alter Welsh rates of income tax without a referendum. That offers exciting opportunities to attract new investors, and tax powers to reform the Welsh economy. The Welsh Government can take on more responsibility for how they raise money, as well as how they spend it. The National Assembly will finally take its place alongside other mature legislatures by being accountable to the people it serves. The new tax-raising powers put important fiscal levers in the hands of the Welsh Government, which they can use to grow the Welsh economy, to deliver new opportunities and to attract new investment.

Silk estimated that a 1p cut in the higher rate of tax would equate to a drop in revenue of £12 million. That is only a little more than the Welsh Government reportedly lost selling land in Monmouthshire, for example. Think of the opportunities that the cut of one penny could create: tens of millions of pounds might be spent on business support, or other discrete areas of the Welsh Government. People can now make a comparison: should they pursue one policy, given its cost to the taxpayer, or another, such as reducing the rate of income tax to attract investors and entrepreneurs to Wales?

[Huw Irranca-Davies]

The leader of the Conservative party in Wales has opened up the front on this matter by proposing a 5p drop in the top rate of income tax. That would equate to £40 million or £50 million, which is not a drop in the ocean in terms of the Welsh budget. It is curious that the leader of the Conservative party in Wales thinks that that is the best way to incentivise entrepreneurship, rather than investment in infrastructure, the innovation funds and everything else. Why does it have to be a cut in the top rate of tax? How many people on the frontline of our public services, including nurses and the police, have already been cut? Have the Conservatives made those calculations when committing to a 5p cut in the top rate of income tax?

[Alun Cairns]

The hon. Gentleman is demonstrating his misunderstanding, because he compares capital projects with revenue projects. The rate of income tax would affect revenue projects only. These are the sorts of policies that could be presented in a manifesto. People can choose whether they want to see money spent on pet projects of the Welsh Government or a cut in income tax. People will make their choices according to their objectives, but it is up to each political party to make its case. The whole point about the autumn statement is that it empowers the Welsh Government to make the case on whether it should be spending more or less.

[Susan Elan Jones]

Does the Minister think that Jobs Growth Wales is a pet project of the Welsh Government?

[Alun Cairns]

It is up to people to make judgments on what are pet projects. The point I am making is that we are in a serious debate. The opportunity to cut income tax rates is an opportunity to attract more investors and entrepreneurs to Wales.

In the 20 seconds that remain of the debate, I want to scotch any concern about the Barnett consequentials for HS2 funding in the autumn statement. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) has misunderstood the tables presented in the statement. We will happily go through it and write to him with the detail.

Motion lapsed (Standing Order No. 10(6)).