Food Banks (Wales)

David T C Davies Excerpts

Tuesday 12th February 2013 Westminster Hall

[Kevin Brennan (Cardiff West) (Lab)]

It is a great pleasure to serve under your chairpersonship this afternoon, Mrs Riordan. I am delighted and dismayed in equal measure to open this debate on food banks in Wales. I never thought, when I entered public life as a Cardiff councillor a long time ago, in 1991, that this topic would become a priority for discussion. I never thought I would see, in my time in public life, the rapid expansion of centres to hand out food to the people of Wales, on a scale unprecedented since the 1930s.

Of course, we from Wales have particularly strong and often bitter memories of the 1930s and of poverty. It was often said of my grandmother, Gwenllian Evans, a miner’s wife from Nantyglo, that she could spread an egg over Cardiff Arms park, such were her culinary skills of making a little go a long way. My mother, who is still alive today and living in Cwmbrân, often told me of the poverty that she grew up in, in the 1930s, in Nantyglo and the times when it was a struggle to feed the family.

[David T. C. Davies (Monmouth) (Con)]

Will the hon. Gentleman give way?

[Kevin Brennan]

I will in a moment. I am just warming up; once I have got into my stride, I will let the hon. Gentleman have a go.

It is for those reasons that I believe the provision of social security is such a strong theme in the history of Welsh politics, and that the rapid increase in food banks in Wales is particularly hard for us in Wales to take.

[David T. C. Davies]

I am grateful to the hon. Gentleman for the history lesson as to what life was like under Ramsay MacDonald in the 1930s. Returning to the present, given the hon. Gentleman’s interest in food banks, why did no Labour Member of Parliament ask any questions about them during the entire period of the previous Labour Government?

[Kevin Brennan]

It is because food banks were such a minuscule feature on the scene compared with what we see today, despite the Prime Minister’s erroneous use of statistics recently at Prime Minister’s Question Time, in an attempt to sidestep his failure to take note of the rise of food banks over a long period.

It is particularly apt to talk about the 1930s because we are reliving that period of austerity economics. The failures of, and false theories behind, austerity economics are being repeated. We might expect that from the Conservatives, but it is staggering that it is being repeated in the coalition by the party of John Maynard Keynes through its approach to the economy.

--- Later in debate ---

[Kevin Brennan]

Indeed. I am sure that other hon. Members will want to point out that, while this crisis is going on, the Government saw it as their priority to lower the income tax of the richest.

[David T. C. Davies]

Will the hon. Gentleman give way?

[Kevin Brennan]

I will get a bit further into my stride before I let the hon. Gentleman have another go.

It is no coincidence that the three giants behind the creation of what became known as the welfare state came from Wales: David Lloyd George, Jim Griffiths and Aneurin Bevan. It is particularly ironic that the Government presiding over a policy that is helping to trigger the rapid expansion of food poverty and food charity for the poor are a Government who include members of the successor party to Lloyd George’s Liberals.

--- Later in debate ---

[David T. C. Davies (Monmouth) (Con)]

First, I should like to deal with comments made to me directly by the hon. Member for Cardiff West (Kevin Brennan). I received an invitation to visit a food bank in Chepstow, but it was during the parliamentary week and I made it clear that I was unable to take a day off from here. I am more than happy to visit it at any time, however, and I hope that that will be arranged.

Of course there is poverty. There is poverty in Monmouthshire and in the whole of Wales. I spent many years in the Welsh Assembly making the point that there is a great deal of poverty in Monmouthshire, although that usually fell on deaf ears among Labour Members of the Welsh Assembly, who assured me, practically, that the place was full of millionaires, although it never has been and it certainly is not at the moment. There is a great deal of poverty in rural areas. I hope that matter will be addressed.

One of the most important things that can be done to address this matter is dealing with the completely unfair local government funding formula, brought about by the Welsh Assembly in about 2000, which has caused a catastrophic loss in income for local authorities, particularly those in rural areas. As the hon. Gentleman will no doubt be aware, the local government funding formula for Wales, introduced by a Labour Welsh Assembly Government in about 2000, does not take proper account of the costs of dealing with rurality or the extra costs involved when trying to deliver goods and services in rural areas, and it does not take proper account of the age of the population. Sadly, those who live longer are much more likely to incur costs on the local authority than those of us who are younger and in better health. If those two issues were addressed in the local government funding formula, it would go a long way towards stamping out poverty in parts of Wales, particularly in the rural areas. I hope that the hon. Gentleman joins me in campaigning against that disgraceful, unfair local government funding formula, which did so much to remove cash from rural areas of Wales.

[Albert Owen]

I am sure the hon. Gentleman will mention food banks in a moment. He has dealt with the local authorities, but will he not accept that those are under strain now because of the cuts that the Westminster Government have made to revenue and capital grants to local authorities?

[David T. C. Davies]

I will certainly come to it. I am jumping in rather quickly by not mentioning the 1930s and the Ramsay MacDonald Government, during which time my family were miners, but I wanted to start from 2000. The hon. Member for Ynys Môn (Albert Owen) knows that local authorities in Wales are funded by the Welsh Assembly, and its funding has remained in line with inflation.

[Albert Owen]

It has been cut.

[David T. C. Davies]

Well, one problem is that the Welsh Assembly has found it easy to raise money—taxation through the back door—by reducing the amount of money, proportionately, that it gives to local authorities throughout Wales and expecting them to raise the difference in council tax. The hon. Gentleman will know how the gearing effect works: a small cut in the amount given to the local authority by the Welsh Assembly will result in a much larger increase, proportionately, in council tax to make up the difference.

The hon. Member for Cardiff West mentioned the 50% tax cut for millionaires, a great line that he repeated a number of times. Of course, this came about because Governments of left and right since the 1980s, across the whole world, have accepted—

[Mrs Linda Riordan (in the Chair)]

Order. I should like to bring the hon. Gentleman back to the topic of the debate, which is food banks.

[David T. C. Davies]

I appreciate that, Madam Chair.

[Mrs Linda Riordan (in the Chair)]

Order. The correct way to address the Chair is by their name, so Mrs Riordan is in order.

[David T. C. Davies]

Mrs Riordan, my apologies.

The hon. Gentleman mentioned the 50% tax cut for millionaires several times. That was introduced to increase the amount of revenue that the Government have, and it was certainly not put in place during the previous Government.

The reality is that there is poverty in the whole United Kingdom; there always has been and I assume that there probably always will be. The Government have an enormous problem dealing with the economy at the moment, as a result of the deficit and debt that they inherited when they took over in 2010.

[Geraint Davies]

The hon. Gentleman loosely referred to the relationship between local government and food banks. Does he accept that the Welsh Government, by paying for the 20% cut that will be imposed in England on council tax, which would cost the average person on housing benefit in Wales some £5, have done a lot to try to stem the flow of people having to go to food banks, and have put money back into the pockets of the poorest at a time when his Government are taking money out of their pockets?

[David T. C. Davies]

The Government are not taking money out of the pockets of anyone that they do not have to. The people whose pockets have been picked most under this Government are those in the very wealthy bracket, who are now paying more, proportionately, of total tax revenue than they were under the previous Government. I do not follow the hon. Gentleman’s question.

I have already said that there is a huge problem with council tax in Wales. In Monmouthshire, where we have a food bank, council tax has risen more than anywhere in the whole of Wales. It has risen by more than virtually anywhere else in the entire country. Monmouthshire receives less funding per head than any other local authority in Wales, by quite a long way.

The hon. Member for Cardiff West mentioned the economy, which of course is crucial in this regard. He talked about the forces of global capitalism. I was struck by the fact that the economic problems of the previous Government were always said to be the fault of the invisible hand of global capitalism, which perhaps the hon. Gentleman does not support, although I thought that most members of his party these days did. Yet the economic problems that we now face are apparently nothing to do with the previous Government and nothing to do with global capitalism, but all down to the policies being followed at the moment. That is incorrect.

The problems that we have are simple. We owe £1 trillion on the books and probably the same amount again in figures that are kept off the books—public sector pensions, private finance initiatives, and so on—and we have to find a way of paying it back. Instead of paying it back at the moment, we are borrowing £120 billion a year from the banks.

I listened to the hon. Gentleman talk passionately about poverty, and we had more crocodile tears than in the Limpopo valley of South Africa, where 24,000 crocodiles escaped from a farm last week, according to the press. We did not hear the hon. Gentleman mention one single thing that he wanted to do about any of this—not one solution.

The solution is simple. We need to create the conditions that will allow growth, prosperity and jobs to be created in this country. We will not do it by borrowing money, levying higher taxes on people or printing money. We will do it by getting the deficit under control and starting to pay back some of the enormous national debt, which was created by Labour Members. That is how we will create growth in this country. That is what the Government are doing, and they have my 100% support.

--- Later in debate ---

[Mrs James]

I agree. It is a ticking time bomb. It is not wrong to use terms such as “explosion” or “huge growth”. I do not know where this will end. When constituents are sitting in front of me, and we are wading through the complex new rules and regulations, we solve one problem, but we are left with a raft of other problems. I often have to tell people, “Hold on now. I do not have the answer yet.” That is the biggest issue in my postbag. There are many fearful people out there; they are really worried about what is happening to them and about the changes we have heard about—the bedroom tax, the changes under universal credit and the changes to the designation of who can receive disability living allowance—but I do not have all the answers. However, I do know that there will be more and more problems, and I meet more and more fearful people.

Food is not a luxury, but an essential of life. We all like to have a good diet, and we all enjoy certain foods. People are not receiving luxury items, but the staples and the basics of life. Their circumstances are putting huge pressure on their daily incomes.

We already have particular problems in Wales, and we all know about the problems we have had historically and geographically. We have lower incomes. The Office for National Statistics says that pay has fallen by £80 per month on average. That puts pressure on people. There are more cuts and changes to be implemented. As I said, I meet people who are very fearful. They are worried about this poverty explosion.

The number of people using food banks is a good indicator of what we need to do. We need a solid plan from the Government to get us out of this mess. We do not want false promises or denials of what is happening in our constituencies. The situation will not improve unless we have direct Government intervention. That means that we must take responsibility for people on benefits. We should not see them as an easy and quick way of saving money. We must think not necessarily of inflating people’s quality of life and standard of living, but about ensuring that people receive a decent basic wage and decent basic income.

Every day I hear about constituents losing their jobs, or about benefits that have been delayed or crisis loans failing to appear. As I have said, the changes to the welfare system are huge and will have far-reaching effects. We have a maze of new rules and regulations to go through. I am working at the moment with other bodies—the local authority, charities and Citizens Advice. We are all picking our way through and trying to come up with something practical for our constituents. No sooner do we get to the bottom of things than more changes are made.

I echo a question that has already been put: is that what we want in modern Britain? I do not want to be melodramatic and talk about Victorian soup kitchens and going back to handouts–

[David T. C. Davies]

Will the hon. Lady give way?

[Mrs James]

I have nearly come to the end of my speech. The reality in today’s Britain is that decent, hard-working families are forced to seek help from food banks, and that is what I find unacceptable.

--- Later in debate ---

[Chris Evans]

The hon. Gentleman has summed up my absolute frustration with the House since I came into this place. All those on the Government Benches seem to want to do is look into the past and blame the Labour Government for everything. I simply ask him to put himself in this position: if tonight someone cannot afford to feed his family, because he finds that he has no food and that his children are screaming for food, will they care whose fault it is? What they care about is where their next meal is coming from. Often in this House, we look more interested in trying to win cheap political points than in bringing about real political change for people who are suffering.

[David T. C. Davies]

Instead of emotion, I am looking forward to something I have not heard so far, which is someone telling us what exactly Labour policy would be. How much extra would a Labour Government borrow? How much extra money would they print? What would they add to the national debt to spend money and resolve the problem?

[Chris Evans]

Were the hon. Gentleman to let me carry on with my speech, rather than intervening in my first couple of minutes, I might have been able to develop that argument. Surely it is a damning indictment of any Government when food banks increase threefold; 22,000 meals were provided by food banks in Gwent in the past year. That is equivalent to a third of the people living in my constituency. Food banks are a damning indictment of Government policies, but they are only a symptom of Government policies.

I had a briefing recently from Caerphilly borough council’s housing department, in which we talked about the effect of the bedroom tax. Single parents whose child is not living with them will not be able to have the child stay over with them. Disabled people will have to leave their homes, even though they have made adjustments, because they have an extra bedroom; otherwise, it will cost them £91 extra, which will have an effect on what they can spend on utilities and food. They are being driven to food banks.

I remember the Welfare Reform Bill going through; everyone was labelled a scrounger just because they were claiming benefits, even though six in 10 people in work are claiming benefits. That is happening an awful lot. We are not talking about the people we might traditionally think of—the ones talked about by my hon. Friend the Member for Newport East (Jessica Morden), such as drug addicts or alcoholics who need food. We are talking about people in work, and that is a damning indictment. Unless there is some change, we are writing off another generation.

I grew up in the ’80s; my father left home when I was 11 and my mother brought me up as a single parent. I could list the things my mother would do with a tin of corned beef to feed us throughout the week; we had corned beef fritters, corned beef stew, and corned beef pie. She even made bread-and-butter pudding out of sandwiches that we had not eaten. Yet she was not faced with the problems that people face now. It is all very well to quote statistics, and it is easy to do that, but what does it mean for children going to school hungry? They are being written off before they even start. They do not have the tools intellectually, because they are too hungry to do school work.

We need to think about radical solutions. Rather than pigeonholing people as benefit scroungers, let us talk about individual need. If I find myself out of work, I have different needs from someone who has not worked for a long time. It is no good the Government saying, “We need to make cuts.” The hon. Member for Monmouth (David T. C. Davies) thinks that we need to make more cuts and that the Government are on the right path— he is nodding away—but if we cut someone’s job, we increase the welfare bill. If we cut the welfare bill through welfare reform, we are putting pressure on charities and others who are helping with handouts. Sooner or later, whether the Government like it or not, someone will have to pick up the bill when the charity has gone under or when the volunteer cannot do the work any more. It will be left to the Government to pick it up.

I would like to have developed the argument further, but someone else wants to speak, so I will give them the last five minutes.

--- Later in debate ---

[Stephen Crabb]

No, I will not. I may not have been doing my research as fully as I should, but I could not find a single Labour MP who raised food banks as an issue on the Floor of the House of Commons before the coalition Government came into office. [Interruption.] The hon. Member for Cardiff West says from a sedentary position that it was not an issue. Well, questions were being asked by my hon. Friends the Members for Lichfield (Michael Fabricant) and for South West Bedfordshire (Andrew Selous), as well as a certain individual called Dai Davies, representing the south Wales seat of Blaenau Gwent. He asked a question about food banks during the previous Government, and some Labour Members will recall how viciously that individual was treated by members of the Welsh Labour party in recent years.

Food banks were very much an issue under the previous Government. However, the conspiracy of silence that existed around food banks extended beyond this place to Jobcentre Plus, because one thing that Labour Ministers refused to do was allow Jobcentre Plus advisers to signpost people facing particular financial need to use food banks. That is something that we changed. In 2011, we altered the guidance to allow Jobcentre Plus advisers to refer people and advertise the services of food banks. Among the underlying causes and reasons for the expansion in the use of food banks in recent years, one reason is that, in contrast to the previous Labour Government, we see them, up front and unashamedly, as a good thing, and we encourage people who are facing points of financial crisis in their lives to use them.

The hon. Member for Cardiff West mentioned a “cost of living crisis”. He used that phrase several times, and it was picked up by other hon. Members as the reason for the expansion in the use of food banks. Of course, that is true. People use food banks because they face a financial crisis at that time. I have met people who use them for a whole variety of reasons: some are young, homeless people; some are struggling with addictions, and they are spending money as a result of addictive behaviours that they are seeking to address; and some are victims of domestic violence who find that they have to flee their family home—they are fleeing an abusive relationship and need that extra support. People use the resources for a variety of different reasons.

I do not want to spend too much time picking holes in the remarks made by the hon. Member for Cardiff West, but he did say, slightly patronisingly, that he suspected that the Minister would stand up and say that he has visited a food bank. Well, I have actually. In fact, I served as a trustee on a charity that ran food banks. The charity set up its food bank in 2008, and its services have expanded. It now provides not only food but a basic bank of clothing, because as hon. Members have rightly said, people face a whole range of financial needs. As well as that, it runs an annual toy appeal to ensure that the poorest families in Pembrokeshire, in my constituency, are able to have a Christmas for their children.

The charity was founded by some of the Churches, and I know that the hon. Members for Newport East (Jessica Morden) and for Llanelli (Nia Griffith), among others, have mentioned different Churches and faith-based organisations that are behind the creation of food banks in their constituencies. I would like to pay my own tribute on the record to the volunteers and people who work in those organisations, because they are doing a fantastic job. When I speak to them, the last thing they want is to be dragged into a party political football match. This issue is bigger and more important than that. We could have had a sensible debate this afternoon about the social needs in Wales, and the role that charities and third sector organisations can play. It is really disappointing that the debate was reduced to a party political argument, when it could have been so different.

[David T. C. Davies]

I am grateful for the way that the Minister is putting his points across. Does he agree that many volunteers across Wales will be utterly horrified by the way in which they have been portrayed and politicised by the tone of the debate? Instead of trying to use food banks as a reason for having a go at Government policies that are widely supported, we should all be supporting those volunteers who have been there for many years, and will be there long after this and other Governments have finished.

[Stephen Crabb]

My hon. Friend expresses himself extremely well, as ever.

Let us look at the context for Wales. The hon. Member for Arfon (Hywel Williams) mentioned the underlying economic context for Wales. It is true that Wales has suffered from low wages, but it is not true that wages continue to decline relative to the rest of the UK. If we look at the most recent wage data for Wales, the increase is sharper than for the UK average. That is only a small set of data, but it gives us reason for optimism that we can, over time, close the wage gap and see more families in Wales taking home more real-terms pay from their jobs.

Public Service Pensions Bill

David T C Davies Excerpts

Tuesday 4th December 2012 Commons Chamber

[Mike Freer]

I am not qualified to judge that. I am not an economist, so I do not have information about the impact on GDP. It might be appropriate to ask the Economic Secretary that question, however.

[David T. C. Davies (Monmouth) (Con)]

I am not an economist either, but the issue is not the predicted rise in GDP; rather, it is the predicted fall in the working population who will be available to pay the pensions of a growing number of older people.

Inward Investment (Wales)

David T C Davies Excerpts

Thursday 29th November 2012 Westminster Hall

[David T. C. Davies (Monmouth) (Con)]

I am absolutely delighted to have the opportunity, which comes around once every couple of years, to speak as Chair of the Select Committee on Welsh Affairs about an issue that we think is particularly important. Today, that subject is inward investment in Wales and the Welsh economy.

The timing of this debate is a little unfortunate. As hon. Members will know, the Leveson report is being released at this very moment, so I apologise to Lord Leveson if we keep him off tomorrow’s front pages. I accept that some Members will have even more interest in Leveson than in the Welsh Affairs Committee, so I will try to keep my speech as brief as possible to be fair to those who also find that issue of interest.

When we published our report on inward investment in Wales in February, I think that I can fairly say that it was well received and comprehensive. We took evidence from a range of witnesses in business, as well as economists and politicians. We met Ministers from the UK Government and shadow Ministers from the Welsh Assembly Government. We would, of course, have liked to meet Ministers from the Welsh Assembly Government, but the Minister with responsibility for this area did not see fit to appear before the Committee, which was a shame. As well as being a little discourteous to the Committee—I can take the insult—that risks sending out the negative message that the Welsh Assembly Government and the UK Government are not working well together, which we do not want to happen.

We recognise that there is a problem with inward investment in Wales. Looking back, we can say that the ’80s and early ’90s were something of a boom era. Despite the fact that Wales has less than 5% of the UK’s population, we were getting about 15% of inward investment projects. By the late 1990s, however, things had started to decline. Between 1998 and 2008, some 171 foreign-owned companies closed their sites in Wales, with the loss of 31,000 jobs, and now things are getting worse. A parliamentary written answer from this Monday shows that the number of inward investment projects in Wales has declined from 68 in 2009-10 to just 26 in 2011-12, despite the fact that the UK as a whole remains the No. 1 destination for foreign direct investment in Europe.

There has been a shift in FDI away from Wales and towards London and the south-east of England, and the Committee wanted to know what we could do to improve the situation. We were, of course, clear that the traditional routes for attracting investment—low labour costs, grants and help with infrastructure—can no longer be relied on. We certainly do not want to compete on labour costs with countries such as China or India. It is important that we can offer a good standard of infrastructure so that we make Wales as appealing as we can for companies that might want to come here.

Lord Green of Hurstpierpoint, the Minister for Trade and Investment, told us that countries and overseas companies weigh up certain factors systematically, as if building up a grid, before deciding where to invest. Our report focused on three of those areas, the first of which was education, which obviously is devolved to Wales. It would merit its own inquiry, if we could find a way to conduct one without causing offence to the Welsh Assembly.

[Paul Flynn (Newport West) (Lab)]

The Government’s response to recommendation after recommendation in the Committee’s report is:

“This is a matter for the Welsh Government, who may wish to respond.”

Does not the hon. Gentleman think that his report has been weakened by the Committee’s trespassing beyond its own responsibilities? The Welsh Assembly Government are likely to respond negatively. The report would have been far better and more incisive if it had concentrated on matters that are the responsibility of this Parliament.

[David T. C. Davies]

The Welsh Affairs Committee is perfectly entitled to have an interest in anything affecting Wales. Although some in the Welsh Assembly might take the view that they are not willing to talk to the UK Government about things that they consider to be their own prerogative, it is noticeable that our Committee has considered such issues as defence, which the Ministry of Defence could say was its responsibility. We have also considered broadband, which is cross-cutting and affected by both UK Government and Welsh Assembly Government policy. We consider anything. I am proud to be Welsh and proud to be British, as hon. Members can see from my cufflinks. I make no apology for the fact that the Welsh Affairs Committee would be perfectly happy to consider anything affecting Wales.

[Paul Flynn]

Throughout the long history of Denbighshire county council, its longest ever meeting, which went on beyond midnight, was to decide the council’s policy on the war in Vietnam. That might have seemed to be a sensible thing to do, but I do not think that it had a great effect on world opinion or the conduct of the United States at that time. Does the hon. Gentleman think that his Committee is likely to end up in a position where it takes up any subject, whether or not it has any influence on or knowledge of it?

[David T. C. Davies]

First, although I was a mere boy at the time, I seem to remember that the hon. Gentleman was either a member of, or involved in, Newport council at the time when I lived there, and that he used to help with discussions of whether Wales should be a nuclear-free zone, so perhaps he has experience of long discussions about things over which he is likely to have little influence. Secondly, inward investment is clearly a cross-cutting issue that is affected by both Welsh Assembly and UK Government policy. I do not want this sitting to go on for as long as that meeting of Denbighshire county council—it is not a record that I am hoping to beat—so I would like to continue my speech.

[Paul Flynn]

rose—

[David T. C. Davies]

Which I shall do after I have given way to the hon. Gentleman for the third time.

[Paul Flynn]

The hon. Gentleman is being very generous. The nuclear-free Wales policy was a remarkable united expression by every county council in Wales—there were eight in 1981. “Nuclear-free” was about nuclear power, not nuclear weapons. Every county council passed an identical resolution saying that it did not want nuclear power stations in Wales but, sadly, the then Government defied that call.

[David T. C. Davies]

How times have changed, as Labour councils now seem to be very supportive of nuclear weapons and nuclear power stations. In 1981, there were no Conservative-led councils, but today there is one in my constituency, so things change for the better.

Returning to education, however, things are not changing for the better. Hon. Members will be aware of the recent OECD programme for international student assessment—PISA—report on education across numerous developed countries. Wales was not only below average for the developed world in subjects such as maths and science, but below average for the whole United Kingdom. The Committee hopes that the Welsh Assembly Government will address that situation. Speaking personally—to take off my Chair’s hat for a moment—I do not think that it will be addressed by setting up a completely separate examination system in Wales, which the Assembly is considering.

We considered the role of further and higher education, and universities are becoming increasingly prominent in investor decisions. We believe that although a lot of good work is going on between universities and industry, a great deal more can be done.

There are numerous studies about the economic benefits of good and efficient transport links. We should be concerned about the current quality of transport links in mid and north Wales, and about connectivity with the rest of Wales. We are exploring those issues in more detail in a current inquiry and our report will be published shortly.

[Guto Bebb (Aberconwy) (Con)]

Does my hon. Friend share my concern that the Welsh Assembly Government failed to make any representations for investment in the north Wales coast main line, which is the key rail infrastructure in north Wales?

[David T. C. Davies]

I am extremely concerned about that, but I welcome the announcement by the Secretary of State for Wales that a business case will be developed for the north Wales main line from Holyhead to Crewe. If the Minister has any more to say about that, we would welcome it.

I am sure that every member of every political party represented in Wales will be delighted by the coalition Government’s decision to extend electrification of the Great Western main line to Swansea and the valleys, and I am sure that the biggest supporter will be the hon. Member for Swansea West (Geraint Davies). There is much good news there.

[Geraint Davies (Swansea West) (Lab/Co-op)]

I warmly welcome the decision to extend electrification from Cardiff to Swansea, which we recommended in our report. Does the hon. Gentleman agree that what we need in Swansea, as in Cardiff, is super-connectivity, because we want a level playing field in south Wales, which has one economy? Will he, like me, press the Government to ensure that we are up and running in the Swansea city region, as well as in Cardiff, to achieve economic growth?

[David T. C. Davies]

The Swansea bay region would be an excellent place to invest. The Government are doing a huge amount to support better infrastructure, including IT infrastructure, across the whole of Wales. Although I look forward to developments that will increase broadband speeds in cities such as Swansea, Cardiff and Newport, we have more to do to ensure that people in rural areas such as Monmouthshire are able to get some sort of broadband.

[Geraint Davies]

It is important that we have Swansea city hub super-connectivity before broadband in rural Monmouthshire.

[David T. C. Davies]

I note what the hon. Gentleman says from a sedentary position, but let me turn to the Severn bridge, because that affects all of us in south Wales. Our report shows that little can be done until the original amount that was agreed with Severn River Crossing is paid off, which is expected to happen in 2018. Until then, there will always be inflation-busting increases in charges on the Severn bridge because that is set according to a formula at a certain time of year. There is absolutely nothing that can be done about that because it is a matter of commercial law.

[Geraint Davies]

Will the hon. Gentleman give way?

[David T. C. Davies]

I will, but may I finish my point first, because I think that the hon. Gentleman will be likely to agree with me?

After 2018, all bets are off, and several things could happen when the money is paid off. The Government will no longer have to pay VAT so, at a stroke, 20% could be taken off the charges. They could decide to get rid of tolls and fund the maintenance themselves, although that is unlikely, because I have been given an inkling of the cost of maintaining two large bridges over an estuary—it is phenomenal. I do not have the figures to hand, but we worked out that we would need to charge at least one third of the current toll simply to cover maintenance costs, and the Government might want to take a little more just in case it is necessary to build a third bridge in the future. However, there is no doubt that there could be a huge cut in the tolls after 2018, when Severn River Crossing’s charges have been met.

At the same time, the Welsh Assembly Government are loudly demanding control over both bridges, although one is entirely in England, which seems to have escaped their attention. However, they are being rather silent about what they would do to the tolls if they were put in charge. We need some transparency. There was a lot of anger in my constituency, and probably throughout south Wales, when the latest toll increases were announced, and I believe that some of that anger could be assuaged if we had more transparency about what will happen.

I was disappointed when we were informed by one of the Minister’s colleagues in government that there was unlikely to be any decrease in charges whatsoever because of extra costs—the Committee was told that they were several hundred million pounds, but I believe that they are now around £112 million—that the Government want to recoup. I do not know what those costs are, and the first I heard of them was when the evidence was given to the Committee. We were told nothing about that when the inquiry took place, so we would like to know what those costs are and what will happen when they have been paid off. We cannot find ourselves in the 2020s with the Severn bridge being used as a cash cow to milk the public in Wales and south-west England of money that the Government should not be taking through a toll, so a little transparency would be welcome.

[Geraint Davies]

Does the hon. Gentleman agree that the Government should commission a report from the Treasury to determine whether, if it paid all the tolls that will be due before 2018, all that money would be recovered from higher income tax receipts and lower benefit costs arising from the generation of extra jobs?

[David T. C. Davies]

The hon. Gentleman puts me on the spot. I would certainly support a report from the Government giving more transparency over what will happen. His question seems to be fair and relevant, so perhaps that could be dealt with.

I have entertained hon. Members for a little too long, so let me refer, finally, to how Wales is marketed. Currently, that is done by IBW. I shall have to tell hon. Members that that is International Business Wales, because no one, except a few people in the Welsh Assembly, really knows what “IBW” is. Previously, Wales was marketed extremely successfully by the WDA, and I do not need to tell anyone that that stood for the Welsh Development Agency. The time has come for us to reconsider the way in which Wales is marketed. We have plenty of evidence, some of which is anecdotal, that IBW has not been doing a very good job. It is time for the Welsh Assembly to set up a dedicated promotional body to sell Wales to the rest of the world.

We have a good story to tell, and we still have a highly-skilled, capable and loyal work force. There is a great argument for persuading companies from across the world to come to Wales, and I look forward to working with members of the Committee, and Ministers from the UK Government and the Welsh Assembly Government, to try to ensure that that happens.

--- Later in debate ---

[Geraint Davies]

I was not expecting to hear cries for austerity from Plaid Cymru, but there you go. They come from all sorts of directions.

Very briefly, you will know, Mr Bone, that between 1997 and 2008 Britain enjoyed a period of more rapid growth than had been seen since the war with paid back debt, massive growth in employment, and reductions in welfare costs. After the financial tsunami of 2008, my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) and Barack Obama got the fiscal stimulus going so that we did not go into a global depression, which the hon. Gentleman seems to be calling for. In 2010, we then had a deficit, which the coalition Government inherited. Two thirds of that was due to the bankers and one third was due to excess investment above earnings to pump-prime the economy and keep it growing. The current Government then decided to focus more on cuts than growth to get the deficit down, ending up with virtually zero growth, and the deficit has been growing ever since. I do not know whether the hon. Gentleman wants to cross the Floor to the Conservative side, but when history is written, it will be seen as a painful place to be.

[David T. C. Davies]

On a point of information, the debt had already gone from £350 billion to £650 billion before the real financial crisis started to strike in 2008.

[Geraint Davies]

As the hon. Gentleman knows, the real rise in debt started in 2008 after the financial tsunami, and the previous Labour Government had paid back enormous amounts of debt, partly through the sale of—[Interruption.] I think I had better redirect my argument. We can rehearse those arguments again, but people realise that what I say is, in essence, a factual record of what happened.

--- Later in debate ---

[David T. C. Davies]

Will the hon. Gentleman give way?

[Geraint Davies]

It is the case that debt is now going up. I give way first to the hon. Member for Monmouth, as he has only a small point to make.

[David T. C. Davies]

May I direct the hon. Gentleman, and anyone else who is interested, to, dare I say it, my website? On the front page, there is a history of the debt and what actually happened, with every figure checked by the House of Commons Library. He will find that what I have put there is rather different from what he is suggesting.

[Geraint Davies]

I have seen the European version of his website—it is called “Mon mouth”. Moving swiftly forward, I give way to the hon. Member for Aberconwy.

--- Later in debate ---

[Geraint Davies]

I am grateful for that intervention. When we saw the Welsh Government office in Brussels, it made its top three priorities clear. The first, as it is in Brussels, was policy in the EU, and in particular where it impacts on Wales—the common agricultural policy, and the rest of it. The second was grants and funding opportunities. Convergence funding has provided billions of pounds of investment in Wales, and that must be a key priority. We have seen it throughout Wales: recently, at Swansea university, £60 million from the European Investment Bank was invested in the second campus, and the £20 million in convergence funding for that is vital. Its third priority was the profile of Wales—to brand Wales. Those are key issues.

As the hon. Gentleman pointed out, we asked whether a fourth priority should be inward investment and trade. I agree that it should, and the response we received was that the office would be happy to work with UKTI. My understanding is that we are moving down that track. The report is helpful in encouraging co-operation with UKTI, which has 83 offices, while Wales has much fewer. However, where Wales does have them, it should work in co-operation.

On the Welsh brand, I understand that the Welsh Government are now looking at a new marketing strategy, which again, I very much welcome. There are big opportunities to push forward the Welsh identity, and I think that castles should be considered. If Members will indulge me for a moment, having a background in multinational companies and global brands, the castles around Wales symbolise romance, history, culture, strengths and endurance, which are all qualities of Wales. It is all part of inward investment and tourism. The dragon tends to be slightly overwhelmed by the Chinese dragon, but there is hope yet. [Interruption.] Okay, let’s keep the dragon—sorry about that.

Moving forward, it is not only about castles; it is about having a unique, clear identity for Wales in the global marketplace. The report referred to the success of the Welsh Development Agency. Some feel that if that brand still existed, it might be able to be re-harnessed in some respect. The report also suggests that we work in co-operation with private sector practitioners on the ground. The report’s basis was to get entrepreneurs, inward investors, multinationals, academics and an array of people in the economic community to give their view on what we should do, and we should be open-minded about taking advice as the global environment changes.

The report is obviously a place in time, and a similar report will be needed downstream, because clearly, things are changing, and the role of the public and private sectors is important in providing the instruments for success in future. Few people know, when they look at some of the great global successes, such as the Apple iPhone, that some of the technology—the touch-screen and voice sensitivities—was delivered by the public sector, by a scientific foundation in the United States. Apple then took that and made it a global brand. Some people seem to think, “Oh well, it’s the private sector. They know what they are doing,” but fundamental science and innovation is vital for commercial success. The issue is to have that link between the academic, and research and development, going through to commercial success.

I mention that because it is mentioned in our report and it is alive and well in our great city of Swansea—in Swansea university, in the first instance. People there are changing the rules. Within Swansea university, instead of having a silo situation, with the engineering department here, medicine there and so on, they mix it up so that the engineers are in with the medics. In terms of life sciences, development of nanoproducts and so on, they are working with inward investors in producing global brands. They have the support of Rolls-Royce, BP and others in relation to the development of a second campus worth £200 million. As I mentioned, the investment in that from Europe has been critical. Those coalition Members—in particular, the Tories, of course—who say yah-boo to the Europeans need to realise that a joined-up approach whereby we are working together to have a strong Europe and a strong Wales within Britain within Europe is vital for the future. We cannot retrench to become fish and chip shop Britain, as many on the Conservative Benches would like to see us.

[David T. C. Davies]

What’s wrong with fish and chips?

[Geraint Davies]

There is nothing wrong with fish and chips—

--- Later in debate ---

[Susan Elan Jones]

I will be honest with the hon. Gentleman. I am not able to give him the total details and I am not prepared to flaff and speak generally, but we will provide him with an answer.

This budget will bolster Wales’s economic competitiveness, generate jobs, increase mobility and, in the context of today’s debate, strengthen Wales’s bid for future inward investment.

Another way that the Welsh Government are going about improving transport infrastructure is by continuing to forge a close relationship with Cardiff airport. Ministers are determined to work towards modernising the airport and increasing its connectivity.

The second of our Committee’s central issues is Wales’s international standing and efforts by the Welsh Government to promote Wales abroad. Since the Committee’s inquiries, there have been significant developments on this front, which I am sure that hon. Members from all parties will welcome. In July, for example, the Welsh Government officially opened their new London headquarters, based on Victoria street, focusing specifically on promoting Wales to the world, attracting greater inward investment and boosting international trade. I welcome the fact that the office will be home to permanent staff with inward investment a large part of their remit. As our First Minister, Carwyn Jones, said when unveiling the new office,

“it will create an important base for the Welsh Government, and businesses from Wales, to influence decision-makers in the foremost financial and commercial centre in the world.”

Since then, the First Minister has also revealed plans to co-locate Welsh Government staff with UKTI, to forge an even closer relationship with staff there, which is most important, and to maximise their vital contacts and resources. At the same time, the Welsh Government have placed important emphasis on trade delegations, including recently welcoming a delegation from India, led by the country’s high commission, as well as two delegations from China in September. Just two weeks ago, the Welsh Government supported their largest ever delegation to an international trade event.

[David T. C. Davies]

Although I welcome the efforts to promote Wales through trade missions, does the hon. Lady agree that it would be helpful if the Welsh Assembly Government were willing to work with the UK Government and arrange joint trade missions with Ministers in the Wales Office?

--- Later in debate ---

[David T. C. Davies]

I will be brief. I thank all hon. Members who have taken part in our debate and prioritised Wales over the other matter that is going on down the road to do with Lord Justice Leveson.

I thank the hon. Member for Swansea West (Geraint Davies) for his wide-ranging contribution. I look forward to discussing my figures on debt deficit that I obtained from the Library and to working out why it believes that the previous Government spent £250 billion and added that to the national debt before the financial crisis struck, when he said something different. That will be interesting.

I thank the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) for sharing the details of his honeymoon with us and for lifting my heart. He told us that the Assembly’s Treasury Minister had been outfoxed by the UK Government and that the borrowing powers were so small that they would have barely enough for a packet of crisps. I have been extremely worried about that, but I find myself strangely reassured by his comments.

The hon. Member for Ceredigion (Mr Williams) was kind enough to thank me for choosing relevant inquiries on the Welsh Affairs Committee, but unfortunately my timing was not so good. He did us all a favour by suggesting the inquiry into connectivity, particularly how it affects his constituency in west Wales. He then built on that by suggesting that we all went to Aberystwyth by train and arranging for the train company to institute long delays so that he did not arrive until several hours after he was meant to as a result of the train service that his constituents receive, thereby making the point very well that things need to improve.

The hon. Member for Clwyd South (Susan Elan Jones) was an extremely hard-working and diligent member of the Committee, and she has now been promoted. It is wonderful that so many members of the Welsh Affairs Committee are promoted to the Front Bench. I await my call and look forward to that happening more widely. In fact, I do not want a job at the moment, because the Minister is doing extremely well and working very hard. I know because I have seen him on constituency visits. I congratulate him and the other Minister. I look forward to working with them, as does all the Committee, and look forward to hearing them give evidence to the Committee.

Question put and agreed to.

Multiannual Financial Framework

David T C Davies Excerpts

Wednesday 31st October 2012 Commons Chamber

[Mark Reckless (Rochester and Strood) (Con)]

We simply cannot afford to agree an inflationary increase to the EU. This country has 13% less income than it had just five years ago, and we are seeing 20% reductions to domestic spending. According to the House of Commons Library, if an inflationary increase is agreed, next year it will amount to £290 million, every penny of which we will have to borrow. Hon. Members will have spoken to constituents on different issues, and police officers have been to my surgery. They understand that their pay is frozen, although they are less happy about changes to their pay and conditions and about not getting their increments, but they do not understand why other elements of the budget, particularly the EU, should be guaranteed inflationary increases, let alone inflationary increases all the way through to 2020.

[David T. C. Davies (Monmouth) (Con)]

I have the utmost respect for my hon. Friend. Does he have the utmost respect for Opposition Members who voted time and time again to give away our powers and our money to the EU but now propose to wrap themselves in the Eurosceptic flag and walk through the Lobby with him this afternoon?

[Mark Reckless]

No, I do not. Sometimes people do the right thing for the wrong reasons, but if even the Labour party is now arguing for a real-terms cut in the EU budget, I hope that Conservatives will do likewise.

As well as my police officers, my local council, Medway council, of which I was a member, passed a motion asking Members of Parliament representing that area to vote for a cut in the EU budget. It wrote:

“The Council notes, with indignation, that whilst Medway is facing a massive…reduction in its financial settlement…the UK’s contribution to the European Union is”

getting a massive rise. It continued:

“This Council believes the EU should be treated the same as the other tiers of government and in these austere times should share responsibility…for public spending reductions.”

It argues that that would allow it to protect local services. I could not agree more.

Public Service Pensions Bill

David T C Davies Excerpts

Monday 29th October 2012 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

With advances in medical science meaning people are living longer and a pressing need to ensure that our public finances are on a sustainable path, it is right that we put in place the long-term reforms we need to manage the cost of public service pensions. That is why when in government we took important steps to ensure public service pensions were sustainable, and it is why we regret that this Government have behaved in a way that has made reform harder and that has undermined confidence in occupational pensions for teachers, nurses, police officers and others who work in the public sector.

We remain of the view that the Government’s imposition of steep contribution increases across the board and a permanent switch in the uprating of pensions to a lower measure of inflation were unfair and unnecessarily provocative. However, we support in principle the Bill’s main measures.

[David T. C. Davies (Monmouth) (Con)]

Do the hon. Lady’s comments mean that if she were the Minister, she would reverse that Government reform?

[Rachel Reeves]

We have said that we support the shift from the retail prices index to the consumer prices index for the period of this Parliament to reduce the deficit, but we do not support a permanent shift from RPI to CPI that will continue long after the deficit has been eliminated. I will discuss shortly some evidence from the Pensions Policy Institute and the Royal Statistical Society on the appropriate measure of inflation for uprating pensions.

--- Later in debate ---

[David T. C. Davies (Monmouth) (Con)]

I will try to keep my comments as brief as possible. I want to address some of the remarks that I have had thrown back at me as a supporter of this Bill and this coalition Government—not so much by Members, whom I have listened to carefully this evening, but in the newspapers, from the unions and from politicians in other political parties who have sought to make capital out of this issue.

Let me say clearly from the start that I—and, I believe, every single member of this coalition Government, whether from our position as Members of Parliament or from personal experience—very much support and respect the role of public sector workers across the United Kingdom. I know from personal experience about the very hard work done by the police officers in London with whom I work. I know about the paramedic who came to the aid of a member of my family recently and solved a problem for them. I also know about those who are teaching my three children the three Rs in a local state school. I know from personal experience, not just through my work, just what a good job public sector workers do, and I do not think there is anyone in this coalition Government who wants to do anything to undermine the pensions of public sector workers or undermine their role in any way whatever.

It was the hon. Member for Banff and Buchan (Dr Whiteford) who talked about the problems in the private sector. Although we should not be making comparisons, it is perfectly true to say that people in the private sector have lost out greatly, and they have done so partly as a result of the previous Government’s policies. We have heard all about the tax on dividends, but there are all sorts of other, subtle ways in which private sector pensions were undermined by the previous Government. They included, for example, demanding that financial institutions buy Government bonds and gilts, instead of allowing them to invest larger proportions of their money in stocks and shares, as well as enacting policies that kept stocks and share prices down. However, those are matters to be debated on another occasion.

What is clear is that we are not going to allow what happened in the private sector to happen in the public sector. We saw the misery that that caused for people—our constituents—and we do not wish to see it happen to other hard-working people. At the same time, however, we cannot ignore the fact that although people may well be doing physical jobs in the public sector, there are people in the private sector who also have to do physical jobs. We do not seem to have heard much about them. What about the lorry drivers? I used to do that job for four or five years, and it can be hard and physical. What about all the people who work in factories? What about builders? Why should they have to work so many extra years to pay for the pensions of people retiring years before them who may not be doing physical jobs at all? To some extent we have to make some comparisons.

[Mr Anderson]

I agree with the hon. Gentleman about workers in the private sector who should also have better arrangements. If he comes forward with a private Member’s Bill, will he allow me to become part of that process, so that we can legislate to ensure that those people are looked after properly, as public servants should be too?

[David T. C. Davies]

There is of course a wider problem. When I bring forward that Bill, which the hon. Gentleman will be supporting, I will be looking carefully at the maths, because what I think is absolutely disgraceful is promising people in the public or private sector things that cannot possibly be afforded.

I have heard the argument from trade union officials that says: “Why is this happening? It’s all because of the banks.” It has not been mentioned today, but that is something that people have come out with. However, when we examine the figures, we see that the problem has absolutely nothing whatever to do with the banks. The Treasury Committee looked at the amount of money that some banks were given—on a temporary basis; most of it will be coming back—which it calculated as about £120 billion. However, the national debt today stands at £1 trillion, which is almost 10 times that figure. Most of that debt has been caused by politicians overspending. However, when we take into account public sector pensions, the figure for the national debt goes from £1 trillion to £2 trillion at the very least. Indeed, last April the Office for National Statistics issued figures suggesting that the total amount that Britain will need to cover its pension liabilities over the next few years is £7 trillion. I must admit that I do not know how many years ahead that figure covers—I assume it covers quite a few—but it is an absolutely astonishing sum of money. I did a quick calculation and worked out that if £1 million represented 1 cm on a graph, we would need a graph that was 40 miles long, stretching all the way to Reading, to show our current liabilities. We cannot ignore the current financial situation.

Thinking about what has gone on with pensions in the past few years reminds me of an analogy. I used to work in the private sector, for a small family transport business. I wonder what would have happened if, one day, the directors of the company had gone through the books and, instead of collecting money from their workers over the years and investing it for the pensioners of the future, they had simply taken their workers’ contributions and used them to pay for the pensions of the people who were retired at that time. It would have been a sort of giant pension Ponzi scheme, and it would probably be illegal if it were ever tried out.

Anyone bringing about such a situation would have two options. One would be to pretend that there was no problem, and to try to gain short-term popularity with their work force by continuing to pay generous pensions that they could not afford. One way of doing that would be to borrow a vast sum of money from the banks to employ more people whom they could not afford, and to use their contributions to pay for the pensions of the workers who had just retired. That is more or less what has been happening over the past few years.

The alternative is far more sensible, and it is what this Government have done. We have opened up the books and said that we simply cannot afford to do this. We know that a much larger work force is going to retire in the future, and that they are going to live even longer, so there is no point in making promises that we cannot possibly keep. We have only to look at the recent history of the past 30 or 40 years to see what happens when countries can no longer balance their books. That is happening in Greece at the moment, and it has happened in recent years in Russia and Argentina, and across south-east Asia in countries such as Thailand. It happens over and over again, and we must not think that, just because this is the United Kingdom, we can somehow buck the basic rule of economics.

I am proud that this is the first Government to have gone into an election saying, “We’re not going to spend more of your money. We’ll spend as much as we can, and we will spend it well, but we are not going to make promises that we cannot afford to keep.” We are going to protect public sector workers, particularly the lowest paid, but we are also going to ensure that the country is in a financial situation that will allow it to guarantee the pensions of those public sector workers who are going to retire not just in the next few years but in the decades ahead. In other words, we are going to trade short-term popularity—the easy thing to go for—for the long-term interests of public sector pensioners in this country. I hope that Opposition Members will, for once, do the responsible thing and support us in this vital work.

Jobs and Growth

David T C Davies Excerpts

Thursday 17th May 2012 Commons Chamber

[David T. C. Davies (Monmouth) (Con)]

We are all aware, of course, that the Government are having to make some very tough and difficult decisions. Some of them may question some of those individual decisions, but let us be in no doubt about why we are in the present situation. In 1997, we handed over an economy with no deficit and a national debt of £350 billion that was being paid off. By 2007, before any banking crisis had taken effect, the debt had risen to £650 billion, because supporters of the previous Government were spending, at a rate of £30 billion to £40 billion a year, money that they simply did not have. We all know what happened then: after the banking crisis, they went on the biggest spending spree in financial history, which left us with a debt of £1 trillion on the books—probably twice that when private finance initiative commitments are included—and a deficit of £160 billion a year.

[Several hon. Members]

rose—

[David T. C. Davies]

I am happy to give way to a Labour Member who wants to answer some of those points.

[Paul Murphy (Torfaen) (Lab)]

The hon. Gentleman has said that the people of his constituency are pleased with the performance of his Government and his Chancellor. Is that why they actively rejected the Conservative party and the Liberal Democrats, so that they lost control of Monmouthshire county council?

[David T. C. Davies]

Monmouthshire county council will have a Conservative-led administration, with help from our great friends in the Liberal Democrat party, with whom it is always a pleasure to work. They were not responsible for causing the mess left by Labour.

I want some answers from Labour Members. I want to know why they left us with a debt of £1 trillion and what exactly they intend to do about it. It seems to me that the basis of their economic theory is Enid Blyton’s “The Faraway Tree”, which children climb to find a land where everything is free and nothing has to be paid for. To me, that is a fairytale; to them, it is an economic theory. They think they can just carry on borrowing and borrowing, and put off until tomorrow what needs to be done today.

[Huw Irranca-Davies]

Can the hon. Gentleman explain why he felt it necessary to write in to his local paper apologising for the incompetence of his Cabinet colleagues? I thought for a moment that he was describing them, not turning his guns on us. Surely it is they who are incompetent—that is what he stated, in black and white.

[David T. C. Davies]

I would never apologise for doing my job as a Back Bencher, which is to scrutinise and to point out that, on occasions, some Cabinet members have done things or prioritised certain policies with which I disagree. What Opposition Members should do is start to apologise, and not only for the £1 trillion debt. What about selling gold at $200 an ounce—400 tonnes of it? What about the £5 billion raid on private sector pensions, which has plunged people who worked in the private sector into poverty? Only one of them has apologised—the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), who left a note saying, “Sorry, we’ve spent all the money.” That is not good enough.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

Will the hon. Gentleman give way?

[David T. C. Davies]

No, I have no more time to give way.

I want to know why Labour Members still maintain that the banks are to blame, when, in all, just £120 billion was given to the banks out of a total debt of £1 trillion, almost 10 times more. They are following the policy of fools, knaves and despots throughout history started by Edward I, who blamed everything on bankers. The reality is that, every year, we are borrowing more from banks than we have given them. We get 10% of our revenue—£50 billion a year—from the banking industry. If Labour Members are allowed to destroy it, they will have to find cuts 10 times greater than the ones that we, unfortunately, have already had to make.

This Government are taking proper and concrete steps and I think that most Members present support almost all those measures. I totally agree with the decision to reform welfare spending, so that people have to go out to work, and at the same time to cap immigration, which has held down wages for the lowest paid, as even Opposition Members have been the first to accept. As one who has experience of trying to run a small business, I am delighted that the Government will do something to reduce the red tape of employment legislation, which makes many businesses reluctant to take people on. It is, of course, a pleasure to read about cuts in corporation tax and, yes, even the cut in tax for top rate taxpayers. We know that that is politically difficult to defend, but there is a strong economic argument for the measure, which is why Labour Members were not prepared to vote against it and will not now say what they would do.

In Wales the public sector is very large, and the Army forms a large part of that sector. I am worried to learn of proposals to amalgamate the Queen’s Dragoon Guards with another regiment. Many Welsh people are employed in the Queen’s Dragoon Guards, which is an excellent regiment. Since the battle of Agincourt, Wales has supplied men and women who have fought loyally for Britain, as I would have been happy to do in the Territorial Army—I saw no active service. I hope that the Chancellor will bear that in mind when the decisions are made.

I hope that the Chancellor will forgive me for expressing the hope that he will also look carefully at the carbon tax. I am one of a growing number of people who worry about the fact that there has been no increase in temperature for the past 12 years. It took me a while to get the figures from the relevant Government Department, but Members should have a look at the Met Office website. I worry about imposing on the manufacturing industry a tax that is not being imposed elsewhere in the world. I am not absolutely certain whether global warming is taking place or not, but I am certain that if we start imposing measures that are not imposed elsewhere, all that will happen is that manufacturers will go elsewhere and there will be no overall decrease in carbon dioxide emissions.

I am coming to the end of my little piece. I want to assure the Chancellor that we are his most loyal supporters, even if we occasionally quibble on certain issues. We are determined to face down the forces of financial chaos on the Opposition Benches. We know that every Labour Government have ended in utter financial catastrophe, whether because of Attlee using war loans to build the NHS on the back of American credit, Harold Wilson devaluing the pound and telling us it would stay the same, Jim Callaghan having to go cap in hand to the International Monetary Fund, as the Greeks are now doing, or the previous Prime Minister, himself a former Chancellor, who told us that he had ended boom and bust and then created one of the biggest booms in history, on the back of lax lending regulations and lax immigration controls, and then the biggest bust in history, which we now have to sort out.

We know, as do most people in this country, that, whether one is a nation, a company or an individual, it is impossible to go on spending more money than one earns. That is why Government Members will be loyally supporting the Government on the Queen’s Speech and making sure that we can build a better Britain, built on real growth, not debts that our children will have to pay off at some point in the future.

--- Later in debate ---

[Ian Mearns (Gateshead) (Lab)]

If I had been standing in this House a month or even a fortnight ago to speak about the prospects for jobs and growth, I might have expressed the opinion that the entire credibility of the Government now stood at a crossroads. A month on, however, I believe that we are well beyond that point. The Budget, followed by the local government elections and the collection of sideshows that make up the Queen’s Speech, have made it clear that the Government have abdicated any responsibility for trying to generate any real growth in our economy.

As Labour Members warned when the coalition came to power, the policies adopted by the Government were effectively an enormous gamble with the future of our nation’s economy. We also warned that whereas the richest and most privileged in our society would be spared the costs of that gamble, the poorest and most vulnerable would be expected to pay the costs. We predicted that the experiment—the gamble—was doomed to failure. However, heedless of the warnings, and driven by an ideological desire to shrink the state, the Government pressed ahead, determined to use the excuse of the budget deficit to drive through their political agenda, oblivious to the damage to our economy.

[David T. C. Davies]

Is the hon. Gentleman simply following the mantra that we should have borrowed even further, on top of the £160 billion that we were already borrowing when his colleagues left office?

[Ian Mearns]

I can tell the hon. Gentleman what I would do: invest to save to grow, and then reap the benefits of that growth through the taxation system.

We warned that the Government’s policy was wrong, but I do not think any of us predicted just how wrong, just how disastrous its impact would be and just how much more difficult things would become in regions such as the north-east of England. The impacts on the young, as so clearly outlined by my right hon. Friend the Member for South Shields (David Miliband), are much greater in regions such as the north-east, yet Government Members seem completely oblivious to what is happening in these regions.

The UK economy has returned to recession, after shrinking by 0.2% in the first three months of 2012. A sharp fall in construction output is said to be behind the contraction, but it is not the only factor. BBC economics editor Stephanie Flanders says that the situation

“adds to the picture that the economy is bumping along the bottom”.

At Prime Minister’s questions, the Prime Minister has said the figures were “very, very disappointing”—that is perhaps the understatement of this Parliament. He went on to say:

“I do not seek to excuse them, I do not seek to try to explain them away…there is no complacency at all in this Government in dealing with what is a very tough situation that, frankly, has just got tougher.”—[Official Report, 25 April 2012; Vol. 543, c. 944.]

He said it was “painstaking, difficult work”, but the Government would stick with their plans and do “everything” that they “can” to generate growth.

I am surprised that the Prime Minister was disappointed —what did he expect? The economic outcome of his policies was completely expected by many commentators. The outcome was highly predictable. The Prime Minister needs to recognise that it is his Government who have caused this recession in Britain and that it is his policy that has taken us back into recession. He needs to accept responsibility, and to accept that cutting deeper and deeper is the problem, not the solution and that to continue blindly will only damage our economic prospects yet further.

The Leader of the Opposition hit the nail on the head when he said the economic figures were “catastrophic”. He said that

“this is a recession made by”—

the Prime Minister—

“and the Chancellor in Downing street.”

He went on to say that it is their

“catastrophic economic policy…that has landed us back in recession”.—[Official Report, 25 April 2012; Vol. 543, c. 944.]

The Office for National Statistics has said that the output of production industries decreased by 0.4%; construction decreased by a full 3%; and output of the services sector, which includes retail, increased by only 0.1%, after falling a month earlier. Those figures are slightly worse than many expected, but the fact that the UK is now technically back in recession should not detract from the underlying reality, which is very much as predicted.

The UK economy has been bumping along the bottom for more than a year and is struggling to gain any momentum. The preliminary figures from the ONS are consistent with the messages coming from official and private data, which say that the UK was once again relying heavily on services and consumption by households. That suggests that the recovery will continue to be weak. Demand is very weak. UK business is sitting on a cash mountain but will not invest because there is no demand in the domestic market. So we very much welcome the growth of exports in the car sector, but the fact that such exports are outstripping the domestic market is not really that great news, because the depression of the domestic market is the real problem. We do not have demand.

The ONS figures also demonstrate clearly that the fall in Government spending has contributed to the particularly large fall in the construction sector. Some Government Members have tried to question the ONS figures and argue that the position is not so bleak, but they are burying their heads in the sand. Joe Grice, chief economic adviser to the ONS, has vigorously defended the figures. He said the construction data were based on a survey of 8,000 companies and had been carefully checked and double-checked.

We are in a very difficult situation. All across Britain and Europe people are rallying to challenge the consensus on austerity, because it is nonsense. The election of the new President in France, who is committed to a policy focused on growth, challenges the failed orthodoxy of austerity; the election and protests in Greece, the protests in Spain and the state elections in North-Rhine Westphalia in Germany last Sunday are shouting to us that a change of direction is absolutely necessary.

The Government could, if they so chose, focus on growth, but they do not do so. The fact that they choose austerity—that they choose destruction rather than investment—is wilful, and it is clearly a political choice. But there is an alternative and I beg them, on behalf of regions such as the north-east and on behalf of my constituents, to change tack—we need growth.

--- Later in debate ---

[David T. C. Davies]

Will the right hon. Gentleman give way?

[Mr Byrne]

I will not give way, because there are so many points to respond to.

We know that this recession was not made by British business. It is not down to the weather, the snow or the royal wedding; it is down to the failed policy of this Government. Despite the good news we had on unemployment this week—there was a glimmer of hope—Britain’s jobs crisis has now gone on for too long. We now have more people working part time or becoming self-employed, because they will do anything to make ends meet. Long-term unemployment is surging towards the 1 million mark, the number of people out of work for two years is up to 500,000, 100,000 more people are signing on than last year, redundancies are up by 50,000, and vacancies are down by more than 10,000. Families all over Britain are facing a disaster, because of the failed policies of this Government.

This afternoon we heard those stories from all over Britain. The point was made forcefully by my hon. Friend the Member for Liverpool, Walton (Steve Rotheram), and it was a story repeated by my hon. Friends the Members for Ogmore (Huw Irranca-Davies), for East Lothian (Fiona O'Donnell), for Blackpool South (Mr Marsden) and for Leicester South (Jonathan Ashworth). We heard in the debate this afternoon that we need growth and demand—a point made by my hon. Friends the Members for Oldham East and Saddleworth (Debbie Abrahams), for Gateshead (Ian Mearns), for Great Grimsby (Austin Mitchell) and for East Lothian. We heard how higher unemployment is hitting some communities and some regions harder than ever—that was the point made by my hon. Friend the Member for Wirral South (Alison McGovern). It is hitting ethnic minorities harder than ever—that was the point made by my hon. Friends the Members for Stretford and Urmston (Kate Green) and for Oldham East and Saddleworth. It is now hitting young people harder—that was the message we heard from hon. Members from all parts of the House, and it was a point made with particular force by my hon. Friends the Members for Islington South and Finsbury (Emily Thornberry) and for Birmingham, Ladywood (Shabana Mahmood).

That is why what we needed in the last Budget and in the Queen’s Speech was not excuses, but action. We needed action on bank lending—that was the point made by my hon. Friends the Members for Leeds East (Mr Mudie) and for North Ayrshire and Arran (Katy Clark), and by the hon. Members for North East Cambridgeshire (Stephen Barclay), for Northampton South (Mr Binley) and for Aberconwy (Guto Bebb). We needed action on infrastructure spending, too—that point was made with great force by my right hon. Friend the Member for Barking (Margaret Hodge), the hon. Member for Erewash (Jessica Lee), and my hon. Friends the Members for Glasgow North (Ann McKechin) and for Glasgow Central (Anas Sarwar). This absence of action is now costing this country a fortune.

Jobs and Growth

David T C Davies Excerpts

Wednesday 12th October 2011 Commons Chamber

[David T. C. Davies (Monmouth) (Con)]

I confess that as I listened to the shadow Chancellor this afternoon, I almost felt a growing sense of admiration for the sheer effrontery of the man. This man who came to deliver a lesson to the Chancellor was personally responsible for much of the economic mess that the country now finds itself in. He, of course, is no longer in his place, but I wonder whether I might give a quick economic history lesson to those Members on the Opposition Front Bench who have hung around to listen to the debate.

In 1997 this country had a national debt of £350 billion and was basically spending what it earned. By May 2008, well before the collapse of Lehman Brothers and the banking problems, the national debt had already increased to £629 billion and the Government, during the boom times, had run a deficit of around £30 billion a year. I am yet to hear any Opposition Member explain why, when the country was booming, they spent £30 billion a year more than the country was taking in taxes. Once we hit the banking problems, which the previous Government successfully blamed all the economic problems on, the debt skyrocketed to £1 trillion.

Of course, even that is not the full story, because many sensible economists claim that the national debt is at least twice as large, as the figures used do not take into account the PFI contracts used for all the schools and hospitals that the previous Government built but never paid for. It does not take account of the liabilities for organisations such as Railtrack and Metronet, and of course it takes no account of public sector pensions. The reality is that we must now deal with a debt of at least £1 trillion and the deficit of £160 billion that we inherited.

Opposition Members like to blame it all on the banks. “It was all the fault of the wicked bankers”, they say. I have done a little checking with the House of Commons Library, and as far as I can ascertain the banks received £100 billion. That money was given out not simply in cash, but in shares and the rest of it, so a lot of it might come back to us. If we take the best-case scenario for the national debt, which is £1 trillion, rather than the £2 trillion suggested by many economists, and the worst-case scenario for the £100 billion that was given to the banks, which is that nothing will come back, even then that money accounts for only 10% of the national debt. What about the other £900 billion? When will the Opposition start accounting for that?

One trillion pounds is a lot of money. I was thinking about it earlier and trying to put it in perspective. If we were to create a graph and used 1 cm to show £1 million, it would have to stretch all the way from here to Highgate cemetery to show the scale of the wanton spending for which Opposition Members are responsible—I do not know whether it is relevant, but that is the burial place of Karl Marx.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I wonder whether the hon. Gentleman knows what the public sector debt was in 1997 and in 2007 before the recession.

[David T. C. Davies]

Yes, in 1997—

[Debbie Abrahams]

Does he know what it was as a percentage of GDP?

[David T. C. Davies]

Has the hon. Lady finished now, and may I continue? I am always fascinated by the fact that comparisons are made between levels of debt as a percentage of GDP. I will certainly give way again if someone can explain why we compare national debt with GDP. Why do we not do what any company would do and compare it with revenue? If we look at a comparison with 2010, when this Government took over and when the national debt was £1 trillion, we will see that the revenue coming in was £520 billion. The country had a national debt that was almost twice the revenue it was taking. Anyone who has run a company—most Opposition Members have not, but I have—will know that any company that found itself in such a situation would be declared bankrupt immediately.

[Kwasi Kwarteng]

Will my hon. Friend remind the House why the previous Labour Government ran a deficit for nine consecutive years from 2001 to 2010, despite having a boom?

[David T. C. Davies]

My hon. Friend asks a very good question. They managed to come up with an excuse after 2008, following the collapse of the banks, but as I said earlier, I am yet to hear an answer on why they ran a deficit from 2001 to 2008. Perhaps we will get one later.

What I did hear from the shadow Chancellor was some rather mealy-mouthed insults directed towards my right hon. Friend the Chief Secretary to the Treasury, who had a proper job outside politics and Government, as I did, which the shadow Chancellor seems to think is worth mocking him for. My right hon. Friend was not the man who was responsible for the £1 trillion-worth of debt, for selling gold at a fraction of the price, or for running up deficits in boom years. [Interruption.] I will not say anything about the euro at the moment, but there are many Labour Members who were urging us to the join the euro during those times and are now trying to give us a lesson in economics. I notice that they have all now gone very quiet.

The reality is that Labour Members never, ever learn their lesson. For them, it is not a case of plan A or plan B; there is only one plan: “Let’s tax people as highly as we can, and when we’ve finished squeezing every penny out of them, we’ll borrow more money.” They do not remember the words of one Labour Chancellor of the Exchequer during a Labour conference: “Comrades, you may think that we can tax and spend our way out of a recession, but I tell you that is no longer an option.” They still have not learned the lesson.

Clement Attlee failed in the 1940s when he tried to build his welfare state on the back of American war loans. There was Harold Wilson in the 1960s telling the public that the pound in their pocket was worth the same when he was rapidly devaluing it. Then there was Jim “Crisis, what crisis?” Callaghan, who, just like his successors, brought the country to the brink of utter bankruptcy, and did not even seem to think that he had done anything wrong. It was 18 years before they got another chance, and they have done exactly the same thing again: tax and spend, borrow and spend, just keep on doing it and do not worry about it.

I am glad that we have a Government who are not going to go for the easy option, which would be to borrow a whole load more money now in the hope of winning an election, which is exactly what Labour Members were doing for a couple of years. We are going to take some tough decisions, and that means getting our books in order. Unlike the shadow Chancellor, I know, having run a small family haulage business, that one cannot carry on spending more money than one gets indefinitely. I welcome the fact that the Chancellor is going to encourage real growth by making it easier for businesses to take people on and not have to worry about employment tribunals, which anyone who has run a small business does worry about all the time because of the number of spurious claims.

[John Mann]

Rubbish!

[David T. C. Davies]

I wonder whether the hon. Gentleman has ever had any experience of running a business or dealing with spurious employment tribunals—I very much doubt it.

I am also glad that the Chancellor has recognised that reducing our carbon emissions at a time when the economy is facing problems is not necessarily the wisest thing to do, particularly when the Government are now having to accept that our winters are getting colder, that more people are dying through cold than through heat, and that the link between carbon dioxide and global warming is not quite as clear-cut as many people say.

[John Mann]

rose—

[David T. C. Davies]

I will not give way again, because I have done so twice and I do not want to cut myself off.

I congratulate the Chancellor and all his colleagues in the Conservative and Liberal Democrat parties and urge them to stay the course, to ensure that we spend what we earn, and not to listen to Labour Members or take any notice of people such as the former Prime Minister. Even he did not seem to know the difference between debt and deficit, because anyone who looks at the YouTube video of him abusing Mrs Duffy and calling her a bigot will notice that halfway through he said, “We will cut the debt in half.” Did he not know the difference between debt and deficit, or was he planning much deeper cuts than the coalition Government? Perhaps someone will answer that question.

All Back Benchers on this side of the House are supportive of the Government because we recognise, as we always have, that it is not possible to carry on spending money that one does not have because that merely creates a bigger problem further down the line for our children. That is why I urge my colleagues to stay the course.

--- Later in debate ---

[Chris Evans (Islwyn) (Lab/Co-op)]

It is a pleasure to be called to speak in the debate, and a pleasure to follow the hon. Member for Wycombe (Steve Baker). As a history graduate, I have enjoyed the history lessons during this afternoon’s debate. I enjoyed the intervention from the hon. Member for Monmouth (David T. C. Davies), telling me all about the ’40s, ’60s and ’70s. I have heard many Members tell me what happened under a Labour Government long before I was born, but it seems to me that we have always bounced back to the same point: those on the Tory Benches say that it is all Labour’s fault, while we say that it is all the Tories’ fault. The truth is, where is that getting us?

In my constituency, 2,000 people are claiming jobseeker’s allowance. Some 40% of those are under the age of 24. Behind those figures, there are real human tragedies: kids leaving school believing that there is no hope for the future other than being driven—let us hope not—into the hands of drug dealers or becoming involved in crime; the hard-working father who comes home one night and says to his family, “I’ve been made redundant after 20 years,” and his wife who worries; the single parent who is bringing up children on her own and who has just lost her job. What does she do? It is all very well quoting statistics and figures, but what can we do for those people?

Unemployment is not a price worth paying. For me, anybody losing their job is a total tragedy. That is why the motion is so important: we should use bankers’ bonuses to create youth jobs and do something to help people, not after being out of work for six months, as the Prime Minister said in his speech, but from day one. I remember when I was a trade union official and jobs were going as, unfortunately, they were being offshored. A scheme was created so that when people were made redundant the company matched half their redundancy to be used for training. Some people decided to become driving instructors, whereas others in the Solent decided to become ship builders, and so on. It interested them and that was what they wanted to do. I want some incentive in the tax system for companies that make people redundant to use similar ideas.

[David T. C. Davies]

Will the hon. Gentleman give way?

[Chris Evans]

I am sorry, I cannot take an intervention because other people want to speak, although I would love to give way to the hon. Gentleman.

As I was saying, when a person is unemployed—I do not know how many people in the Chamber have been unemployed—it is soul destroying. It reduces confidence and, in the worst cases, it brings about depression. If anybody wants to see a microcosm of the economy, they should walk down the local high street. There is nothing more sad and depressing than seeing the butcher, the baker and even the candlestick maker all boarded up. Nothing says more clearly that the economy is not working.

So what can we do? We could reduce VAT on a temporary basis to encourage people to come back to the high street, but we could do more than that. We could encourage local authorities to reduce their business rates so that people can stay in their businesses and we could encourage communities to come in so that these places are not boarded up. Above all, we could ask authorities to start providing free car parking. That might be a bit more simplistic than the credit swaps we have heard about, but I am concerned.

I am going to say something quite shocking which is not in vogue at the moment. This afternoon, I spoke to Lloyds TSB and I thought, “It's all very well to bash the banks”—and we should bash those who have been responsible—"but we have to make an assertion and realise that only one part of the banking industry failed." It was not the retail banker or the cashier in Blackwood High street or Newbridge, who serves their community; it was the bankers in the City, and that part should be reformed. However, we have to be very careful when we talk about reform. We cannot introduce regulation that hinders financial innovation. That would be impossible, and I am very concerned about that.

We have to ask ourselves how we are going to encourage manufacturing when we do not encourage banks. I will be honest: I have been one of the banks’ biggest critics, but at the moment we are asking them to do something that is almost impossible—we are asking them to save money and lend at the same time. How will they do that? I do not know, but tonight I will walk through the Lobby and support the motion, because I genuinely believe that we need to do something to promote growth.

Finance (No. 3) Bill

David T C Davies Excerpts

Tuesday 5th July 2011 Commons Chamber

[Ian Swales]

I am not aware of Airbus’s activity in detail, but I will support the hon. Gentleman’s point later by saying that such industries have a role to play in our future, and that they are not just of the past.

The hon. Member for Bristol East (Kerry McCarthy) has mentioned the comments of the head of Tata Steel. He also said:

“European steelmakers already face the prospect of deteriorating international competitiveness because of”

EU emissions costs. On the provision in the Bill, he added:

“This is an exceptionally unhelpful and potentially damaging measure.”

As well as steel, other large sectors are at risk—including chemicals; oil and gas; cement; aluminium; glass, bricks and ceramics; tyres; and paper. There could be more. Those are broadly the sectors that are most affected, but the EU has gone further and drawn up a list of 164 industrial sectors and sub-sectors that are deemed to be exposed to what it calls carbon leakage. That means that the EU recognises that the EU emissions trading scheme and other measures could disadvantage European companies that compete internationally. The sectors and sub-sectors that are judged to be at risk of carbon leakage are estimated to account for around a quarter of the total emissions covered by the EU emissions trading scheme, but for around 77% of the total emissions from EU manufacturing industry.

The UK Government's proposing to add a further tax to those already in place is bound to have an effect. We have just witnessed fresh closures and 1,500 job losses from Tata in Scunthorpe and Teesside. I see a number of hon. Members in their places who are directly affected by that. Tata again mentioned UK energy prices as a factor in its recent decision, but in the fourth carbon budget statement, the Secretary of State for Energy and Climate Change said that

“we need to ensure that energy-intensive industries remain competitive and that we send a clear message that the UK is open for business.”—[Official Report, 17 May 2011; Vol. 528, c. 177.]

The announcement has been welcomed, but there is concern that, to date, there has been insufficient detailed consultation on, and impact assessment of, the proposals with respect to energy-intensive industries. Consequently, the fear is that the Government might underestimate the risk to those sectors.

[David T. C. Davies (Monmouth) (Con)]

I am grateful to my hon. Friend—I suppose I should call him that—for giving way on that point. Does he find it slightly ironic that Members of all parties in this House have for years called for all sorts of extra costs on any industry that generates carbon in any form, but that now, all of a sudden, when the consequences of that become clear, they begin to express their reservations?

[Ian Swales]

I thank my—yes—hon. Friend for his intervention. It seems that the issue is becoming more prominent. That is due partly to industry lobbying. Earlier this year we set up an all-party parliamentary group on energy-intensive industries. I have major concerns for my constituency and the Tees valley, and I am an officer of that group—at least one other officer is in the Chamber. The very high level of interest shown in the group by companies from all sectors indicates the potential gravity of the problem.

Those industries are looking not for special favours, but simply for a level playing field on which to compete internationally. Despite what some commentators claim, there is already a price issue. Even before the Bill, the increase in bulk electricity prices in the UK over the past 10 years was 22% more than in Germany, 29% more than in France and 64% more than in Spain.

The inconvenient truth about UK carbon reduction performance is that it is partly due to the rapid decline in manufacturing. As we have heard in this Chamber many times, under the previous Government manufacturing reduced from 22% to 11% of the economy. Our goal should not simply be to reduce our energy usage at the expense of those industries which, by their nature, are energy intensive. A tonne of steel cannot be melted, and chlorine cannot be made from brine, without using a huge amount of energy—it is simply not possible. Our goal should be to improve our energy efficiency for the same level of activity, not to reduce activity. Otherwise, the trend of the UK exporting jobs and importing carbon will continue.

To ensure that the UK makes a real contribution to climate change, we cannot look just at carbon production; we must also measure carbon consumption. I say that mainly to ensure that the effect of imports is recognised, but we must also acknowledge the contribution of export businesses to our economy. There is no better example than the restarted Redcar steelworks, which will contribute almost 1% to the UK’s carbon emissions, but whose output will go almost wholly to Thailand. Whose carbon is that?

The Government’s policy has far wider economic consequences. Energy-intensive industries play a vital economic role. For example, as the hon. Member for Bristol East said, the chemical industry is a vital exporter—in fact, I believe that it is our biggest exporter. That illustrates how important such industries are to our national economy as well as our local economies. Those sectors feed many other industries, such as automotive, aerospace and green technology, which needs materials for wind, wave and solar power.

We should also remember that the service economy does not exist in isolation—it partly depends on manufacturing, all the way from office cleaners to corporate lawyers and merchant bankers. Pricing those industries out of the UK would mean that tax revenues fell because of closures, and a lack of further investment. That will have the knock-on effect of higher unemployment and an increased burden in welfare costs. I therefore hope that the Minister considers the wider economic consequences of the effects of the Government’s policy on energy-intensive industry.

Energy-intensive industries are often capital intensive, which means that companies cannot just pick up their kit and move. The key thing for the UK is whether executives in boardrooms across the world are writing off the UK as a place to invest and reinvest. International businesses have options on where to put their money. I know from experience in the chemical industry that a business can take up to 20 years to die after an exit decision is effectively made by ceasing to reinvest.

Energy-intensive industry does and will continue to play its part in improving energy efficiently. It also produces a range of environmentally beneficial products, such as catalysts, insulation, lightweight plastics, and, as we have heard, energy-saving aerospace products. The all-party group recently heard how developments in tyre technology reduce fuel use in vehicles, how new types of glass reduce heat loss from buildings, and which industries are needed to make photovoltaic cells. To give another example, I am aware of a research project in my constituency between Tata, the steel producer, and the Centre for Process Innovation, to make construction-grade photovoltaic panels. Such developments are vital in moving the UK towards a low-carbon economy. We do not want that expertise to be lost to the UK. Energy-intensive industries are not sunset industries that stand in the way of our low-carbon goals, but crucial allies in delivering the necessary technology to make them a reality.

There is therefore an urgent need for simplicity in carbon taxes and for long-term certainty for the industry. Energy-intensive industries need such clarity before the carbon price support mechanism is introduced. Will the Minister assure me that she supports the Energy and Climate Change Secretary, who said—and I repeat—that

“we need to ensure that energy-intensive industries remain competitive and that we send a clear message that the UK is open for business”?—[Official Report, 17 May 2011; Vol. 528, c. 177.]

Will she ensure that the Government engage in comprehensive consultation, and take steps to ensure that a full package of mitigation measures is agreed and legislated for, ahead of the introduction of carbon price support?

Loans to Ireland Bill

David T C Davies Excerpts

Wednesday 15th December 2010 Commons Chamber

[Mr Osborne]

We are being repaid in sterling, so that answers the hon. Gentleman’s first point. I have already dealt with the second point on a number of occasions, but I shall just point out that the effect would be exactly the same. Whether I brought to the House legislation or used the affirmative procedure, I would have to get the support of Members, so materially the impact would be exactly the same: the House of Commons would be able to stop such action taking place. I should stress that I have absolutely no intention of doing so at the moment, and there is protection.

[David T. C. Davies (Monmouth) (Con)]

I do not pretend to be an economist, but does the Chancellor share my concern that, if the European Union forces Ireland to put up its corporation tax, that might hold greater danger for us, as Ireland could be in less of a position to pay us back the money? For that reason alone, we should resist any attempt by outside bodies to impose a tax regime on Ireland.

[Mr Osborne]

My hon. Friend makes a very good point. A sudden flight of international investment from Ireland is not in anybody’s interest. All countries seek to compete against each other for such inward investment, but, as I say, it would set a poor precedent for the UK if one nation state or a collection of nation states started dictating to another nation state what its tax rate should be.

--- Later in debate ---

[Alan Johnson (Kingston upon Hull West and Hessle) (Lab)]

We will support the Bill. The more I listen to the Chancellor, the more my admiration and respect grows for his predecessor, my right hon. Friend the Member for Edinburgh South West (Mr Darling). On 8 May, my right hon. Friend negotiated arrangements under which the UK remained outside the €440 billion European financial stability facility and ensured that we did not contribute as much as a rusty old drachma to the bail-out of Greece.

[David T. C. Davies]

Will the right hon. Gentleman give way?

[Alan Johnson]

I will take interventions later.

In his statement on 22 November—repeated today—the Chancellor said that he counselled his predecessor against joining the European financial stabilisation mechanism, which was a pre-existing fund involving all 27 member states and was worth only a seventh of the larger facility. As the Chancellor said, my right hon. Friend the Member for Edinburgh South West is in his place and if he catches your eye, Mr Deputy Speaker, he can give his recollection of that conversation.

However, given that the mechanism—the smaller amount—was decided by qualified majority voting, it seems that agreeing to ensure that we stay out of the €440 billion EFSF was a good deal for our country, particularly as my right hon. Friend ensured that none of the mechanism of which we were part was used to bail out Greece. That was a good deal all round, and a lesson for our inexperienced Chancellor in the art of negotiation. Indeed, the quip going round a couple of years ago, when the collapse of the banking industry in Iceland was closely followed by what happened in Ireland, was: what is the difference between Iceland and Ireland? Answer—one letter and six months. A modern variation could be to ask, what is the difference between Darling and Osborne? Answer—five letters, six months and £6.6 billion.

--- Later in debate ---

[Alan Johnson]

I believe that the hon. Gentleman will seek to address that in his amendment to clause 3, which we will discuss later. On the specific issue, there is no doubt that the mechanism was decided by qualified majority voting. All 27 European member states were part of that. I know from experience of negotiating in Europe over many years that it is a pretty turgid process and one has to be on one’s toes. My right hon. Friend the Member for Edinburgh South West can speak for himself, but I think he got a very good deal for this country on Greece.

The Chancellor must take responsibility for the deal that he has negotiated and not try spuriously to blame his predecessor, as he did again in his evidence to the Treasury Select Committee on 8 December. He had a choice about whether the UK should contribute to the Irish rescue plan. In principle, he has made the right choice, but before us today is a hastily drawn-up Bill that does not set out the terms of the loan, the interest rate or the repayment schedule. Colleagues from all parties will want to explore and probe those matters in Committee, and we particularly want to get to our amendments on clause 2, so a goodly proportion of the time available to us this afternoon may be better spent on that. It is therefore not my intention to detain the House for long on Second Reading.

[David T. C. Davies]

Does the shadow Chancellor share my gratitude that the decision is being taken in this Chamber and not by a group of unelected bankers in Frankfurt? That is because we did not listen to Opposition Members—we have never supported joining the euro, which would have meant that the decision would not have been ours to make in the first place.

[Alan Johnson]

I always try to avoid sharing the hon. Gentleman’s pleasure. I shall come to the nature of the deal, because in debating the Bill we are discussing one element that constitutes a little more than half of the money that the UK taxpayer is putting into the deal.

The argument for treating Ireland as a special case is clear. I shall reiterate some of the points that the Chancellor made. Our two countries are intertwined in commerce, in trade, in banking, in culture and in sport. We share a language and a land border. Not only is Ireland one of our five largest export markets but, as the Chancellor said, one part of the United Kingdom—Northern Ireland—sends 40% of its exports across the border to the Republic. The situation in Ireland could cause significant damage to UK financial institutions and create instability in both sovereign and bank debt markets. The UK is Ireland’s largest creditor—we are talking about almost €112 billion—and I understand from a newspaper report last week that the Royal Bank of Scotland and Lloyds have Irish loan books worth 82% and 53% of net assets respectively.

In its report last month, the International Monetary Fund singled out Ireland to demonstrate what it called the “key underlying vulnerability” of UK banks’ exposure to foreign banks. The support programme assures the protection of senior bond holders in Irish banks from any losses, thus affording a greater level of protection to UK banks. For all of those reasons and many more, it is in this country’s interest to support this package.

I want to raise three concerns. The first, which was raised in a couple of interventions—including by the hon. Member for Stone (Mr Cash)—is the open-ended nature of the commitment. There is a distinct possibility of more money being required for Ireland after 2013, given the tendency of Irish banks to downplay the severity of their situation and the tough conditionality being applied alongside concerns about European growth. In those circumstances, should we not make it clear to our European partners that the EFSF must be used for any further financial support, rather than giving the impression that this is a well into which further buckets can be dipped?

That is particularly relevant to my second concern about the balance between the contributions made by the various mechanisms. The €440 billion EFSF—the facility— for eurozone countries only is being tapped for 4% of the total resources that eurozone countries have agreed to make available for Ireland. The smaller EFSM—the mechanism—of which we are part and to which we contribute, was not used at all for the Greek bail-out. The EFSM is offering 37.5% of its available resources for the Irish bail-out. Why was that formulation chosen and why is the total amount we are contributing double the amount that we would have had to pay if we were a eurozone country?

Draft EU Budget 2011

David T C Davies Excerpts

Wednesday 13th October 2010 Commons Chamber

[Justine Greening]

That is the sort of argument that I have been presenting to other European countries, including the French Minister who was in London a few weeks ago. As the hon. Gentleman says, it is simply untenable for the EU budget to remain unchallenged when across Europe we are making incredibly difficult decisions on our national budgets. The way in which the hon. Gentleman phrased his argument is exactly the same as the way in which I have been pitching ours to our European partners. We are hopeful that, over time, there will continue to be a growing sense among them that we do indeed need to start challenging the European budget that is currently proposed.

[David T. C. Davies (Monmouth) (Con)]

My hon. Friend is presenting a powerful argument to encourage us to support her. Does she accept that all the Members who have put their names to the amendments, however they vote tonight, are helping her and her colleagues in Europe by demonstrating the strength of feeling and the anger that exist throughout the House?

[Justine Greening]

My hon. Friend is absolutely right. That is one of the reasons why I welcome tonight’s debate. I believe that it underlines the concern that we feel, not just as a Government but as a Parliament. The value that we can gain from the debate is our ability to show that we are united as a Parliament in standing up to the rise in 2011, and in wanting to see it cut.

The Chancellor, Ministers and officials have been working with member states, the Commission and the European Parliament to make our case. As members of the European Scrutiny Committee will know, at a time of fiscal consolidation the EU simply cannot afford to budget for more than it can realistically spend. Therefore, we have also maintained a firm focus on realistic implementation rates, because implementation of the EU budget has long been a cause of concern with a combined surplus and underspend in 2009 of almost €5 billion.

As I have said, the Government will focus not only on the size of the EU budget. We also want to focus on its priorities for spending, because it is clear that certain areas of the EU budget simply do not offer the best possible value for money that we should be able to expect. The common agricultural policy, citizenship spending in some areas and spending on the EU’s own administration are foremost among them. There is also, of course, the perennial question of why the EU is based in both Brussels and Strasbourg. Critically, we want an EU budget that prioritises economic growth and recovery across the EU and worldwide, just as we are doing with our fiscal consolidation measures here in the UK. We want a budget that is focused on prioritising poverty reduction, promoting stability and addressing the challenges of climate change. The Government will therefore work to ensure that funding for activities is focused on areas that offer the best value for money and that offer the best deal for the British taxpayer.