Oral Answers to Questions

Debate between Geraint Davies and Stephen Crabb

Wednesday 21st January 2015 Commons Chamber

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

Is the Secretary of State aware of the innovative medical centre at the end of Wind street in Swansea, which treats intoxicated people on the spot, freeing up ambulances, police and accident and emergency departments? Will he inform the Secretary of State for Health in England of the success of that venture, and suggest to him that similar facilities here could help to reduce the pressures caused by the removal of walk-in centres?

[Stephen Crabb]

I am not familiar with that facility, although I am familiar with Wind street—from what I have read, not from what I have experienced. However, we will certainly look at that project in some detail and I will raise the matter with Health Ministers.

Wales Bill

Debate between Geraint Davies and Stephen Crabb

Wednesday 10th December 2014 Commons Chamber

[Geraint Davies]

That is an interesting point, but it does intrinsically depend on the elasticity of demand. At a time when corporation tax is already the lowest in the G8, I suggest that inward investors are not looking to Britain to lower its corporation tax and making a marginal decision to invest. They are looking at the level of research and development and the prospects of being part of Europe. One issue for inward investors is the uncertainty of a referendum ending up with us as a sort of chip shop England floating out into obscurity with UKIP and the Tories.

In my view, if we cut corporation tax again there will be a net reduction in corporation tax revenues. On the income tax issue, I have an open mind. I am just throwing forward some of the scenarios whereby we can lose out in England and in Wales and making a point, which I ask the Minister to respond to in his summing up. I want to know what analysis has been done of the potential downside to the Exchequer of Wales reducing the top rate of tax and people migrating to Monmouth? What are those numbers and what consideration has he made? My guess is that he has made no consideration, and if so we should not be hurtling ahead in this way.

[Stephen Crabb]

I will be very brief as there is another set of Lords amendments that we need to debate.

We spent most of this debate not debating the specifics of the Lords amendments about the removal of the lockstep. Most of the time has been spent listening to the weight of arguments, largely from Labour Members, against fiscal devolution full-stop. So we end the parliamentary passage of the Wales Bill exactly where we started: with three parties in this Chamber recognising the potential benefits to Wales of devolving a portion of fiscal powers—we are not talking about a full step down the road of full fiscal devolution, but a strong step forward —and one party resolutely digging in, trying to pretend that there is some kind of plot or conspiracy; we have had all those words and that language used before.

Government Policies (Wales)

Debate between Geraint Davies and Stephen Crabb

Wednesday 26th November 2014 Commons Chamber

[Stephen Crabb]

We are delivering this project. We have worked very constructively with the Welsh Government to put the deal in place. We will see trains running on the electrified service to Swansea in 2018, and on the valleys lines in 2022. Obviously, those timetables are subject to how quickly the Welsh Government move in managing the project, but they understand its strategic importance and urgency for people and businesses in south Wales.

[Geraint Davies]

I welcome the news of the financial deal and the certainty of the timetable, with a date of 2018 for the Swansea service. However, the economics of austerity and low wages have meant that instead of increasing by 7% this year, income tax receipts are flatlining, and the projected income from national insurance and income tax is £13 billion down, so the Chancellor will not now be able to reduce the deficit by £11 billion. Does the Secretary of State not accept that the politics and economics of low wages and hitting the poor hardest simply are not working, and debt is being driven up?

[Stephen Crabb]

I am not sure that I follow the hon. Gentleman’s argument. If he is expressing concern about the deficit, let me ask him why, for the last four and a half years, he and his colleagues have pursued policies with the exact objective of increasing the deficit and increasing the debt, and have argued and voted against every measure we have tried to introduce to restore stability and sanity to our national finances.

Effective transport links are a vital part of any modern economy, and few areas in the United Kingdom are more in need of the improved commuter costs, reduced travel times and more frequent train services that electrification will bring than the valleys communities. Yet again, investment has Welsh people at its heart. The Government’s programme of investment in rail infrastructure in Wales and throughout the UK is one of the most ambitious since the development of the rail network in the 19th century. By 2019, we shall have put in place more than 870 miles of electrification, whereas Labour Governments have managed less than eight miles.

Rail electrification is only one example of the constructive and co-operative relationship that we have struck with the Welsh Government to help deliver for the people of Wales. In contrast to the Labour party in Westminster, we do not posture and play silly games; we roll up our sleeves, put partisan interest aside and do our very best to help get Wales moving again.

Opposition Members may recall the NATO summit in Newport just two months ago, which was a stunning success for Wales—a great example of two Governments working in co-operation to deliver for the people of Wales. We hosted the largest gathering of world leaders in Britain’s history, putting Wales on the world stage. We worked with local business, local councils—I pay particular tribute to Newport city and Cardiff city councils—the Welsh Government and the local people, and they all delivered superbly. NATO showcased the excellent hospitality Wales has to offer and created jobs for local people, and this success paved the way for last week’s investment summit—another example of this Government working positively with the Welsh Government in the interests of Wales.

It could not be any clearer: the UK Government are putting business at the forefront of the recovery and they are delivering. I refuse to accept the Opposition’s argument that the private sector in Wales is too weak for the rebalancing of the economy to work, and I certainly refuse to accept the constant bashing the shadow Secretary of State delivers in respect of Welsh businesses.

These two historic events—the NATO summit in September and the investment summit last week—should convince the shadow Secretary of State that Wales can deliver on a scale matching any other nation in the world. Joint working on this scale demonstrates how the Welsh and UK Governments can co-operate and collaborate in the interests of the people of Wales.

Securing good quality jobs for people in Wales is a priority shared by both the UK and Welsh Administrations. Airbus in north Wales continues to be a shining example of the quality of jobs and the skills sets Wales has on offer. I was therefore delighted that investment from both Governments last week has secured 6,000 jobs in the long term at the firm’s factory in Flintshire, in the constituency of the hon. Member for Alyn and Deeside (Mark Tami).

Wales Bill

Debate between Geraint Davies and Stephen Crabb

Monday 31st March 2014 Commons Chamber

[Stephen Crabb]

That is not what I am saying. A key principle of the mechanism is creating the incentive for the Welsh Government to create the conditions for the economy in Wales to grow, so that they can reap the fruits and benefits of a growing Welsh economy. The protection kicks in when there are shocks and changes that affect the overall UK tax base. When changes would otherwise have a detrimental impact on Welsh Government revenues, Welsh Government revenues are protected because of the indexation. I shall circulate further information to right hon. and hon. Members.

[Geraint Davies]

Is the Minister saying that there are only upsides? Is he saying that, if the Welsh Government do well and grow the Welsh economy, they get a greater share of overall UK revenue, and if things go the wrong way from their point of view or the UK point of view, they still get that share or more and it never goes down? I cannot believe that.

[Stephen Crabb]

There is a lot of upside in the proposals, which I hope Opposition Members have the intelligence and foresight to recognise. In fact, the Silk commission calculated that Wales would have been better off under the system we are proposing had it been in place in the past decade. That answers the question asked by the right hon. Member for Neath—he asked whether Wales will be better off. The Silk commission estimated that, had the system been in place in the past 10 years, the people of Wales would have been better off. I hope that that also provides assurance to the hon. Member for Swansea West (Geraint Davies), who sees the Bill as a nasty plot and conspiracy.

Some Opposition Members have sought to link the devolution of income tax to so-called fair funding. That is another diversion they are throwing up, and another barrier they are erecting, so that they do not have to contemplate greater and truer accountability for the Government in Cardiff Bay, which they would prefer not to contemplate. The joint statement from the UK and Welsh Governments in October 2012 established a clear process to review relative levels of funding for Wales and England in advance of each spending review. The announcement recognised that levels of funding for Wales relative to England were not currently converging, but that, if convergence in funding is forecast to resume during the period, both Governments are committed to discussing a sustainable and fair solution. The fair funding mechanism agreed with the Welsh Government in 2012 worked very well in practice ahead of the last spending review. I hope that that, too, reassures hon. Members.

Current funding levels are well within the parameters recommended as fair by the Holtham commission. Safeguards are in place to address convergence if and when it resumes. Therefore, the funding regime for Wales should not be seen as a barrier to income tax devolution. That is one more smokescreen the Opposition are throwing up to disguise their basic opposition to, and dislike of, fiscal devolution.

A number of hon. Members mentioned borrowing powers for capital investment. There is clearly a broad consensus on all sides in favour of giving the Welsh Government the ability to borrow to invest in Wales’s infrastructure. Some Opposition Members want the Welsh Government to be able to borrow more than the £500 million permitted under the Bill—some suggested they should be able to borrow a virtually unlimited amount. The UK Government have set the limit considerably higher than we would have if we had used the tax and borrowing ratios we used in the Scotland Act 2012. Had we done that, the borrowing limit would be closer to £100 million, based on the taxes devolved in the Bill. We have set a higher capital borrowing limit of £500 million initially, but with flexibility for that limit to be increased if the Welsh Government gain access to further independent streams of funding, such as an element of income tax. If Opposition Members want to see the Welsh Government have a greater borrowing capacity, they should join us in campaigning for a yes vote in an income tax referendum.

What we are not prepared to accept is reckless borrowing without the means of paying that money back. Borrowing must be commensurate with the independent revenue streams. The Government have not worked hard over the last four years to build a reputation for financial prudence and competence, and tackling Britain’s deficit effectively, only to throw away that hard-earned reputation by allowing the Welsh Government to borrow beyond their means.

The hon. Member for Swansea East (Mrs James) said that she would welcome sight of the “workings-out”—I think that was the phrase she used—to help her to understand how we arrived at the £500 million borrowing limit. I suggest that she looks at pages 26 and 27 of the Command Paper that was published alongside the Bill, which is clear on the rationale and the basis for deciding on the £500 million figure. It is higher than would have applied if we had stuck closely to the Scottish ratios, and that is because we want the Welsh Government to crack on with the job of improving the M4. That was agreed with Welsh Ministers, and it gives them the tools to make progress quickly and to tackle that major infrastructure problem.

The hon. Lady also asked why Northern Ireland’s position was different. Northern Ireland is not a good benchmark for hon. Members to use in comparing borrowing regimes. The Northern Ireland Executive exercise many of the powers and responsibilities that are exercised by local authorities in other parts of the UK. In particular, they collect the equivalent of council tax and business rates and have borrowing powers similar to those held by local authorities.

Opposition Members did not talk much about borrowing, which will have a huge, transformational impact in allowing the Welsh Government to invest in new infrastructure in Wales, and nor did they talk much about the impact of lowering taxes in Wales, creating a low-tax economy and creating new jobs. They saved most of their energy and time for discussing the ending of the ban on dual candidacy. In fact, the right hon. Member for Neath used large chunks of a speech he made in 2006, if my memory serves me right. It has been like “Groundhog Day” as Opposition Members—although I am sure they were reflecting the concerns they have heard in their constituencies—manned the barricades to oppose a sensible measure—

Oral Answers to Questions

Debate between Geraint Davies and Stephen Crabb

Wednesday 26th March 2014 Commons Chamber

[Stephen Crabb]

The hon. Gentleman will forgive me if I say that I will be cheering on neither Nick nor Nigel in this evening’s debate. I hear what he is saying. I, too, speak to a lot of farmers in west Wales and they tell me that they do not want to be seen as just reliant on handouts from the European Union. They want to be regarded as business men and women in their own right, so they support our position to reform the European Union and to become more competitive.

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

The Minister should be aware that 150,000 jobs in Wales and 25,000 jobs in the Swansea bay city region depend on trade with Europe. Does he accept that firms such as Unilever, Nissan and others are saying that even talk of a referendum is undermining investment and jobs in Wales today, and that if we do in fact end up outside Europe following a referendum, they will withdraw jobs and investment from Wales and Britain? Will he therefore oppose such a referendum?

[Stephen Crabb]

The hon. Gentleman’s position is not correct and is not supported by the facts on the ground. He should not scaremonger and use old figures to suggest that businesses are scared to talk about reform and renegotiation. Investment is coming into the United Kingdom and into Wales. The prospects for the Welsh economy are very positive indeed.

Oral Answers to Questions

Debate between Geraint Davies and Stephen Crabb

Wednesday 9th October 2013 Commons Chamber

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

9. What recent assessment he has made of the effects in Wales of changes to housing benefit.

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

The Government remain committed to reforming housing benefit to create a fairer and more affordable system.

--- Later in debate ---

[Stephen Crabb]

We are not forcing disabled people out of their homes. On the hon. Gentleman’s question about Flintshire, we are making available to his local authority more than £240,000 this year in discretionary housing benefit. I ask him to ask his local authority why it has more than 275 empty properties in the social rented sector. That is part of the answer to the local housing problems in Flintshire.

[Geraint Davies]

Is the Minister aware that in Swansea two thirds of the thousands of people affected by the bedroom tax are now in arrears and that those arrears have doubled since April? Will he and the Secretary of State have an urgent meeting with the Prime Minister to make the case for Wales, which is the worst affected area in the whole of Britain, with fewer smaller units and the poor being thrust into dire poverty and the arms of loan sharks?

[Stephen Crabb]

I am happy to meet the hon. Gentleman to talk about housing issues in Swansea, but he should be aware that there are about 300 empty properties in the social rented sector in Swansea. That should be part of the answer to the problems he is talking about. I am concerned to hear about the large increase in the number of people he says are suffering from rent arrears. We are making available substantial resource to Swansea borough council, and we should be asking how it is using those discretionary housing payments to assist people through the difficult transition.

National Assembly for Wales

Debate between Geraint Davies and Stephen Crabb

Wednesday 6th February 2013 Commons Chamber

[Stephen Crabb]

The hon. Lady asks a direct question about the cost of the Green Paper consultation and I will give her a direct answer. The consultation on the Green Paper cost just over £3,000. If she or any of her colleagues are tempted to say, “Isn’t that now a waste of money because we are not proceeding with changes to Assembly constituency boundaries?” I remind them that the Green Paper was about a lot more than the shape of constituency boundaries for Assembly elections. Important parts of the consultation still need to be considered, and I will come to that in a moment.

[Geraint Davies]

The Minister seems to suggest that the Government’s plan was to improve democracy. He will correct me if I am wrong, but the plan that has been mentioned was, in essence, to reduce the number of directly elected MPs from 650 to 600, and increase the number of peers by 50. In other words, to substitute 50 elected Members of Parliament for 50 unelected Members. How can that be democracy? It is ridiculous.

[Stephen Crabb]

I am not sure where the hon. Gentleman has been for the last year, but he will know it was this Government’s serious intention to see a substantial directly elected proportion of the House of Lords, and there is still a huge appetite for that. As a result of Parliament’s decision to defer the reform of parliamentary constituencies until 2018, it would not be in anyone’s interest to proceed with that aspect of the Green Paper at this stage.

[Geraint Davies]

Will the Minister give way?

[Stephen Crabb]

I am going to make some progress. I am disappointed but not surprised that the Labour party is using this opportunity for point scoring and attempted grandstanding, rather than for a serious discussion of the issues.

While the Labour party engages in what has become characteristic negativity, and in the absence of any constructive contribution to the debate from Labour Members, the Government will consider how to take forward the other important proposals in the Green Paper. First, should Assembly terms be increased from four to five years? Secondly, should the prohibition on standing as a candidate in both a constituency and a region be lifted? Thirdly, should Assembly Members be prohibited from sitting in Parliament and from having multiple mandates?

[Geraint Davies]

Before the Minister answers those important questions, will he confirm that the boundary changes are dead and buried and that there is no plan to introduce further boundary changes in Wales before the next election? Following his point about the Lords, will he confirm whether there is a plan to introduce a change to the House of Lords before the next election? I would be very glad to hear that there is such a plan.

[Stephen Crabb]

I have been clear about the consequences of the vote taken in the House last Tuesday—I was disappointed with the outcome—and that we will not proceed with the aspect of the Green Paper that deals with changes to Assembly constituency boundaries.

Of the three questions I have highlighted, the most pressing is on the length of Assembly terms. Hon. Members will be aware that, as a result of concerns expressed by the Welsh Government during the passage of the Fixed-term Parliaments Act 2011, the Assembly election scheduled for May 2015 was deferred by one year until 2016 to avoid a clash with the next general election. That is a good example of the UK Government listening to the concerns raised by the Welsh Government and, to address another point the hon. Gentleman raised, collaborating with them. That is a one-off change. The two elections are set to coincide again in 2020 unless provision is made to prevent it.

A majority of respondents to our consultation favoured a move to five-year terms to reduce the likelihood of elections coinciding in future. The decision is a finely balanced one—good arguments have been made in support of both options—but however we decide to proceed, we are mindful that electors in Wales should be clear on how long they are electing their representatives for. Importantly, all four political parties in the Assembly favoured a move to five-year terms. It is worth putting that on the record.

In the Green Paper, the Government set out our intention to repeal the prohibition on a candidate at an Assembly election standing in both a constituency and a region. All three Opposition parties in the Assembly favoured removing the ban, but I acknowledge that, overall, a small majority favoured retaining the prohibition in their responses to the consultation. A significant majority of respondents agreed with our proposal to prevent Assembly Members from sitting in Westminster.

The hon. Gentleman mentioned competency—that issue was discussed at length during the debate of 3 July 2012. I should point out that the Government are simply operating within the framework that the previous Government set out in the Government of Wales Act 2006. As he knows, the Act states that competency and responsibility for electoral arrangements for the Welsh Assembly resides at Westminster. There is a Silk process—part 2 was launched recently, which provides a great opportunity for people who have concerns and other ideas to contribute. The Government have made it clear that we will listen and read very carefully all submissions to Silk part 2. We will announce our response in due course. The hon. Gentleman was not in the House at the time, but other hon. Members in the Chamber were, and I remind him that they supported the previous Government’s legislation and the framework that retains competency and responsibility for Welsh Assembly elections at UK level.

--- Later in debate ---

[Stephen Crabb]

If ever there was a false premise to an intervention, that was one. It was not wasted at all. We had extremely valuable responses to the consultation that will feed into our deliberations about the other parts of the Green Paper package. [Interruption.] The hon. Gentleman laughs. If we were not consulting, he would be the very first Member to stand up and complain about a lack of consultation. We can never win with the Opposition: there is either too much consultation or not enough consultation, or we are going too fast or going too slow. Actually, we think we have the balance right. We are taking the time to do this properly. We know that the most timely part of the changes will be, as I said earlier, the need to make a decision about the length of the Assembly term—whether we move from four years to five years—and we will proceed on that in a timely manner.

[Geraint Davies]

The Minister may have already answered this, but just to clarify the point about the list and dual candidacy, he mentioned he has had some feedback. I think he said that the feedback was that there should not be dual candidacy. What is his instinct about the way forward, and how will he be collaborating with Cardiff?

[Stephen Crabb]

The responses to the consultation were mixed. I acknowledged that a majority of correspondents appeared to say that there should not be dual candidacy—where somebody is both a candidate on a list and a candidate in a constituency. However, when I read through those responses I have to say that a large number of them seemed to come from the hon. Gentleman’s colleagues and seemed to bear a remarkable degree of similarity. They got hauled up recently for copying each other’s press releases. Far be it from me to suggest that some of his colleagues might have been doing that when they responded to the Green Paper.

In conclusion, I reiterate that the decision not to proceed with changes to Assembly constituencies does not mean an end to all the proposals in the Green Paper. We do not intend to let the significant work we have already undertaken go to waste. The work is not wasted—I refute that suggestion made by the hon. Member for Caerphilly (Wayne David). These are issues of real importance. We can joke about them as we have done a little this evening, but we need to get them right. It is right that we consulted the people of Wales, and we are considering how best to proceed before announcing our plans. In light of the Commons vote last week, we will announce how we intend to move forward in due course.

Question put and agreed to.

Inward Investment (Wales)

Debate between Geraint Davies and Stephen Crabb

Thursday 29th November 2012 Westminster Hall

[Geraint Davies]

That is a very well rehearsed intervention—“How can you have this, that and the other?” Obviously, there is a case for London weighting, for example. There are some cases at the margin for differentials, but in the main what we do not want is suddenly to have a free market approach to regional pay, as the hon. Gentleman’s colleagues seem to want to promote. That would undermine inward investment in areas such as his own, because people would not be paid the right rate for the job.

In a global environment, regional pay becomes even less relevant. I hope that over time the average pay in Swansea will escalate quite phenomenally because of the emergence of the second campus at the university and of satellite industries—SMEs and global companies locating beside that centre of excellence and moving forward from that. I am talking about international links from Swansea university and, indeed, the other university in Swansea, Swansea Metropolitan university, which delivers the highest proportion of SMEs that last for three years or more in Wales. It is building up digital clusters in interactive technology, animation and modern manufacturing design. If we can move to a level at which the community of people around that intellectual base evolves, so that people can get a number of jobs in the same place, the average pay may go up. What does that mean for regional pay in the public sector? We might stop that through the moves that have been set out.

We have already mentioned bridge tolls. My view in a nutshell is that the Severn bridge toll is a tax stranglehold on the south Wales economy. We should eliminate the toll sooner rather than later. The reason why I want the Government to evaluate immediately whether, if they paid that toll themselves, they would get the money back in jobs, in income tax from new jobs and in benefit cuts from people going off the dole is that the toll is undermining inward investment in south Wales.

The Welsh Government recently produced a report that said that £107 million was being lost from the Welsh economy because of the tolls. I suggest that that is an underestimate. Let me give a simple example. A small builder from Newport, who wants to retile roofs and do extensions, would not go across to Bristol to look for that work now because of the toll, but if there was no toll, he or she would do so. I therefore believe that we should look at that again.

As we see other city regions, such as Manchester, emerging, it would be unbelievable for the person or the group that is leading Manchester city region to suggest a toll on the M5 to build some infrastructure. That would be unheard of. Similarly, we must look carefully at the economic impact of removing tolls. The removal of the Forth bridge toll, which was only £1, increased traffic by 13%. The Select Committee report is about what the UK and Welsh Governments can do to stimulate inward investment and growth. Getting rid of the tolls is clearly an option.

The Silk report talked about borrowing powers and so on, but frankly, the first issue to get right is ensuring that Wales has its fair share of the UK cake—though I do understand that it is a squeezed cake. We have had something like 2.5% of the transport investment in recent years, but proportionally we should get about 5%. There is a plan to spend £32 billion on High Speed 2 to connect north and south England. Our fair share would be £1.9 billion, and unless we also have a spur off the line, inward investment that would otherwise go to Wales will end up in the north of England.

Is the Silk report just a way of saying, “Actually, we’re not going to give you any more money. We don’t want to know the arguments about a fair share and Barnett and all that. If you want more money, raise it yourself from a lower tax base.”? Wales’s gross value added is about 70% of the UK average however, so it is less capable of doing that. We do not need new tax raising powers and a lot of uncertainty about the future for inward investors; we need a fair share of British investment in our services, capital investment in our transport infrastructure and to deflate the costs of entering south Wales by bridge.

I shall move swiftly on, because I know others want to speak. The tax regime leads to a tax on inward investment. One small example, which leads to a significant example, is that in recent days Tata Group has announced 900 job losses in Britain, 600 of which are in Port Talbot in the Swansea bay city region. The job losses are largely due to a fall in demand in Tata’s core markets in Europe, which accounts for two-thirds of its sales. I have had discussions with Tata, and part of its decision is about a level playing field on tax. In Britain, Tata pays 50% more tax than it would in its European operations, due to the additional carbon pricing that the coalition Government have introduced.

I worked for five years in the Environment Agency Wales on flood risk management and adapting Wales to climate change—incidentally, the Government have cut investment in those areas, despite the flooding. Although I am a great supporter of investment in green technology and a sustainable future, we need a level playing field. We cannot have a situation in which steel production moves from south Wales to South America, for example, and we end up with dirtier steel production, because taxes are too high here. We all share the same environment. The European tax regime, which has carbon taxing built in to it, is the right way forward. Adding a huge amount to UK prices, which drives down jobs and clean production in Britain, is not the way forward.

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

The hon. Gentleman is wrong to suggest that there is any link between Tata’s sad announcement of job losses in Wales last week and its concerns about energy prices. Companies that are intensive energy users, such as Tata, face a real issue. The Government are looking at it, and we have made £250 million available to help intensive energy users. Tata’s announcement last week had everything to do with changes in international steel markets globally and nothing to do with what he is saying about the challenge of green energy.

[Geraint Davies]

I do not accept that at all. Certainly, the main driver of the Tata job reductions was, as I mentioned, the reduction in demand, particularly in the European market. Someone running a business clearly looks for ways to reduce costs. There are two drivers for a business—the revenue that it gets and the costs that it pays. Revenues are going down because demand is down due to the global environment, but if expenditure is going up due to excessive costs, that will also form part of the choice over how many job cuts are made. In the business mix, energy prices have an impact, and if they did not, Tata would not be talking to me about them. It is clearly also talking about the wider marketplace and the structure of the market.

I should say that a great deal of great work is going on in Tata. With Swansea university, it is developing multi-layered steel—six layers of different steel—that produces its own electricity and heat when clad on a building. It reduces carbon footprints and may become a global game changer. In addition, Tata are investing £185 million in a second blast furnace—increasing capacity production from 4 million tonnes to 4.7 million tonnes a year—alongside the Margam pit, which has particularly good coal for the production of coke for steel production. There is a strong future for Tata, but we have to get the right balance to protect our environment, while protecting competitiveness for the steel industry in Britain, and south Wales in particular.

We have had long discussions about to what extent we should cut expenditure, as opposed to grow revenue, to get the British economy back on track. The Minister will know that the International Monetary Fund suggested that for every 1% cut in expenditure, growth would go down by 0.5%. More recently, it suggested that for every 1% cut, growth goes down by 1.7%, so expenditure cuts do not seem to be as good an idea as they used to. Our focus should be on revenue. A business person who runs a small business in Uplands, in Swansea, came to me recently and said, “I have a business, and if it makes a loss, the last thing that I am going to do is sack all my workers and sell my tools. I have to tighten my costs and focus on selling more.” That is what the Select Committee report should be about—increasing the productive capacity and commercial success of Wales in the global marketplace.

Other changes are being made that impact on consumer demand and the opportunities for people to get jobs, help themselves and help their local economy. I should say in passing, as I did in the main Chamber yesterday, that some changes to the welfare system that are designed to reduce the costs of the welfare state are likely to do the opposite, by preventing people from accessing work. I am thinking particularly of under 25-year-olds having their housing benefit cut, because 45% of such people have children. I know of a woman who has been made redundant and a man who worked for nine years—from the age of 15—but was made redundant six months ago; they have two children and could face homelessness. If they are homeless and of no fixed abode, they will not be able to apply for jobs. That does not make sense.

Under the other housing benefit change—the empty bedroom tax—a couple with two children and, therefore, three bedrooms will be suddenly charged £7.50 a week for each empty room if one child goes to university and the other has a job or goes to live with their boyfriend or girlfriend. They might say to their son or daughter, “It’s going to cost me this money, so you don’t really want to go to college, do you?” That is wrong; some people simply will not be able to pay.

People have come to me with disposable incomes of about £20 a week, after utility bills and so on. I am particularly thinking of a man with medical problems, who told me, “I use my spare room for painting. If I have to pay the £7.50 for it, I will end up with £12.50. A council tax benefit cut of 20%, will mean another £5. I will be down to £8 a week for my food, clothing and leisure.” That does not make any economic or social sense. That person will end up homeless.

I have been a local authority leader, and local authorities historically built two and three-bedroom houses for families. There is a shortage of one-bedroom properties. Everyone is supposed to go into such properties, but there are not enough, so they have to pay to go to the private sector, which costs more. It does not add up on a simple balance sheet, and it does not add up in terms of access to jobs and providing an environment for people to work in, and we want people to work. If people are not available to work for inward investors, because we have under-occupation and empty houses on the one hand and homelessness on the other due to the housing benefit changes, the system will not make sense.

We have also seen cuts to the working families tax credit. If a small company in Wales can afford to pay someone £12,000, or whatever, and that person can only afford to work for £15,000, it makes sense for the Government to provide the £3,000 difference, because we get someone a job in a growing business. People who work part-time will lose nearly £4,000, with the move from 18 to 16 hours. People will not have jobs and we will not have growing businesses, so there will be problems. We therefore need to think about the architecture of the welfare state in relation to boosting jobs and job access.

On banks and finance, there is a problem in Wales. I do not know whether the Chair of the Welsh Affairs Committee will agree, but we have discussed the possibility of doing a report on access to finance for small business. Since I last spoke to him about that, more and more businesses, some of them quite big, have told me that they have the bookings and can do the work, but they need the money and the banks are letting them down. Of course, that is not an issue only for Wales, but the proportion of small businesses is higher there than in England.

Wales has great opportunities for tourism. If we get the branding right, it is a great place to visit, particularly for environmental health or historical trips. Many mature people, particularly from north America, do not want to get skin cancer from lying on beaches, but speak English and want fine food, so there are lots of opportunities to build up the Welsh brand and encourage inward investment.

That naturally leads me to the Dylan Thomas centenary in 2014. He was from Swansea, of course, and there is now a great opportunity to market the Dylan Thomas festival, which runs from 27 October, his birthday, to 9 November, which was the day of his death. Not enough is known about that festival—it is not like the Hay and Edinburgh festivals—but there is an opportunity next year to gear that up for the following year and to internationalise it. The Swansea bay beer festival might be moved into that week; of course, Dylan Thomas had a few drinks and enjoyed himself, as well as writing fine literature and poetry. We should celebrate that, and during that week we want Swansea to be the place to be. We need to learn from the Hay festival and others, and I am already involved in trying to make international links, perhaps without getting people from Bollywood to go. We want that to be the place to be, as a great celebration for the whole of Wales, as well as for the Swansea bay city region.

In conclusion—[Hon. Members: “Shame!”] I know, but it had to happen. A bright future is possible if emerging markets work together. We can use our insights, as team UK and team Wales, to build a more exciting, productive, richer and fairer future for Wales. The UK Government need to think again about several issues, and I have already mentioned enabling people to work, providing easy access to markets, inward investment and encouraging success. It is important that the Welsh Government work in partnership on that and take forward their own successful initiatives, so that there is mutual learning and respect in the interests of having a strong economy for all our people.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

It is a pleasure to serve under your chairmanship, Mr Rosindell, and a privilege to round off this important debate on inward investment into Wales.

I pay tribute to the Chairman of the Select Committee, my hon. Friend the Member for Monmouth (David T. C. Davies), not just for his eloquence in setting out the terms of the debate, but for the way that he chairs the Committee. As the hon. Member for Ceredigion (Mr Williams) said, he ensures that the Committee focuses on the important issues facing our constituencies and businesses in Wales, making the Committee’s work relevant at this time.

All hon. Members recognise that inward investment remains a significant driver of economic growth in Wales. As the Committee’s excellent report stresses, we must do all we can to enhance the contribution that inward investment can make to the economy in Wales. I think that the Labour Member, the hon. Member for Newport West (Paul Flynn), who is no longer in his seat, was being deliberately provocative when he suggested that the Committee’s report was trespassing into areas where it should not go. Inward investment into Wales is exactly the kind of area that the Committee should be considering. It should be looking at how the UK Government and the Welsh Government collaborate. The hon. Member for Clwyd South (Susan Elan Jones) mentioned the rail electrification project, which required collaborative working between the two Governments. If we are going to achieve anything significant in Wales to achieve the step-change in economic growth that we all aspire to, the two Governments will need to work together over a wide range of areas, and inward investment is one such area. I am delighted that the report makes specific recommendations not only to Ministers at the UK Government level but to Welsh Ministers in Cardiff.

Several Members this afternoon have mentioned Wales’s impressive track record in securing inward investment. The Committee’s report rightly highlights the central role that the Welsh Development Agency played in winning new investment and jobs. During the late 1980s and early ’90s, Wales was regularly gaining around 15% of the inward investment and associated jobs coming to the UK each year. The WDA had an incredibly strong brand and, when I have the opportunity to travel overseas, I continue to meet business people abroad who still think the WDA exists. Such was the strength of the WDA brand globally, its disappearance was a loss, but we all need to look forward to new models of working.

Several hon. Members talked about the glory days—or the boom years—of inward investment in Wales, but we are in danger of sounding as if we are talking about the Welsh rugby team. They are great to talk about, but we cannot go back to those days. The entire global environment in which inward investment occurs has changed, which was recognised very much in the Committee’s report. Over the past decade, the inward investment figures for Wales have been declining. The growth in the knowledge economy and increased competition from developing economies around the world have changed the nature of inward investment in Wales. The Committee makes it clear that we are in a new environment for inward investment.

While we recognise that new environment, we must also remember that Wales still hosts major global companies that year on year continue to make significant and substantial capital investment in Wales. Companies such as RWE, Airbus, Ford and Valero show that Wales remains a good place in which to invest and make that capital expenditure. Members in all parts of the House will join me in welcoming last month’s announcement that Hitachi had bought Horizon Nuclear Power, which represents a £20 billion investment throughout the UK, potentially creating up to 6,000 construction jobs and 1,000 permanent positions in north Wales alone.

The UK economy is ever more dependent on external economic conditions, and we operate in an increasingly globalised economy. The effect of new entrants to the EU from eastern Europe, major developing economies such as China, Brazil and India, and many other countries means that Wales cannot compete on low labour costs, which were an important component in attracting the high levels of inward investment of previous decades. The growth of those developing economies, however, cannot be seen only as a threat to Wales, but as offering real opportunities that Welsh businesses must take advantage of. It is worth putting on record that Wales now exports more goods to countries outside the EU than it does to those inside the EU, and that diverging trend is continuing. Over the past year, Welsh exports to EU countries fell by 7.4%, compared with an increase of 6.8% to countries outside Europe.

Wales needs to be more global facing. As my right hon. Friend the Prime Minister highlighted in his recent Guildhall speech, Britain is in a “global race”. Winning in that global race means that we need to show that the UK is open for global business. The United Nations world investment report shows that the UK remains No. 1 in Europe for foreign direct investment, and the Financial Times fDi Intelligence report for 2012 ranks the UK as the primary FDI location in Europe. Britain remains a great place for international companies to invest in, and our challenge in Wales is to ensure that Wales captures its fair share of that inward investment coming to the UK.

The global economic environment is difficult, but the Government have done a huge amount to ensure that the UK remains the top location for inward investment. Our plan for growth sets out a programme of reforms across the whole economy to meet the UK Government’s four headline ambitions: to create the most competitive tax system in the G20; to make the UK the best place to start, finance and grow a new business; to encourage more investment and exports; and, finally, as the Select Committee report picks up on powerfully, to create an educated work force that is the most flexible in Europe.

[Geraint Davies]

Does the Minister agree that the UK, and UKTI in particular, are in a position to do a lot of the heavy lifting, in terms of promoting the UK as a place to invest, for some of the reasons he is outlining? The opportunity for Wales is to focus and build on that benefit and to get people to go to Wales within the UK, as opposed to Wales doing the whole thing over again, given that it has fewer resources overall.

[Stephen Crabb]

I agree with the hon. Gentleman. UKTI is the agency that is best placed, given its network of relationships around the world, personnel, expertise and acquired knowledge. The challenge is for Welsh Government initiatives to dovetail with what UKTI is doing to ensure that we leverage the maximum opportunity from the available resource.

[Stephen Crabb]

With the significant action of the UK Government to rebalance the economy geographically, we recognise the specific needs of peripheral areas, of which Wales is one. We recognise the extra assistance that Wales needs, which is exactly what is driving the additional investment that the UK Government are giving to the Welsh Government for broadband roll-out, for example, or the rail electrification projects that we talked about. Those are big capital investments, over and above funding through the Barnett formula, about which the hon. Gentleman likes to speak a lot. That demonstrates the UK Government’s real commitment for Wales to receive a greater-than-proportionate share of capital investment, which reflects the fact that we want to see the economy geographically rebalanced. Our ambition is for Wales to share the benefits of all the UK-side measures we are taking, while also showing that Wales is a great place to invest.

The Committee’s excellent report and today’s debate highlight the importance of attracting inward investment with regard to transport infrastructure, skills and promoting Wales abroad as a brand. The Government are delivering for Wales in all those areas. On transport infrastructure, we have discussed the electrification project on the Great Western main line, but it does not stop there. My hon. Friend the Member for Aberconwy (Guto Bebb) asked about the potential electrification of the north Wales line, which we are actively looking at. We want the business community in north Wales to help to work up the economic case for electrification, and hon. Members should be aware that my right hon. Friend the Secretary of State for Wales hosted an important strategic meeting of business bodies, local government and public agencies in north Wales last Friday. They got their heads around the table to think seriously about how we go about building up the economic case that will hopefully convince the Treasury that north Wales electrification is the right next project for railway infrastructure in Wales.

Further investment in Wales will not come from the Government alone. We need to find ways to accelerate major infrastructure investment further, and I hope to see Welsh projects bidding for and benefiting from the £50 billion UK guarantees scheme that we introduced.

In the important area of skills, it is vital that we do all that we can to enhance the skills of the work force in Wales. Wales has a lot to offer, but further up-skilling of the work force will not only attract more inward investment, but support indigenous business. It is excellent that the big companies in Wales such as Airbus continue to run their effective apprenticeship programmes, and the UK Government certainly put a lot of emphasis on increasing the number of apprenticeships. Welsh Government Ministers are also looking at the importance of apprenticeships in Wales.

Higher education institutions in Wales have a world-class track record, as my hon. Friend the Member for Ceredigion touched on in his important contribution, and the reputation of the Welsh HE sector is recognised around the world. Members might be aware that, in Wales, there is a higher proportion of foreign students among the total number of students than in Scotland or in England. Our higher education institutions are also working with several of our major inward investors. I very much welcome the news that Swansea university will team up with BP and Tata Steel to create an energy safety research institute, which was mentioned by the hon. Member for Swansea West (Geraint Davies). Tata Steel is also working in partnership with a number of other Welsh universities to develop a project supported by the Engineering and Physical Sciences Research Council and the Technology Strategy Board.

[Geraint Davies]

On the Minister’s slightly earlier point about foreign connections and foreign students, does he agree that most foreign students from places such as India and China have links? Their parents have businesses and so on, so there are opportunities for both inward investment and tourism. When his colleagues in government consider visas for tourists and so on, will he urge them to have due cognisance of prospective inward investors and links to valuable commercial networks in emerging markets?

[Stephen Crabb]

The hon. Gentleman makes an important point. We as a Government were elected with a mandate to bring down immigration into this country, but we recognise the importance of foreign students to the UK. We do not want anything to diminish that, but they must be bona fide students at bona fide institutions studying for real degrees.

When I have had the opportunity to travel overseas—I was in Africa this year—I have been impressed by the people I have met who have master’s degrees or PhDs from Welsh universities, some of whom have been Ministers in foreign Governments. The Finance Minister of Sierra Leone, whom I had the privilege of meeting this summer, has a degree from a Welsh university. There are Ministers in Rwanda who studied at Welsh universities. We have a great track record, and that means that we have a network of relationships around the world with people in significant positions. If we leverage those relationships correctly, that should help to create export opportunities for Welsh companies.

It is vital that Welsh universities forge partnerships with the private sector. Only last week, my right hon. Friend the Secretary of State for Wales and my fellow Wales Office Minister, Baroness Randerson, met Welsh higher education institutions. We put private sector partnerships and promoting Welsh higher education institutions abroad at the top of their agenda.

On promoting Wales abroad, I believe that this Government’s investment will ensure that Wales can continue to offer inward investors a world-class package based on high-quality infrastructure, a skilled work force and HE institutions with the knowledge to convert innovation into commercialised solutions. Through the global brand of UKTI, that package is being marketed around the world. One key theme running through the Committee’s report is the need for the Welsh Government to develop the brand of Wales. I believe that that can be achieved by working with the UKTI, and I am pleased to report progress.

UKTI is supporting the Welsh Government’s efforts by sharing access to its overseas network and national inward investment services. I am delighted that UKTI’s relationship with the Welsh Government has been strengthened through a joint memorandum of understanding that clearly sets out the responsibilities of the Welsh Government and UKTI on co-operative working and information sharing. Several hon. Members mentioned that one member of UKTI personnel is embedded with the Welsh Government, but actually two key UKTI officials have been seconded to work with the Welsh Government to ensure that the Welsh offer is as strong as possible and that the Welsh Government sector teams are linked into the UKTI sector teams. Through the work of Lord Green and UKTI’s chief executive, Nick Baird, the Government strongly support that key working relationship with the Welsh Government. The ability to draw on UKTI’s global reach is critical in promoting the Wales brand.

The work of the Wales Office is also vital. Since June 2010, we have met and made representations to delegations from Taiwan, China, Turkey, Japan and Russia. During this summer’s Olympic games, we held a reception complementing the work of the British Business Embassy and highlighting the benefits of investing in Wales. Afterwards, my right hon. Friend the Secretary of State for Wales met the chief executive and chief operating officers of the UK India Business Council to promote Wales as a location for inward investment from one of the world’s fastest growing economies. Earlier this year, the previous Secretary of State also visited south-east Asia to promote trade, tourism and governmental links, as well as opening the new UKTI office in Cambodia and signing a $10 million contract between the Thai Treasury and the Royal Mint.

Several hon. Members talked about the decline in the number of inward investment projects in Wales in recent years. Last year was particularly disappointing, as I think we all recognise. Early reports from UKTI suggest that 2012-13 will be a better year for inward investment in Wales. This year’s figures are much improved from the same time last year: 27 foreign investment projects have been recorded to date, including a £36 million investment by the American-owned automotive company Meritor, as well as the £7 million investment by a Turkish manufacturing company in Cardiff. However, there is obviously still much more to do. Closer working between the UK Government, UKTI and the Welsh Government is essential so that best practice is shared and to ensure that Wales is effectively marketed as an ideal location for inward investment. The Wales Office ministerial team is committed to achieving that.

Our debate included a wide-ranging contribution from the hon. Member for Swansea West, who made numerous good points. He also discussed public sector job cuts in Wales, and I would like to come back to him on one point. Private sector job growth in Wales during the past two and a half years far outstrips the decline in the number of public sector jobs, as an estimated 60,000 new private sector jobs have been created in Wales since this Government was formed. We should back the private sector in Wales and have more faith in it. Yes, times of austerity and difficult decisions about public finances make this a more challenging environment in which to achieve economic growth, but we should have faith that Welsh companies can go out there, grow their businesses and jobs in Wales, and take our economy forward.

[Geraint Davies]

The Minister is probably aware that Hewlett-Packard is the biggest computer company in the world and that its two hubs are in Swansea and Bristol. HP is currently bidding for a contract with the Department for Transport relating to contracted-out financial work and back-room work. HP supports a major skilled computing cluster in south Wales. Will he bear that in mind, and perhaps talk with the Department for Transport about its valuation of whether to bring in a German company or use one that provides an enormous skills base in south Wales? It is a factor that should be borne in mind. I appreciate that the Department must make rational decisions about cost-effectiveness, but strategic considerations should also be taken into account. I feel that the public sector and the Government should do everything that they can to encourage local indigenous private sector job growth.

[Stephen Crabb]

I thank the hon. Gentleman for his remarks. I will follow that up outside this debate.

My hon. Friend the Member for Ceredigion spoke powerfully about the role of the knowledge economy, mentioning the important work being done at Aberystwyth university and the potential of that university and all the Welsh HE sector to attract inward investment. I encourage him to speak to my hon. Friend the Member for Mid Norfolk (George Freeman), who has been appointed by the Prime Minister as this Government’s life sciences representative and who is developing an exciting strategy that he wants to be UK-wide for developing the life sciences sector in this country and bringing in new investment through that route.

The hon. Member for Clwyd South was the first Member to mention Cardiff airport. Wales deserves and needs a growing, thriving, attractive airport to welcome inward investors. I think that we all share the concern of the First Minister and his team that Cardiff airport is underperforming. I leave the hon. Lady in no doubt about the priority that the Wales Office places on the issue. We will be holding discussions with Ministers at the Department for Transport and in Cardiff.

I thank Members for their contributions. There are reasons for us all to be positive about inward investment in Wales. It is vital that we continue to attract new investment to drive economic growth. The challenge that we face is to continue to develop Wales’s fantastic offer and to take every opportunity to promote it in the ever-increasing global market. We talked a lot about the role played by UKTI and Welsh and UK Ministers, but we can all play a role. Lord Green, the Minister responsible for inward investment and exports overseas, says that he wants to hear from individual Members of Parliament from all parties about companies in their constituencies that should be linking up with our trade missions.

There is a role for us all in speaking to firms in our constituencies that are looking for export opportunities overseas. There might be initiatives and projects that could host greater inward investment. There is a challenge for all Members of Parliament to fit in with the programme that is being developed UK-wide and at Welsh Government level. I hope that we can all play our part in attracting new inward investment to Wales and driving forward economic growth.

Oral Answers to Questions

Debate between Geraint Davies and Stephen Crabb

Wednesday 28th November 2012 Commons Chamber

[Stephen Crabb]

The Government have made consistently clear our belief that wealthier member states have both the ability and the capacity to finance their own regional development policy and hence do not require structural funds. However, as the Prime Minister made clear on Monday afternoon, we also recognise that the more prosperous member states, such as the UK, need to be given time to make the adjustment and so should continue to receive funding during the 2014-20 programming period. The Government will consider the right balance of competences in terms of regional policy in the autumn of 2013 as part of our review.

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

Does the Minister accept that Wales does not get its fair share of UK funding in either capital or revenue from Barnett, that the money paid, for instance, to Swansea university—£60 million from the European Investment Bank and £30 million from convergence—helps Wales to succeed, and that we would like to see the UK Government help Wales in the same way?

[Stephen Crabb]

I do not accept that Wales is underfunded. This Government have demonstrated in our announcements on investment in rail infrastructure in Wales and broadband infrastructure in Wales that we are providing funding over and above the Barnett formula for Wales, so I do not accept the hon. Gentleman’s proposition at all.

Oral Answers to Questions

Debate between Geraint Davies and Stephen Crabb

Wednesday 17th October 2012 Commons Chamber

[Stephen Crabb]

My hon. Friend is exactly right: it is vital that the two Governments—the UK Government and the Welsh Government in Cardiff—work together on a range of issues, not least the success of enterprise zones. I am committed to doing that, and I look forward very much to my first meeting with the Welsh business Minister, Edwina Hart, which is to take place shortly.

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

The Minister will be aware that having the Bristol enterprise zone alongside the tolls on the gateway to the south Wales economy is a major impediment to inward investment and growth. Will he therefore ask Treasury colleagues to commission a study to see whether a reduction in the tolls would be more than compensated for by an increase in income tax resulting from new jobs created by inward investment?

[Stephen Crabb]

My right hon. Friend the Secretary of State is to discuss tolls on the Severn bridge with our right hon. Friend the Secretary of State for Transport this afternoon. No decisions have been made beyond 2018, when the current concession ends. Clearly there is a lot to discuss in relation to how we maximise the benefits of inward investment in Wales.