Welfare Reform (Welsh Valleys)

Debate between Wayne David and Alun Cairns

Tuesday 11th November 2014 Westminster Hall

[Wayne David]

Will the Minister give way on that point?

[Alun Cairns]

In a moment—with the greatest of respect, I would like to make an element of progress, certainly at the outset.

We have taken steps to deal with the legacy of a welfare system that encouraged dependency and penalised those who wanted to work. The benefits system was clearly broken. It did not work for claimants, for the economy or the people of those communities or for the nation’s finances. According to the Work and Pensions Committee, a parent who increased their hours from 16 to 30 hours of work a week would gain less than £1 for every extra hour they worked. It was hardly a system that incentivised people to do the right thing. That sort of example underlines absolutely the need for reform.

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[Alun Cairns]

I hope to come to universal credit if I make progress in my speech.

Welfare reform is part of the long-term economic plan to stabilise the nation’s economy, to deal with the years of financial mismanagement under the last Government, and to get the people of Britain, including Wales, back to work. The Government want to move people from dependence to independence. We must enable them to free themselves from a lifetime on benefits and enable them to achieve their ambitions.

The previous Government, to their credit, recognised the need for changes to the welfare system. Various Governments attempted to address the issues, but only tweaked an already failed system. Another tweak was not an option. An overhaul was required, so we are creating a new welfare system in Wales and throughout the UK based on flexibility, simplicity and fairness. We want a system that can respond to the modern and flexible labour market, while ensuring that no individual is worse off by accepting a job. We want a system that is easy for people to use.

[Wayne David]

The Minister says he does not want people to be worse off by accepting employment, but part of the Government’s strategy is to reduce the value of benefits so that there is more incentive for people to take low-wage jobs because they are receiving hardly anything, and sometimes nothing, on welfare.

[Alun Cairns]

I am trying to get on to universal credit, but I will highlight how the poorest will be better off financially. We cannot take one policy in isolation and we must consider the reduction in unemployment—I hope that the hon. Gentleman recognises and welcomes it—as well as other economic changes.

We want a system that is easy for people to use but ensures that customers receive all the benefits to which they are entitled. We want a fair system that reflects the heart of our nation—a nation that looks after those who need it but ensures fairness for hard-working individuals and families.

Worklessness needed addressing and is being addressed. Surely we must all be concerned that 200,000 people in Wales have never worked. That is wholly unsustainable. As Welsh MPs, we should want the Government to do all they can to move people from dependence to independence. I am sure the hon. Member for Caerphilly supports that and that we can continue to enable people to free themselves from a lifetime on benefits and enable them to achieve their goals.

[Alun Cairns]

The hon. Gentleman makes a point that I will try to cover when I come to universal credit. The introduction of universal credit will always make people better off while they are in work. I have highlighted one example and could cite many more of people who were trapped in the benefits system. All parties have recognised the need for reform and the universal credit will bring about the change to move people from dependence to independence. Clearly, it is not good for individuals, their families or their communities to be out of work and it is certainly not good for the rest of the nation.

Successive Governments have failed to tackle the problem, but we have tackled it head-on. We are working to improve the incentive to work because it remains the best route out of poverty. Hon. Members will be pleased to hear that the latest statistics show that the number of workless households in Wales has fallen by 19,000. Across the south Wales valleys, 17,000 more people are in work since the election and almost 12,000 have come off benefits. I hope that the hon. Member for Caerphilly will recognise that.

[Wayne David]

Does the Minister accept that in-work poverty is now greater than ever before?

[Alun Cairns]

That is one thing that universal credit will put right because people will always be better off. I will come to that in a moment. Our reforms are already reaping benefits. People are moving from dependency on benefits and into work. That is a positive step for Wales, for communities and for the individuals who, for far too long, have been locked in the benefits system.

The welfare system we inherited was built for 1940s society and is no longer able to deliver the support that people need in a modern flexible labour market: the sort of market that communities are already adapting to. Our benefits system needs to reflect that and to support people who need it.

A flexible labour market will be supported by universal credit because households in Wales will be entitled to £163 more a month on average and 75% of those who will gain will be in the bottom 40% of the income distribution curve.

Wales Bill

Debate between Wayne David and Alun Cairns

Tuesday 6th May 2014 Commons Chamber

[Alun Cairns]

Not at all. I welcome those announcements. I wish there had been an announcement about improvement to the infrastructure in my constituency, and I wish there was to be improvement to the main infrastructure coming into Wales along the M4 corridor, but today’s announcements are obviously positive. However, we need to underline the delays that take place on that artery, that investment is essential and that borrowing powers need to be granted. Improvement should have taken place well before now. The original commitment was made pre-1997 but the Labour Administration cancelled it and the Welsh-led Labour Administration have not built it since. We should consider the delays, the accident records, the damage to the south Wales economy, and the hauliers based in my constituency who have had to set up on the Avonmouth side of the border because of the lack of investment and ambition over the past 15 years on the part of the Welsh Labour Administration.

[Wayne David]

Does the hon. Gentleman not accept that borrowing powers are vital because the Welsh Government’s capital budget has been cut by one third because of central Government cuts?

Wales Bill

Debate between Wayne David and Alun Cairns

Monday 31st March 2014 Commons Chamber

[Wayne David (Caerphilly) (Lab)]

I will support this Bill, although I have to say that it is very disappointing because it is, I am afraid, a bit of a shoddy compromise. Everyone realises that the Secretary of State for Wales is no enthusiast for devolution—indeed, some people might go further than that—and we know that the Liberal Democrats are quite enthusiastic, so we have a cobbling together of two different opinions, and the Bill suffers as a consequence. Its main proposals, which are modest and relate to the tax-raising capacity of the Welsh Assembly, are very limited. It also has strangely attached to it some new arrangements with regard to the electoral politics of the Welsh Assembly.

Although the first part of the Silk report has been quoted in support of the Bill, there is a great deal of difference between what Silk proposed and what the Government have put before us. For example, Silk states very clearly and boldly that

“for the financial accountability and empowerment of the National Assembly for Wales to be improved sufficiently, it should be responsible for raising a more substantial proportion of its spending.”

That is the core of its proposal. What the Government have given us on income tax-raising powers is a long way from the aspiration articulated by Silk. It is important to recognise, too, that a genuine and fundamental concern has been expressed by many people, including those in the Welsh Assembly, that there is no significant movement on Barnett. This proposal is a real runner only if there is a cast-iron commitment to, and a firm set of proposals on, modifying the Barnett formula as it applies to Wales. Under Barnett, as we all know, Wales is short-changed to the tune of £300 million per year, and that situation will not be addressed by this Bill.

[Alun Cairns]

I am interested in the sum of £300 million because it was presumably derived from the Holtham report, which is now some years old. Gerry Holtham also pointed out that as public spending contracts proportionately, the Barnett formula will protect Wales and the £300 million will decrease. Does the hon. Gentleman agree?

[Wayne David]

The £300 million figure, which is quoted widely and not just by me, is the most accurate figure that we have to go on at the moment. It is widely used by a number of academics as the main basis for the calculation.

[Alun Cairns]

My point is that the figure is several years old. There has been a change in the scale of public expenditure since then, and it is therefore nowhere near £300 million any more. Does the hon. Gentleman accept that, given that Holtham said it in the report?

[Wayne David]

Not necessarily, because an added scenario that Gerry Holtham did not take into account is the austerity package that has been put together by this Government, which has led to huge cuts in the Welsh Assembly Government’s budget. To begin with, those cuts have not kept up with inflation, but all the indications are that they will be significantly deeper. That is an important backdrop to the whole matter that we are tackling.

--- Later in debate ---

[Wayne David]

I do not think I said that. The hon. Gentleman has put forward an interesting hypothesis and I am sure we will consider it at the appropriate time, but it is not relevant to the discussion we are having here.

As I was saying before I was interrupted, one of the most significant constitutional changes in the Bill is the proposition that we should change the method of election for the Welsh Assembly—that there should be a revision of what was agreed in the Government of Wales Act 2006. Like other Members, I have been travelling around Wales listening to what members of the public have to say. Reference has been made to a report from the Bevan Foundation. I remember that report well, as I was one of the Members who commissioned it. It came to the objective conclusion on the basis of a representative cross-section that, as the right hon. Member for Chesham and Amersham (Mrs Gillan) said, most people in Wales did not understand the system. They also thought it was intrinsically unfair that individuals who put their names forward for election but lose the election should suddenly appear in the Welsh Assembly—most people would assume that, as those people had lost, they would not be elected.

It is fundamentally impossible to explain the rationale behind that or to argue that it is fair. Whatever special pleading we make for small parties because of how difficult it is for them to get together a sufficient number of candidates, it is an unfair proposition.

[Alun Cairns]

Will the hon. Gentleman give way?

[Wayne David]

Yes—do your best to explain it.

[Alun Cairns]

Will the hon. Gentleman inform the House why he thinks that either his anecdotal evidence or his summary of the Bevan Foundation’s reasons for its recommendations are more independent or fair than the work of the Electoral Commission, which was challenged legally to come up with a full consultation, based on evidence, and ultimately to give the Secretary of State a recommendation? The commission did so, and found in favour of the measures in the Bill.

[Wayne David]

It is basic common sense. If someone loses an election, they do not get elected—it is as simple as that. I challenge the hon. Gentleman to explain to anybody in the street why that is not fair. I guarantee that he will fail. Go on—have a go.

[Alun Cairns]

I do not want to labour the point too much, but I remind the hon. Gentleman that in the 2003 election every Labour Assembly Member topped the regional list. That suggests that there is yet another inconsistency. Even the then First Minister, Rhodri Morgan, who I suspect was highly unlikely to lose, topped the list. The Opposition used the system in their interests, in spite of what has been stated now.

[Wayne David]

I am at a loss to understand the rationale behind that. We live in a democracy and have to accept the system that Parliament agrees. That does not mean that we think it is right, because it is not—it is fundamentally wrong. What is being suggested in the Bill amounts to gerrymandering.

I will give a couple of examples of how the regional list system as it stands at the moment is being abused in an immoral way. There is the case of Mohammed Asghar. He was elected to the Welsh Assembly as one of Plaid Cymru’s regional list Assembly Members, but having been elected as such, then decided to cross the House and join the Conservatives. Why did he join them? Was it a great matter of political principle? No. It is said that there was a disagreement about the employment of his daughter, so he decided to cross the House and use the system.

Another, more relevant and contemporary example is that of an Assembly Member called Lindsay Whittle. Lindsay Whittle was elected to the Welsh Assembly as a Plaid Cymru list Member for South Wales East. However, Mr Whittle is also a member of Caerphilly county borough council. He lives in Caerphilly and appears to spend a disproportionately large amount of time in Caerphilly. [Hon. Members: “He lives there.”] He does live there, but he works there as well, irrespective of the rest of his constituency. I put this to the House: can it be that Mr Lindsay Whittle is so interested in the council and in his own particular locality because he wants to stand in the Caerphilly constituency at the next Welsh Assembly elections in 2016? I think that is quite likely. The point I am making is that democracy in this country is based on representation. If someone does not represent people properly, but instead represents their constituents selectively and picks out who they are going to focus on, it is undemocratic and unfair. It is reprehensible for the individual to behave in that way, but it is also reprehensible that they are able to do that under the political system.

If Mr Whittle does indeed stand for re-election in 2016, his calculation will be, “Yes, I’ll have a go at Caerphilly but I don’t need to worry if I lose because I still have the old regional list system to fall back on.” That is a practical example of this unfairness. I challenge any Member to explain to the people of south-east Wales how that can be justified and how it is an example of democracy as we understand it—it clearly is not.

amendment of the law

Debate between Wayne David and Alun Cairns

Monday 25th March 2013 Commons Chamber

[Alun Cairns]

My hon. Friend is absolutely right. I shall say more about Labour’s inconsistency later.

All the issues I have mentioned have had impacts on the living standards of families throughout the United Kingdom. Decisions such as these are difficult to take, but they must be seen in context.

What I welcome most is the Chancellor’s drive to create the most competitive of economic environments. That will attract investment, and will also continue to encourage the private sector in the UK to invest. The further reduction in corporation tax goes to the heart of a sustained economic recovery, and underlines the economic imbalance that we inherited. The 20% corporation tax rate means that we now compare exceptionally well with our major competitors. In Germany the rate is 29%, in France it is 33%, and in Italy it is 31%. Those are material considerations for anyone who is thinking about where to invest, and for any United Kingdom investor who is thinking of expanding. We should also bear in mind the uncompetitive position that we inherited. The increase in employers’ national insurance rates led to the term “jobs tax”, with which we are now familiar.

The ultimate judgment will come in the grades that the World Economic Forum confers on the competitiveness of the various nations. Having ranked fourth in 1997, we were dragged down to 13th by the Labour party. At last, however, we have recovered enough to rank eighth—and that happened before the announcement of the welcome changes in the Budget. Neither the 20% corporation tax rate nor the employers’ national insurance relief were taken into account.

Other Budget measures that I welcome include the “help to buy” mortgage guarantee schemes. That is an area of policy in which no Government would ideally become involved. However, bearing in mind the context I referred to earlier, the Chancellor had little choice other than to get involved. The scheme will provide a welcome boost to the construction and retail industries and various elements of the service sector, and it will make a significant difference to many families who want to buy their own home.

[Wayne David (Caerphilly) (Lab)]

On “help to buy”, does the hon. Gentleman think it morally correct that millionaires can get support to buy second homes?

[Alun Cairns]

The hon. Gentleman recognises, I hope, that the economy needs to be kick-started. He always refers to the changes to the highest income tax rates and the 5% reduction that will take place next week. However, I remind him that the rate Labour introduced was temporary. If so, when was Labour planning to abandon it? The ultimate question that Labour Members have to answer is, will they reintroduce for the next general election the 50% rate that was in their manifesto? I will happily give way to the hon. Gentleman if he wants to intervene again. Obviously, he does not, because they are not prepared to say whether they will commit to doing that.

I am pleased that the homebuy scheme will be limited to three years because as I said, it is not a policy area that any Government would want to be involved with in perpetuity, because of some of the risks that have been highlighted. It simply is not a public sector initiative that any Government would want to undertake all the time.

If those who want to criticise such initiatives are to have any credibility, they need to offer some form of alternative. It is hard to believe the audacity shown by some Labour Members. Less than three years ago, they were responsible for, or were the loudest cheerleaders for, the policies that led us into this position, giving this country the most debt-ridden, overspent, unbalanced economy in modern history. Manufacturing had declined by more than 20%, public sector job numbers had ballooned and we had the highest debt level of any G20 nation. I notice that the Labour Members who were seeking to intervene and criticise earlier are now staring at their boots.

These initiatives are aimed at promoting growth and freezing or cutting spending. [Interruption.] The Labour critics really need to come up with some alternatives. Until they have accepted their responsibility, they will lack credibility and no one will listen. Even Lord Mandelson recognised that just last week. They came up with some sort of plans in the past. Spending the 4G auction money on 100,000 new affordable homes was one option; a two-year freeze on stamp duty was another. However, that money has already been used—on the national debt—so I look forward to hearing their alternatives.

This Budget will make a difference to families, and help to kick-start the housing sector and to make Britain’s economy much more competitive. I look forward to hearing the solutions that Labour Members will try—