Government Policies (Wales)

Albert Owen Excerpts

Wednesday 26th November 2014 Commons Chamber

[Mr Williams]

Those of us who have concerns describe it as the bedroom tax; others call it the spare room subsidy. I will stick to the bedroom tax, for reasons that will become apparent.

First, I want to talk about energy prices. There is no doubt that my constituents are feeling very short changed, quite literally, by the energy providers. They are aggrieved that there are few alternatives, if any, for people who live in communities that are off grid. They are then told remorselessly that it is simply a matter of switching providers. Most of my constituency is off grid, so most of my constituents remain subject to the monopolistic practices of energy companies. There is simply no option to shop around.

Off-grid customers are left out of many initiatives. Analysis undertaken by Calor Gas showed that most people are merrily—or less merrily—paying £40 a year for energy efficiency schemes, but that they get nothing back through reductions in their bills. Energy companies charge levies on household bills to fund insulation and new boilers in the homes of the vulnerable and those who live in low-income communities where buildings are hard to treat. We know about the history of the housing stock in Wales, and particularly in rural Wales, yet only 1,443 homes out of 1.5 million have benefited from price reductions. Off-grid gas customers are missing out on the promises of new efficient boilers for their homes. Although all customers are subjected to the same charges, the research suggests that the benefits are not reaching rural households. Not only are they not seeing the benefits, but the costs of energy have historically been much higher. I have been making this point for nearly 10 years, including under the last Government, but those of us in rural areas are still waiting and anticipating greater action.

We are told that the key is to boost the collective purchasing power of customers and that we should all join oil syndicates. Many of us have done that. Joining oil syndicates and trying to negotiate reductions in the cost of domestic heating oil is one of the few options available to my constituents in Ceredigion. I have lost count of the number of times constituents have come to my surgery to pose the problem, “How on earth can I afford the minimal amount of oil that I need to put in the tank to heat my home?” That is food for thought for all of us. I commend Ceredigion county council and Ymlaen Ceredigion, which is an excellent organisation, for working with the National Assembly on a project called Club Cosy to develop the system of oil syndicates across the county and for overseeing the 10 syndicates that already exist.

Of course, no one would be against the opportunity of a reduction in bills during the freeze period, but my concern about the Labour policy is that in the immediate period before and the immediate aftermath constituents would face—

[Albert Owen (Ynys Môn) (Lab)]

Will the hon. Gentleman give way?

[Mr Williams]

If the hon. Gentleman will forgive me, I will not give way because I want to crack on in the little time I have.

I want to talk about fuel duty as it affects drivers. My constituents have no choice about driving their cars. Some of them live in Lampeter and work in Aberystwyth —a 60-mile round journey every day. They do not have the luxury of public transport and taxis are unaffordable. I commend the Government’s actions on the fuel duty escalator, which have meant a 20p per litre reduction over the last five years. But in the very rural communities in Wales, we were hugely disappointed that the policy of derogation from Europe on fuel duty was not carried out across the whole of the country—in fact, no areas in Wales will benefit. The Government need to continue to work on that so that that policy is not isolated to various parts of the Scottish highlands.

As I have said, Ceredigion has 600 family farms, and the farmers are concerned about falls in commodity prices and about common agricultural policy reform, and many other businesses have other concerns. They are the backbone of our economy, and they have commended the Government on the reduction in corporation tax. Some 35,000 businesses across Wales will also benefit from the scheme that will allow employers to reduce national insurance contributions by £2,000. That is important to local businesses, as is the work that the Government are doing to build the infrastructure for broadband and mobile phone reception, which the Secretary of State mentioned. The Government could do more. For example, next week they could reduce VAT on tourism—

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[Albert Owen (Ynys Môn) (Lab)]

It is a pleasure to follow the hon. Member for Islwyn (Chris Evans). He was right to defend the NHS in Wales, and he was right to mention a sad loss that was close to him. The wife of his predecessor, Lord Touhig, sadly lost her battle for life a couple of days ago. I am sure that the whole House will join me in sending our condolences to Lord Touhig and his family.

I agree with the Secretary of State about the need for the Government in Cardiff Bay and the Government here at Westminster to work together. It benefits our constituents when we do so. I have worked with this Government, with previous Labour Governments, and with coalition Governments in Cardiff Bay. I have seen marked improvements in my constituency since becoming a Member of Parliament. We have more connectivity—faster, more frequent trains—than we had when I was elected. That is due to investment in the whole railway network. The £9 billion west coast upgrade has benefited my constituents, because when capacity is increased on one side of Offa’s Dyke, the whole of Wales benefits. That is an economic fact in terms of transport.

As the Secretary of State knows, I have been lobbying for more mobile phone coverage in Wales, and I met representatives of the 3 network today. There are too many not spots. There will be improvements, but we must make it clear that the peripheral areas of the United Kingdom, and of Wales, should be treated on the same basis as other parts of Wales. However, there are good projects on the horizon. The Wylfa Newydd development and the new eco park and biomass plant will bring quality jobs to my area.

I welcome the drop in unemployment in my constituency. Before I became a Member of Parliament, I ran a centre for the unemployed. In the 1980s and 1990s, my constituency had the highest level of unemployment in Wales. It was twice the national average in Wales, and much higher than the average in the United Kingdom. I saw a great transformation between 1997 and 2007, but that was followed by the global financial crash, and the recovery has been shaky. Many of the jobs that have been created have been mini-jobs. Many countries, such as Germany, operate a policy of mini-job creation following recessions, but these jobs have involved relatively low pay, and a great many zero-hours contracts that pay below what we now class as the living wage. Many people are finding jobs, but they are under-employed. The economy needs a real stimulus.

The three words that the Prime Minister is frightened to utter in any economic debate are “value added tax”, because VAT is a regressive tax which he promised not to increase but increased at the first opportunity. It is having a huge impact on businesses in my constituency. It is having an impact on consumer spending, which is up by just 2% in my constituency, compared with an average of some 5% in Wales as a whole. Small businesses, whose representatives I meet regularly, have experienced a fall in turnover of some 6%, compared with an increase of 7% in the United Kingdom. Those issues are concerning businesses. According to anecdotal evidence, less secure part-time work and zero-hours contracts are replacing more secure full-time work.

[Roger Williams]

Will the hon. Gentleman give way?

[Albert Owen]

I will give way briefly, although the hon. Gentleman’s colleague the hon. Member for Ceredigion (Mr Williams) was not so gracious to me.

[Roger Williams]

The hon. Gentleman hosted a wonderful Anglesey day when he was able to demonstrate the virtues of his constituency and the pleasures that could be gained from visiting it. Does he agree with my hon. Friend the Member for Ceredigion that a reduction in VAT on tourist attractions and accommodation would be a wonderful thing for rural Wales as a whole?

[Albert Owen]

I do. When the last Government cut VAT temporarily, that boosted the economy, and it could do so again in sectors such as construction and tourism.

I want to talk about a section of society that is very important to us all: younger people. Younger people in Wales and my constituency are finding things extremely difficult because of the zero-hours contracts and because many of them who are self-employed, including members of my family and their friends, are becoming so not out of choice but because their main full-time job has gone. They are taking this step into self-employment, and they are finding it very difficult to get mortgages and to get credit. They are finding it really tough out there.

The Joseph Rowntree Foundation has produced a report on the increase in the young poor in our country. That is a serious issue that we need to tackle. I welcome the growth fund for young people in Wales, getting people into employment, but I want them to go into employment that pays a reasonable living wage so they can spend and contribute to our society in the way we all want.

The hon. Member for Arfon (Hywel Williams) is not here, but he will know that a lot of my constituents work in Gwynedd, and Gwynedd has one of the highest rates of zero-hours contracts in Wales. The number is staggering: some 477 people are on zero-hours contracts. That is the figure for the neighbouring authority. I do not have the figures for my local authority, but some pay on Anglesey is below the living wage. Some adverts in Gwynedd are for pay of £5.87. There is a Plaid Cymru Member present. We hear that party attacking the Labour party and everybody else about the living wage and zero-hours contracts, yet although it only controls two councils in Wales, it has one of the worst records in that regard. These are my near neighbours—in fine fettle.

We want to stimulate the economy, and we can do it through a house building programme that boosts construction by giving companies relief on VAT, so they can build more houses and get more people into the workplace. That is one way forward.

We need greater investment in improved connectivity as well. We can do that by working together, as the Secretary of State said—but working together not just between Wales and the rest of the UK, but between Wales, the UK and Europe. The banging on about Europe that the Prime Minister talked about is having an effect. I know that the Secretary of State is going to my constituency, although I have not been told so officially by his office—the grapevine of Anglesey works much quicker. When he goes there, he will hear from business leaders that the threat of moving towards the exit is having an impact on future investment plans by large companies. I want to see an Anglesey—an Ynys Môn—that is at the heart of the British Isles, and that is a major player in Wales, in the UK and in Europe; the only way we will do that is by being far more positive, and helping our young people in a more positive way than now. I do not want to see the young poor carrying on as they are; I want to see young people with great opportunities for the future.

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[Nia Griffith (Llanelli) (Lab)]

We have had a wide-ranging debate. I will try to focus my comments on the motion, which is about the UK Government policy and its effect on Wales, but of course I will refer to what many hon. Members have said today.

We are talking about the choice that this Government have made about their tax and welfare policies. That choice means that Ministers have deliberately chosen to place a disproportionate burden on those with the lowest incomes in Wales. As we predicted back in 2011, and as has been shown in a recent study from Sheffield Hallam university, in Wales the Tory-Lib Dem Government’s policies on tax credits and welfare have resulted in £1 billion each year being taken out of the Welsh economy, with the losses falling disproportionately on the poorer areas of our communities.

This Government’s changes to tax credits alone have taken £200 million a year out of the Welsh economy. These cuts have meant a loss of income to some 250,000 households across Wales. These are homes where people are in work, often in thankless tasks, often patching together several jobs to try to make ends meet, and working unsocial hours, yet it is Welsh families like these, the very people least able to afford a drop in income, who are losing income. The average loss of income as a result of the Government’s tax credit and welfare policies amounts to some £550 per working age adult in Wales per year, a greater loss than the average for Britain as a whole, which is £470 per annum.

However, in many of our poorest areas, as we heard from my hon. Friend the Member for Vale of Clwyd (Chris Ruane), the average loss is over £1,000 per working age adult, amounting to some £2,000 for a two-adult family or some £40 a week, which is a huge loss when we consider that these people already have some of the lowest incomes in Wales. That takes into consideration only changes to tax credits and welfare; it does not take into account the effects of, for example, the VAT hike, which further curtails spending power.

Not only is it very unfair to take such a disproportionate amount of money from those with the lowest incomes while at the same time handing tax cuts to millionaires, but it is economic madness. It is not rocket science to perceive that those who earn least spend it most quickly in their local communities. They do this out of sheer necessity, spending the money on everyday essentials, so when they suffer cuts in their household incomes, there is an immediate knock-on effect in the local community. Those with the lowest incomes are the least likely to have the financial means to travel far to spend their money, so it is our very poorest communities that suffer the greatest loss. No prizes for guessing that that means the tops of the valleys, the areas furthest from the wealth-generating opportunities of our cities and our major transport infrastructure.

This loss to the Welsh economy has been quantified by the researchers from Sheffield Hallam university as equivalent to the loss of 7,000 full-time equivalent jobs across Wales, but with the highest concentration of such job losses in the areas of greatest deprivation. In reality, that loss of 7,000 full-time equivalent jobs manifests itself in people having their hours cut and not being able to get as many hours work as they would like, and fewer openings for our young people. There are now 71,000 part-time workers in Wales who would like full-time work, up from 54,000 in 2010, so this Government’s taxation and welfare reform is resulting in the poorer areas of Wales getting poorer. By sucking money out of these areas, the Government are making it ever more difficult for these areas to recover economically, and the gap between these areas and the wealthier parts of the UK is growing.

The hon. Member for Aberconwy (Guto Bebb) rightly pointed out that those with entrepreneurial spirit should be praised and he cited some successful businesses. The problem is that the impact of UK Government policies on the poorest areas makes it doubly hard for small businesses in those areas to succeed. My hon. Friend the Member for Vale of Clwyd explained clearly the impact in real terms of the reduction of the Welsh budget by £1.5 billion and the cuts to services. He also graphically pointed out that his area has one of the highest per working age adult losses—it is some £1,400.

My hon. Friend the Member for Ogmore (Huw Irranca-Davies) gave a good example of the reshoring of jobs, which is much to be welcomed. However, he also pointed out the many problems of insecurity, low pay, unfavourable terms and conditions for workers, and the scandal of umbrella companies where workers are actually paying employer contributions as well as their own contributions, leaving some people as much as £100 a week worse off. He welcomed investment in his local area, but pointed out that it is no good if we are not also looking at what type of jobs are being created.

The hon. Member for Ceredigion (Mr Williams) spoke clearly about off-grid issues, the cost of vehicle fuel and the need for a continued roll-out of broadband. He praised Cyfle, an organisation giving young people apprenticeship opportunities through placements in several different companies, because companies cannot always offer a full-time apprenticeship. That is particularly useful in a rural economy. He also mentioned a VAT reduction for tourism businesses, a campaign which he has pursued vigorously.

My hon. Friend the Member for Ynys Môn (Albert Owen) talked about the success of the economy from 1997 to 2007, mentioning that since the downturn things have become more difficult in terms of the types of jobs being created. He mentioned the many mini jobs, the fact that young people are facing a lot of problems when trying to find work, and self-employment not really being what people want—it is sometimes imposed on them because no other option is available. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) focused on the issue of funding for Wales and possible consequentials on funding for Wales from HS2. He also mentioned that the £1 billion being taken out of the Welsh economy is more than four times the benefit that Wales gets from EU funding.

The hon. Member for Monmouth (David T. C. Davies) gave us a history lesson and his own inimitable view of climate change and green taxes. He also spoke about the dangers of the UK Independence party and about health in Wales.

[Albert Owen]

The hon. Member for Monmouth (David T. C. Davies) would not take an intervention from me at the time, but I wish to correct him on something. He said that the Labour party introduced all these carbon taxes, but I wish to remind the House that this Chancellor introduced carbon floor pricing, the level of which the Government have now had to reduce, and which has had such an impact on manufacturing in Wales.

[Nia Griffith]

My hon. Friend rightly says that it was this Chancellor who set that carbon floor price, causing considerable difficulties for our industries. We are still having to go through hoops with those industries to get the relief they need.

My right hon. Friend the Member for Torfaen (Paul Murphy) stressed the importance to our manufacturers of remaining in the EU and the very real fear that the Conservatives’ shilly-shallying over Europe is driving companies to question whether to make new investment here. Let us make no mistake: if the Government are seen to be rushing for the exit from Europe, we will lose those companies, with the loss of thousands of jobs across Wales.

My hon. Friend the Member for Aberavon (Dr Francis) talked about the second campus of the university of Swansea and the importance of partnership working between the university and the steel industry. My hon. Friend the Member for Islwyn (Chris Evans) praised small businesses in his area, said that we should not be obsessed with constitutional issues and talked about the importance of infrastructure linking Wales to the world.

The question is: what is the Minister going to do to tackle the cost of living crisis? Wages in Wales are simply not keeping up with inflation, with wages up by only 0.6% but prices up by more than 2% this year. People in both north and south Wales pay some of the highest prices for our energy and we have some of the hardest-to-heat homes. In addition, many people live off grid and so have more limited options for heating their homes. So what is he going to do to tackle high energy bills? The market is just not working for consumers in Wales.

Labour Members have made it clear that an incoming Labour Government would freeze energy prices for 17 months for both domestic consumers and businesses, during which time we would reform the energy market so that it works for consumers in Wales. We have also taken on board the policy of paying the winter fuel allowance earlier in the year to those who rely on buying in heating oil or liquefied petroleum gas, so that they can buy their supplies more cheaply. That is a simple move, but Ministers have not even agreed to do that. So when are we going to see some action from this Government to address the concerns of the people of Wales by tackling the high energy prices, job insecurity and the low-wage economy?

Will the Minister tell us now that he will match Labour’s energy price freeze? What will he do about low wages? Will he match our pledge to raise the minimum wage to 58% of median earnings? What will he do to tackle insecurity at work in Wales? Will he sign up to Labour’s pledge to tackle the abusive use of zero-hours contracts? I do not mean just banning exclusivity clauses that force workers to work exclusively for one major employer, important though that is. Will he go further than that, as we will? Will he show some humanity and abolish the bedroom tax in Wales? I guess not. He would rather see the people across Wales working longer for less, the poorest areas in Wales getting poorer, and the people struggling with fuel bills. He is happy to give out tax cuts to millionaires and see a recovery for the few, whereas Labour wants to see a recovery for the many.

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[Alun Cairns]

I will happily repeat that, in 1997, Wales was not the poorest part of the United Kingdom. But between 1997 and 2010, Wales sadly and tragically became so. That was when the hon. Gentleman was a Member for Croydon Central, before he decided to come back home to Wales, so he will have played a part in the policies that led to such a devastating consequence for Wales and the Welsh people, and that is something for which he should apologise. Investing in infrastructure is key to our economic plan, and Wales has rightly received significant sums for some major projects.

I cannot mention railways without paying tribute to my right hon. Friend the Secretary of State for Wales for his hard work and persistence in seeking a solution to secure the electrification of the line all the way to Swansea and of the valley lines as well. That is the largest investment in railways in Wales since Victorian times. Wales was sadly left in the slow lane when it came to railways. After 13 years of a Labour Administration, Wales, Moldova and Albania were the only three countries in Europe that did not have any electrified railways. Wales is now set to benefit from rail investment worth £2 billion. Our north Wales link to Liverpool is being renewed through the Halton Curve, which is welcomed by all businesses in north-east Wales and north-west England. Crewe is becoming a hub station for HS2, which offers new opportunities to the whole of north Wales, ensuring that we all benefit from this major UK strategic investment.

It was 12 months ago that my right hon. Friend the Chancellor announced a funding package to enable the upgrade of the M4 around Newport, which was something for which businesses had been calling across the whole of the south Wales corridor. That project was cancelled by the previous Administration in 1997 after my right hon. Friend, the current Leader of the House, committed to it when he was the Secretary of State for Wales. The project was cancelled by Labour but reinstated by the Conservatives.

I was sorry that the hon. Member for Wrexham (Ian Lucas) did not welcome the £212 million investment for a new prison in Wrexham. Even after it is up and running, its operational activity will involve £23 million being pumped into the economy each year.

Wales is playing its part in our energy infrastructure upgrade after years of neglect that led to the risk of the lights going out throughout the United Kingdom.

[Albert Owen]

The Minister is aware that Wales pays among the highest distribution costs in the whole of the United Kingdom, as is reflected in our bills, so would he support flattening those costs throughout the United Kingdom? Some areas might have to pay a little more, but north-west Wales actually produces energy and we pay too much for it through our bills.

[Alun Cairns]

Of course, that is a matter for Ofgem, as an independent organisation. I know that it has made changes and I look forward to its further deliberations. I am sure that the hon. Gentleman recognises the major investment of £20 billion for Wylfa nuclear power station on Anglesey, which will create 6,000 construction jobs alone.

Of course, such activity does not stop at hard infrastructure, and upgrading our digital networks is central to our plans. Wales is benefiting from £69 million of Government investment for superfast broadband to provide access to more than 275,000 homes and businesses, although I did not hear any welcome for that from Labour Members. By spring 2016, 96% of Wales will have access to superfast broadband connectivity. Further digital projects include Cardiff and Newport being part of the Government’s super-connected cities programme. A pilot programme in Monmouthshire to tackle hard-to-reach areas offers exciting prospects, while the mobile infrastructure project to which the hon. Member for Ynys Môn (Albert Owen) referred is a clear plan to start filling the not spots.

As well as dealing with infrastructure, there was a need to reform the benefits system. The historical problems of worklessness in some communities in Wales were another legacy of the previous Labour Administration, but the Work programme is offering new prospects. It has already supported back into work more than 15,000 of those who were furthest away from employment. Universal credit is simplifying the tax and benefit system and increasing the incentive to work. Some 200,000 households in Wales will have higher entitlements under universal credit—on average, £163 more a month—and the poorest claimants will benefit the most. Shotton in Flintshire is already live and the rest of Wales will be online by April 2016. This is a once-in-a-lifetime opportunity to change the benefits system for the better. The changes offer the opportunity of transforming the fortunes and prospects of families and communities. Alongside the benefits cap and other measures, they will make work pay for everyone.

Supporting business is a key part of the long-term economic plan. More than £100 million has been provided to businesses in Wales through the business bank. More than 600 start-up loans have been awarded to businesses in Wales to release the entrepreneurial spirit mentioned by my hon. Friend the Member for Aberconwy. Some 35,000 businesses in Wales have benefited from the employment allowance to help them to grow and take on new workers. We have a disproportionate dependence on energy-intensive industries, and they will benefit from our energy package of £240 million, which I am sure that the hon. Member for Cardiff South and Penarth (Stephen Doughty) will welcome in the light of his interest in the industry in his constituency. Our enterprise zones on Deeside, and at Ebbw Vale and Haven Waterway, will benefit from enhanced capital allowances until 2020, which will give investors incentives and security.

If I had time, I could highlight so many more policy areas where I can show that Wales is coming back. Outcomes are the most important measures. I have been talking about inputs until now. When we combine the impact of these changes as part of our long-term economic plan, there is little wonder that the number of people claiming jobseeker’s allowance has fallen for 20 consecutive months—