Ford in Bridgend

Debate between Alun Cairns and Owen Smith

Monday 10th June 2019 Commons Chamber

[Alun Cairns]

Maybe I should answer that question with another question. When will the hon. Gentleman vote for the deal to provide a stable environment in which to continue exporting to the European Union?

[Owen Smith (Pontypridd) (Lab)]

In February 2019, Ford said explicitly that the possibility of a no-deal Brexit was jeopardising its investment in the UK, including at Bridgend. Ford reportedly said directly to the Prime Minister that she must rule out a no-deal Brexit, lest we lose jobs. Just last week, the head of Make UK, representing manufacturing across this country, said that there is now a direct causal link between the threat of no deal by Conservative Members who are vying for the leadership, including the Secretary of State, and the loss of manufacturing jobs. How many more jobs do we need to lose in Wales and elsewhere before he tells the right hon. Member for Uxbridge and South Ruislip (Boris Johnson) that we must never have a no-deal Brexit?

[Alun Cairns]

The hon. Gentleman quotes Ford from February, but I can quote Ford from before each and every meaningful vote in this House. It is strange that he is happy to heed Ford’s calls when it suits him but did not respond to its calls to vote in favour of the deal that the Prime Minister agreed with the European Commission. On job numbers, I point to the record job creation numbers we have seen in Wales in recent times, which compare favourably with when his party was in government.

Oral Answers to Questions

Debate between Alun Cairns and Owen Smith

Wednesday 15th May 2019 Commons Chamber

[Alun Cairns]

I have already pointed out that Wales is fourth out of any UK nation or region in terms of being successful in gaining grants from the industrial strategy challenge fund. Swansea University’s project for the active home is world-leading, using the latest materials to develop energy-positive properties, and just down the road from the hon. Gentleman’s constituency is Pembroke Dock marina. These are exciting areas of policy from which his constituency can develop and take opportunities.

[Owen Smith (Pontypridd) (Lab)]

5. What recent discussions he has had with the Welsh Government on the design of the UK shared prosperity fund.

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

I have regular discussions with the Welsh Government on a range of issues, including the UK shared prosperity fund. Officials have also already held useful preliminary discussions with their Welsh Government counterparts, and they will of course continue.

[Owen Smith]

A lot of people in Wales are worried that the shared prosperity fund is just a sneaky Tory plot to steal back a measure of devolution and cut our funds again. Will the Secretary of State reassure the House that that is not true? Will he start by telling us whether we will get £370 million in the first year of the shared prosperity fund?

[Alun Cairns]

Ensuring that all parts of Wales benefit from the UK shared prosperity fund is central to our approach. I hope the hon. Gentleman agrees with stakeholders throughout Wales, be they from businesses or local authorities, that there is a better way to deliver regional support than following the current model, which comes from the European Union. The hon. Gentleman seeks to tempt me to pre-empt the comprehensive spending review, which will of course talk about the quantum of the sum available.

Oral Answers to Questions

Debate between Alun Cairns and Owen Smith

Wednesday 5th December 2018 Commons Chamber

[Alun Cairns]

Last week, I spoke to the Welsh Automotive Forum annual dinner. The sector represents 18,000 employees in manufacturing in Wales. It was strongly supportive of the deal that my right hon. Friend the Prime Minister has negotiated. I wish the hon. Gentleman would appreciate it too.

[Owen Smith (Pontypridd) (Lab)]

The Secretary of State says he is optimistic about Wales’s future after Brexit, but can he confirm from the Dispatch Box that Wales is going to be poorer—our GDP will be smaller—if we vote for his deal next week?

[Alun Cairns]

The hon. Gentleman points to a range of economic scenarios that have been painted, but they do not take into account any response that the Government will make. Of course, a responsible Government will respond to the economic situation as it emerges. I am excited about the prospect of striking free trade deals right around the world as an independent trading nation once again.

Oral Answers to Questions

Debate between Alun Cairns and Owen Smith

Wednesday 24th October 2018 Commons Chamber

[Owen Smith (Pontypridd) (Lab)]

Long may it continue.

In the first spending period after Brexit, will Wales receive more money or less than it would have received under EU structural funds?

[Alun Cairns]

The hon. Gentleman is tempting me to pre-empt the Chancellor’s comprehensive spending review and Budgets that will come within that period. It is wholly inappropriate for me to respond on that basis, and much will depend on the detail of the nature of the deal we get with the European Union.

Oral Answers to Questions

Debate between Alun Cairns and Owen Smith

Wednesday 18th July 2018 Commons Chamber

[Alun Cairns]

My hon. Friend will be aware that I have been a strong supporter of the third runway at Heathrow because it is important to the Welsh economy, and connectivity to airports is vital to deliver its prospects and objectives. He is right about the M4 corridor. With the abolition of the Severn tolls, it creates an opportunity for a natural economy to develop between Bath, Bristol, Newport and the south Wales economy in general, to create further economic growth.

[Owen Smith (Pontypridd) (Lab)]

The Secretary of State knows that Airbus is one of Wales’s most important trading entities and companies, so does he think it is a good or bad sign that the chief executive of Airbus is so worried about the Government screwing up Brexit that he is now stockpiling goods that he feels he will not be able to get in to make his finished products?

[Alun Cairns]

I think the hon. Gentleman is out of date. The latest statements from Airbus have welcomed the Chequers agreement, because it will allow the company to protect its supply chain. That demonstrates the positive relationship that we have with large international companies, in seeking to protect their interests but taking the opportunities of leaving the European Union and looking to new markets elsewhere.

Oral Answers to Questions

Debate between Alun Cairns and Owen Smith

Wednesday 13th June 2018 Commons Chamber

[Owen Smith (Pontypridd) (Lab)]

11. What recent assessment he has made of the benefits for Wales of the UK leaving the EU.

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

The Welsh economy approaches EU exit from a position of strength. Leaving the EU will allow us to shape our own ambitious trade and investment opportunities, in Europe and beyond, and put Wales and the wider UK at the forefront of global trade and investment opportunities.

[Owen Smith]

Some 67% of Welsh exports are to the European Union. Yesterday, the Office for National Statistics reported that manufacturing in our country declined by the greatest amount in the past five years, and Ernst and Young says that our exports are nosediving. How is Brexit going to help?

[Alun Cairns]

I would say in the first instance that the hon. Gentleman is calling for a second referendum, which would create the greatest uncertainty for the UK, both economically and constitutionally. I also point out that exports from the UK are growing, and at a faster rate than areas outside the European Union, and he well knows that exports from Wales cannot be taken in isolation without considering the wider procurement and networking of businesses across the UK.

Wales Bill

Debate between Alun Cairns and Owen Smith

Ping Pong: House of Commons
Tuesday 24th January 2017 Commons Chamber

[Alun Cairns]

I did not hear my hon. Friend’s comments, but should there be any attempt to frustrate the process of exiting the EU by the Welsh Government, the Welsh population would not expect or want it. After all, Wales voted to leave the EU, and it is only right and proper that we act on that instruction and direction, which came from the public in Wales. I would hope that the Welsh Government continue to engage positively in the way that they have.

[Owen Smith (Pontypridd) (Lab)]

Given the respect that the Secretary of State says there is between the institution of the National Assembly and the Government here at Westminster, should he not be disappointed that the Supreme Court has not ruled today that there should be a formal consultation with Wales via the National Assembly?

[Alun Cairns]

We have maintained that the views of the Welsh Government are important, but the views of other stakeholders in Wales are also relevant to the discussion. The Welsh Government will rightly form their view, and the UK Government will come to a conclusion that serves all parts of the United Kingdom, including other stakeholders in Wales, as part of the process. The legal action that the Welsh Government took was a matter for them. We have had the judgment, and we need to respect and act on it.

I shall return to the fiscal framework and the funding settlement for Wales. I have already mentioned Professor Gerry Holtham, but it is appropriate that we pay particular tribute to him for the work that he did. We should also pay tribute to my right hon. Friend the Chief Secretary for the part he played in the negotiations, and to the way the Welsh Government and Mark Drakeford, the Cabinet Secretary for Finance and Local Government, went about the negotiations with my right hon. Friend, whereby two mature institutions discussed serious matters that will have long-term positive consequences for Wales.

Welsh Affairs

Debate between Alun Cairns and Owen Smith

Thursday 5th March 2015 Commons Chamber

[Owen Smith]

The Secretary of State shakes his head, but, as he ought to know, the speech was released to the media accidentally with the “da iawn” included in it and some suggestions as to how the Prime Minister ought to pronounce that, but if he thinks there is any prospect of Tories in the valleys ousting our Members I have another bit of Welsh for him: “Yn dy freuddwydion,” which means “In your dreams.”

[Alun Cairns]

rose—

[Owen Smith]

I will happily give way. Is the hon. Gentleman about to correct my Welsh?

[Alun Cairns]

May I suggest that, having made such an attempt at Welsh, perhaps the hon. Gentleman needs some lessons in pronunciation?

[Owen Smith]

I would accept that, as a native English speaker and a failed Welsh learner. I am still trying, although I have not reached the same standards as some, but I think that was a fair attempt at “In your dreams.”

Other examples from the Prime Minister have been pure comedy gold—not weak gags like that. We have had some excellent examples from the Prime Minister. He channelled his Welshness in trying to come up with a nickname for the Secretary of State. There is a great tradition of nicknames in Wales—Dai the Milk, Evans the Coal, and we even had Jones the Jag at one point in this place—but so impressed was the Prime Minister at the way in which the Secretary of State has warmed to devolution, indeed undertaken a damascene conversion, I am told that he referred to him as being known now in Tory circles as “Stevolution”. It has a certain ring to it, doesn’t it? I am not sure that it is the ring of truth, however. I am not entirely persuaded that he is now so devo-friendly that he could be known as “Stevolution” in Tory circles.

What certainly does not have the ring of truth are some of the other claims that the Prime Minister has been making on behalf of the Tories. He claimed this week that it was the Tories who brought Pinewood studios to Wales, despite the fact that the UK Government had nothing to do with it—

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[Owen Smith]

I would fully accept that, were it consonant with the facts. The Prime Minister actually said in his conference speech, after listing all those achievements:

“We need to tell everyone who did all this…it’s us.”

This clearly is not true.

A bigger truth is that the Tories have done precious little to help the economy of Wales, but they have done plenty to hinder it. The people of Wales know that. When they hear the Secretary of State and the Prime Minister claiming credit for creating jobs in Wales, they know that 90,000 contracts or jobs in Wales, not 35,000 individuals, but that might also be right—[Interruption.] No, I said “jobs” yesterday. The Secretary of State should read the Hansard. They know that too many of those jobs are Tory-style mini-jobs involving zero-hours contracts, zero security, low wages and low productivity. They also know that a quarter of Welsh workers earn less than the living wage. Wales has the lowest disposable incomes in the UK.

The people of Wales know that these facts give the lie to the notion that there is a Tory-led recovery, as does the fact that we are £68 billion short on tax receipts and spending £25 billion extra on social security. The price of this failure in Wales under the Tories is a tenfold increase in the volume of people using food banks and £1,700 less in the pockets of Welsh families.

In stark contrast, the Welsh Labour Government have shown that they can get Wales working again. Jobs Growth Wales, designed and built in Cardiff, has got 17,000 young people back to work, showing that local solutions with bespoke ideas can deliver jobs in Wales. So it is inexplicable that the Tory party—the “party of real devolution”, as I am told it now calls itself—is still refusing to devolve the Work programme to Wales, as Labour will when we win in May. Inexplicable, too—to many in Wales—is why fair funding for Wales is being promised only if Wales agrees to raise taxes.

Last week, the Welsh Secretary made some important announcements about his Government’s intentions to take forward the recommendations of the cross-party Silk Commission if—heaven forefend—they are back in government next time. The Opposition agree with many of those extra measures. Putting the Welsh settlement on to the same statutory footing and making the Welsh legislature a permanent part of the UK constitution are proposals that we can agree on. We also agree with proposals to give powers to Wales over elections and energy, and additional powers over ports and marine matters. Indeed, we said all those things first. But we will go further. We will give Wales powers over policing, which is why I was disappointed at the mischaracterisation of Labour’s position by the right hon. Member for Dwyfor Meirionnydd. I am sure the Secretary of State will recall our position during those talks, which was, “Reserved and then announced at the party conference for Labour in Wales.”

Lastly, fair funding for Wales was one of the most important aspects of the talks. It is disingenuous of the Secretary of State now to talk about delivering fair funding, given that his Government have cut £1.5 billion from the funding for Wales and he knows that their plans to cut funding to the rest of the UK back to the levels of the 1930s will have a deeply damaging effect on Wales. Cutting spending back to the level it was when the NHS was just a glint in Nye Bevan’s eye would be devastating for Wales. So we agree with the Secretary of State that there should be a funding floor in Wales, but we want to see the detail and to know precisely where they will set that floor. Only then will the people of Wales trust this Tory Government—

[Alun Cairns]

What detail is the hon. Gentleman prepared to put forward on Labour’s funding floor proposal? The shadow Chancellor said in Cardiff today that Labour would be presenting no detail this side of the election.

[Owen Smith]

We will stand on our record of having trebled the funding for Wales during our period in office. While the Under-Secretary has been in office, the spending for Wales has been cut by £1.5 billion. So we will stand proudly on our record and we can rest assured that the people of Wales will understand that we will deliver for Wales.

Wales Bill

Debate between Alun Cairns and Owen Smith

Wednesday 10th December 2014 Commons Chamber

[Owen Smith]

No. I am saying that if there were a Labour Government, we would have a constitutional convention to look at the whole of the UK. Therefore, wherever we were in the Smith commission proposals, which will continue on their course, that would need to be fed into the convention. A constitutional convention would not need to slow down or stop further devolution to Scotland, but it would have to take cognisance of what was happening in Scotland.

Whatever further changes are made in Wales should reflect what happens in Scotland, because the willingness to accept asymmetry has diminished in Wales and elsewhere. Many of us feel that such asymmetry inherently leads, over time, to instability in the existing settlement.

In the absence of a convention, we must consider why the Government think that Wales should take up the new powers. I want to start not with Labour, but with the current Government. Why do they now feel that the Labour Welsh Government should have an unfettered ability to raise taxes or to lower them to levels below those in England? The Secretary of State has made a couple of soundbites or comments today to illustrate why he thinks we should do so—he talked repeatedly about accountability and responsibility—but I must say that none of them was quite as blunt and honest as the rationale he gave to the Institute of Welsh Affairs a few weeks ago. He said clearly that his objective in providing the tax varying powers was to

“end the politics of the begging bowl in Wales”—

[Interruption.] The Secretary of State says, “Absolutely,” but I find that quite an offensive position for him to take. He should not describe Wales as, in effect, a supplicant, and nor should he suggest that we are a scrounger or a shirker asking for handouts. It is not for him to suggest that the cure for the

“politics of the begging bowl”,

as he injudiciously puts it, is to force the Welsh people to raise taxes within their own borders. I do not espouse such a dog-eat-dog, race-to-the-bottom version of Britain, and nor should he.

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

The phrase “begging bowl”, as used in this context, originated with former First Minister Rhodri Morgan. Does the shadow Secretary of State completely dissociate himself from that?

[Owen Smith]

It was deployed in an entirely different context. The implication of the Secretary of State’s pejorative use of the phrase was—I am paraphrasing, but this was broadly what he said in the rest of his speech —that the Welsh Government have not been responsible or accountable, but that they would become so for the first time if tax powers were afforded to them. I have never accepted that the Welsh Government are unaccountable —they are as accountable as any elected Government—and I certainly do not subscribe to the view that Wales has ever held out a begging bowl.

Oral Answers to Questions

Debate between Alun Cairns and Owen Smith

Wednesday 3rd December 2014 Commons Chamber

[Alun Cairns]

As the right hon. Gentleman was part of the previous Government, he should apologise for leaving Wales the poorest part of the United Kingdom. He should further apologise for the fact that wages fell at the sharpest rate between 2008 and 2009. The Government’s long-term economic plan is working for Wales, and wages are rising quicker in Wales than across the rest of the United Kingdom.

[Owen Smith (Pontypridd) (Lab)]

The Minister knows that low wages and poor jobs affect not just individuals and their families, but the public finances. Will he tell us what has happened to tax receipts and welfare spending in Wales since his Government came to power?

[Alun Cairns]

We will receive a statement from my right hon. Friend the Chancellor a little later which will cover the UK financial position, but I hope the hon. Gentleman, who is the shadow Secretary of State for Wales, will welcome the progress that the Government are making in reducing unemployment and in growing wages in Wales.

[Owen Smith]

The Minister does not need to wait for the autumn statement, because the numbers are publicly available. Tax receipts in Wales have fallen by £2 billion since 2010, and benefit spending has gone up by £1.5 billion. That has piled an extra £6,000-worth of borrowing on every Welsh worker, and what have they got for it? They have got a twentyfold increase in food bank usage, the lowest wages in Wales and a cost of living crisis. The Tories have failed on the deficit, failed on the cost of living crisis, and they are failing in Wales once again.

[Alun Cairns]

The shadow Secretary of State has clearly got his facts wrong. The long-term economic plan is working for Wales. If there has been a reduction in tax receipts from Wales, it is because of our increase in the personal allowance, under which next year the average worker will pay less than £800 as a result, taking 155,000 people in Wales out of income tax altogether by next April.

Government Policies (Wales)

Debate between Alun Cairns and Owen Smith

Wednesday 26th November 2014 Commons Chamber

[Owen Smith]

I am grateful to my hon. Friend for his intervention. Yes, of course that is right. The evidence is right before our eyes: over 50% of Welsh local authorities have had to use top-up discretionary housing payments to deal with the volume of problems created by the changes to welfare in Wales, versus just 27% in England. That is more evidence that Wales is being hit harder on the watch of the Secretary of State and the Minister than anywhere else in the UK.

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

Will the shadow Secretary of State explain, therefore, why only three of the 22 local authorities have applied for additional discretionary housing payment to help with hardship as a result of the spare room subsidy changes?

[Owen Smith]

Some 54% of local authorities in Wales have used up most of their discretionary housing spending. The figure for England is 27%. Wales is harder hit than anywhere else and we are having to spend more money. If the Minister seriously suggests that the DWP figures are wrong, and that Wales does not have a greater volume of people hit by the bedroom tax than anywhere else, he can tell us, but I am sure that he will not disagree with the DWP. I am sure that he will agree with me that 40,000-odd people in Wales are affected, 25,000 of whom are disabled.

[Alun Cairns]

I will happily clarify that Cardiff, Caerphilly and Conwy are the only three local authorities, of the 22 in Wales, that have asked for an uplift in discretionary housing payment to help with hardship. Why did other local authorities around Wales not do so if the situation is as bad as the hon. Gentleman suggests?

[Owen Smith]

Let me tell the hon. Gentleman something very simple that he could do to stop this back and forth about numbers: he could think about the impact on people in his constituency and mine, and those of all other hon. Members, and he could scrap the bedroom tax tomorrow. That is what Labour will do if we are elected. We will get rid of it in a heartbeat. Frankly, the nonsense about who has applied for which grant demeans this debate, which is a serious debate about the impact on real people.

Wales Bill

Debate between Alun Cairns and Owen Smith

Tuesday 24th June 2014 Commons Chamber

[Owen Smith]

I entirely agree. I have been at pains throughout our deliberations to make it clear that, in this Bill, we are being accommodating with regard to borrowing that we understand, but there are real concerns—they are not frivolous—about the benefit for our constituents of Wales having powers that could be misused, particularly by the Conservative party, to cut taxes in Wales in order to engender tax competition across the UK. We think that would bring little benefit but many risks.

[Alun Cairns (Vale of Glamorgan) (Con)]

Is the hon. Gentleman telling us that he is absolutely against lower taxes in Wales, and is he therefore ruling out any Labour Administration using these powers to reduce taxes in Wales at all?

[Owen Smith]

The latter part of that question would of course be a matter for the First Minister, were those taxes to be devolved to Wales, but I think that I have been absolutely clear that we are not in favour of Wales undercutting the rest of Britain to afford benefits to itself. We do not think that would be beneficial to Wales in the long term. Let me be clear: were that to happen, we do not imagine that Wales would continue to enjoy the same degree of welcome support that we receive from the rest of the UK.

Wales Bill

Debate between Alun Cairns and Owen Smith

Tuesday 6th May 2014 Commons Chamber

[Alun Cairns]

I am grateful to the right hon. Gentleman for making that point, but we will have to disagree. The Welsh Office at the time had exactly those responsibilities for transport, health and education. In the first Government of Wales Bill, the powers that the Welsh Assembly inherited were the same powers as had been held by the Welsh Office, which subsequently became the Wales Office. Additional powers have subsequently been granted, but they have been minuscule in proportion to the additional funding that has been provided. Out of a much smaller Barnett block grant, there was ambition for major capital projects. That ambition has gone.

I suspect I know why the right hon. Gentleman is a little bit uncomfortable. It is worth running through some of the history of the improvements that are needed in the M4 corridor. The then Secretary of State, my right hon. Friend the Member for Richmond (Yorks), committed to building that road. It was the right hon. Member for Neath (Mr Hain) who cancelled it after the 1997 general election. It was later proposed by the coalition Administration in Cardiff Bay—the coalition between Labour and Plaid Cymru—and the Transport Minister who cancelled it and who said that the Administration could not fund it was Ieuan Wyn Jones, the Plaid Cymru Assembly Member for Anglesey. That demonstrates the priority that the relevant parties have assigned to that much needed infrastructure improvement.

The Chancellor has pointed out on several occasions the need for improvement. He named the project in statements and in the Budget on one occasion to provide encouragement to the Welsh Government to improve this vital artery into south Wales.

[Owen Smith]

The hon. Gentleman’s argument would have more force were it not for the fact that only today in the Welsh Assembly the Minister for Finance, Jane Hutt, announced £1 billion-worth of further spending on infrastructure, several hundred million pounds on the Heads of the Valleys road, and £200 million on a new cancer hospital at Velindre that will no doubt benefit the hon. Gentleman’s constituents. Far be it from me to suggest that he might be out of date and no longer keeping up with matters in the Assembly, but that would appear to be the case.

[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.

Wales Bill

Debate between Alun Cairns and Owen Smith

Monday 31st March 2014 Commons Chamber

[Owen Smith]

We want fair and equitable tax rates across Britain. That is why we propose to amend the Bill so that, if a Tory Government in Westminster continue to increase the injustice and unfairness of our tax system by making further cuts to taxes on the wealthiest, Welsh values and Welsh beliefs about social justice can implement a decent and equitable rate of taxation.

[Alun Cairns]

rose—

[Owen Smith]

No, I am going to move on. If the hon. Gentleman holds his water, I shall come back to income tax later.

Landfill tax is relatively uncontroversial save for the link to borrowing, to which I shall come later. There is also the link to the landfill communities fund. We heard nothing from the Secretary of State about that, but it is paid to communities with landfill sites within their boundaries. Has the Secretary of State done any analysis about the value of that fund to Wales? How much is collected and how much has been spent in Wales? How many landfill sites are there in Wales in comparison with England?

The Secretary of State is proposing that the landfill tax community fund also be devolved to Wales and that Wales should become responsible for meeting the costs of implementing a revised Welsh landfill scheme. Given that elsewhere in the Bill, the Secretary of State proposes that HMRC duties should not be replicated in Wales, why does he think the implementation of the landfill communities fund should be devolved? Is that yet another example of his wishing to pass responsibilities to Wales without there being the requisite resources?

We absolutely support the extension of borrowing powers to Wales. They are vital to make up for the £1.7 billion cut in funding for Wales—an almost 40% cut in capital funds—that the Government have implemented since 2010.

It is crucial that the Welsh Government be given the ability to borrow in order to try to back-fill the enormous holes in their budget left by the Secretary of State and his colleagues.

There are two measures relating to borrowing in the Bill, both with limits of £500 million—one to cover volatility in tax receipts and the other to cover capital. I wish to talk about the latter. The Silk commission, whose recommendations the Secretary of State keeps telling us he has largely stuck to, said that £1.3 billion should be devolved to Wales for capital borrowing, but the Bill limits it to £500 million. The Secretary of State says, as he repeated earlier, that the rationale for that is to draw a connection between the amount of money devolved to Wales—the volume of taxes—and the volume of money that might be borrowed. The Secretary of State says, as does the Command Paper on the Bill, that that is just like the position of Scotland. In fact, the Command Paper goes further than he did in saying that the Bill is generous given that in Scotland over £5 billion of taxes are devolved and £2.2 billion of borrowing is allowed—£220 million each year—and that if a similar ratio were applied to Wales, then Wales would get not £500 million but £100 million.

The problem with that rationale is that it is not true. The Scotland Act does not draw a connection, as the Secretary of State suggests, between the amount of taxes devolved to Scotland and the amount of borrowing. The Command Paper associated with the Scotland Bill said:

“Scottish Ministers will be allowed to borrow up to 10% of the Scottish capital budget any year to fund capital expenditure”—

that is, £230 million of an overall stock of £2.2 billion. The Scotland Act drew a clear correlation between the size of the capital budget and the amount that could be borrowed. The Command Paper for the Wales Bill, which the Secretary of State said was just like that for the Scotland Bill, reads:

“Specifically, the Scottish Government’s capital borrowing limit is £2.2 billion while it is taking on responsibility for tax revenues that are currently worth around £5 billion. Hence the ratio between the two is slightly less than 1:2. Applying the same tax/borrowing ratio in Wales would have given the Welsh Government a limit of around £100 million.”

The crucial question is why the Government have moved the goalposts for Wales. Why cannot Wales have the same rationale for its volume of borrowing as the Scots? That would give us about £1 billion-worth of borrowing—between £1 billion and £1.5 billion—rather than the paltry £500 million on offer.

Moreover, given the volatility of all tax returns, how sensible is it for the Government to draw a direct line between the receipts that Wales receives and the amount it can borrow? What if those receipts declined? What if we were in another recession? We would therefore see, I presume, a reduction in the amount of borrowing that Wales could undertake, which would frankly be economic stupidity.

--- Later in debate ---

[Owen Smith]

No, I would label it as a progressive change and I will explain why we feel the need to introduce such a change.

The second way in which we would change the question relates to our concerns about the fact that this Tory Government and an increasingly right-wing nationalist party in Wales are proposing to cut the top rate of tax. [Laughter.] Nationalist party Members laugh, but the economic adviser to their leader says he wants to cut only the top rate of tax. I do not know what we are meant to conclude from that, but it sounds pretty right wing to me. An alliance between the nats and the Tories in Wales seeks to reduce taxes just for the wealthiest, but we feel that that would be entirely out of step with the progressive values of Wales. That is why we will give the Welsh Government the ability to set a progressive rate for Wales, to guard against further Tory tax cuts for the wealthiest and to ensure that those Welsh values of social justice and fairness in taxation can be preserved by the Welsh people in the event of the Tories wishing to increase the injustice and unfairness of the tax system in Wales and across Britain.

[Alun Cairns]

The shadow Welsh Secretary is giving out so many conflicting messages that I am finding it difficult to follow him. He says that he wants to extend the tax-varying powers by 15%, but he also says that he is against tax competition, and then he says that he only wants to put taxes up. We can have lots of debates about those inconsistencies, but there is one very serious point: every nation and region of the UK is seeking to attract investment. What sort of message is being sent when the shadow Chancellor—[Interruption.] What sort of message is being sent when the shadow Welsh Secretary, who presumably hopes to be a future Welsh Secretary, says that he wants to increase taxes on higher earners?

[Owen Smith]

It is not too hard to confuse the hon. Gentleman sometimes, either, but I thank him for the promotion. Our position is very clear: we are not in favour of tax competition; we are in favour of increased borrowing powers. The way in which the Government have framed the Bill to draw a connection between borrowing powers and the devolved amount of money paid in tax means that we favour increasing that amount so as to increase borrowing powers for Wales. However, the progressive rate is only to be put up in the event of a Tory Government choosing to deepen the unfairness by making further cuts to the top rate. We should worry about that because the Tory party has form on it. It has already cut taxes for the wealthiest, and we know that it will continue to do so.

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[Alun Cairns]

Will the hon. Gentleman give way on that point?

[Owen Smith]

No, I will not.

Our proposal to allow the Welsh Government to set a progressive rate of taxation in Wales would allow power to be transferred to Welsh people to guard Wales against the damage to social justice done in Britain by a Tory Government who propose to cut taxes further. The motivation is similar to that for devolution in its first inception: a Tory Government in Wales exercising—in the miner’s strike, the poll tax and other measures—a political strategy that reveals how they turn their face against social justice in Britain and use Wales as a means to exercise such injustice. We have recently seen that in the war on Wales, and the way in which Grant Shapps, the chairman of the Tory party, and the Secretary of State—

Welsh Affairs

Debate between Alun Cairns and Owen Smith

Thursday 6th March 2014 Commons Chamber

[Alun Cairns]

Cardiff university is a fantastic university. The funding structure in Wales is starving the university of funding, as compared to its counterparts in England. The question we need to be asking ourselves is this: how can Cardiff university maintain its standards and status when, because of the different funding structure, there is more funding going into higher education in Wales? That is another sign of the reputational damage being caused by the decisions that are being taken.

[Owen Smith]

The hon. Gentleman says that he wants to show some respect for devolution, but could he be a little more impartial with the facts he employs? Will he tell us, for example, whether he accepts that the Welsh Government should be congratulated on a fall of just 250 in the number of students applying to university in Wales, when the fall in England has been 25,000—a hundredfold difference?

[Alun Cairns]

That is the sort of response that does not get us anywhere. I am looking for an intelligent debate to accept the reality of the situation. Unless we accept the reality, we cannot take the intelligent decisions needed to make changes.

In the time that remains, I want to mention health. I had hoped that yesterday was a turning point. The right hon. Member for Cynon Valley (Ann Clwyd) made an extremely powerful contribution to the debate yesterday. Two weeks earlier, we had learned of data she had brought to the attention of Professor Sir Bruce Keogh. He wrote to his counterpart in Wales, seeking to probe the data that had been shared with him. The response came from a politician, rather than a clinician, who was furious and said that this was an attempt by the Conservative party to

“drag Welsh NHS through the mud”.

The reality, however, is that Sir Bruce Keogh stated in the e-mail that he did not know enough about it, but thought there was a potential smokescreen. There needs to be an intelligent debate, otherwise its reputation will be damaged further.

--- Later in debate ---

[Owen Smith (Pontypridd) (Lab)]

I congratulate my hon. Friend the Member for Ynys Môn (Albert Owen) on securing this debate today. It has been an extraordinarily wide-ranging debate, as is traditionally the case with St David’s day debates. Many Members rightly highlighted the importance of having time in this House to debate the issues of Wales. I think that we can all agree that in the past three years, insufficient time has been spent on debating Welsh matters. Ignorance of the realities in Wales has perhaps grown in this House as a result. I hope that we have done something today to redress that imbalance and to shed some light on the issues, as I hope to do in my short remarks.

My hon. Friend made a particularly enlightening and topical opening to today’s debate. He talked about the need to reflect the fact that people in Wales have shared identities in that they are both Welsh citizens and British citizens. Indeed, they can play rugby for Wales and for the British Lions—they can captain either team and still feel themselves to be British and Welsh. That is something that I feel very strongly about and that I hope everyone in this House supports. My hon. Friend also said that we need to capitalise on the great economic strengths of our country, and especially on the energy and tourism potential of Wales. I entirely endorse all that he said in that regard.

My right hon. Friend the Member for Torfaen (Paul Murphy) reminded us of the history of the St David’s day debate. He even told us that this was the day of St Colette, the patron saint of pregnant women. At this point, I cannot help but congratulate Kate Groucutt, who is pregnant and leaving my office. She has been the special adviser to the Welsh Affairs team over the past few years.

More importantly, but slightly surreally, my right hon. Friend talked about the problems in his constituency of head shops, which sell legal highs. The problem is massive and growing in communities such as his and mine, and we must get to grips with it notwithstanding the difficulties of legislating in this complicated area.

My hon. Friend the Member for Newport East (Jessica Morden) talked about the economy of Wales, and highlighted two issues in her constituency that have wider implications and ramifications across the UK. The first was the loss of steel jobs at the Orb works, due to the inordinately high energy prices that companies in Britain are paying compared with their European competitors. I am sure that we all understand that we need to get to grips with that matter not just for individual consumers of energy in this country but for vital foundational industries.

The second was the problem of offshore jobs. My hon. Friend highlighted the irony of a Government who claim to be seeking to reshore jobs overseeing the offshoring of Government jobs in the Ministry of Justice shared services centre in Newport. You could not make it up, Madam Deputy Speaker, but it is what is happening.

My hon. Friend the Member for Islwyn (Chris Evans) raised the important issue of truancy and called for improvements in the way in which our schools deal with challenging children in Britain, and I entirely agree with him. My hon. Friend the Member for Blaenau Gwent (Nick Smith) also talked about the economy and threw his weight behind the proposal for a motor sport track and arena in Blaenau Gwent, and I support him on that, as I know the Secretary of State does. My hon. Friend the Member for Bridgend (Mrs Moon) talked about women in Wales and the need for others to promote the talents of women within Wales. She highlighted the fact that the Labour party has done that in the National Assembly, where women make up almost 45% of all groups, and here in Westminster, where the Labour party stands alone in having a significant proportion of female members—32% of the current parliamentary Labour party. We need more, but it is a good start and better than what we are seeing from the Government.

The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) talked about local government and the hon. Member for Arfon (Hywel Williams) talked about devolution and suggested that I should be sophisticated and enlightening when addressing it myself, and I shall seek to do so at an appropriate moment.

Government Members told us that they wanted to be respectful and positive—I think those were the words—about Wales and then failed to offer a single respectful and positive word; that was certainly the case for the Conservative Members. There were a number of positive remarks made by Liberal Democrat Members, such as the hon. Member for Ceredigion (Mr Williams), who congratulated the Welsh Government on their investment in flood defences in Wales; £4 million has been invested, in distinct contradiction to the direction of travel in Westminster where we have seen £97 million cut from flood defences, as confirmed last week by the Office for National Statistics. Perhaps that is why we did not see the same degree of problems in Wales as we did elsewhere.

The hon. Members for Monmouth (David T. C. Davies), for Montgomeryshire (Glyn Davies) and for Vale of Glamorgan (Alun Cairns) were particularly jaundiced in their view of Wales and highlighted the volume of column inches about what they saw as poor public service performance. They bemoaned the fact that Wales was getting such bad press, but they know full well why Wales is getting a bad press and it is not because of the performance of Welsh public services and certainly not a fair representation—

[Alun Cairns]

Will the hon. Gentleman give way?

[Owen Smith]

I am not going to give way—[Interruption.] No, I will not give way, because I—[Interruption.] Okay, I will give way once.

[Alun Cairns]

I am grateful to the hon. Gentleman for giving way, but mortality rates, cancer waiting times and A and E access are just three examples; diagnostics in the health service are another. Those are fundamental issues that are dominating the UK newspapers because of poor performance in Wales. Is that not a sad situation?

[Owen Smith]

If the hon. Gentlemen can point to a hospital in Wales in which there are higher levels of unexpected mortality than he thinks there ought to be, I will listen seriously to him. However, he has not offered that—

--- Later in debate ---

[Alun Cairns]

The Princess of Wales.

[Owen Smith]

He says the Princess of Wales, where risk adjusted mortality indices improved by more than 20% over the past three years. We have seen significant improvements in mortality indices in Wales and he will know that people cannot do what he and his colleagues have done—and worse, what the Prime Minister has done on 29 occasions in this House—and take out of context extraordinarily complex mortality statistics and use them as a means to smear the Welsh NHS. Only this week, I was confronted with the reality of that smear campaign when I was contacted by members of the Welsh NHS work force to ask me—

[Alun Cairns]

The unions.

[Owen Smith]

No, it was not a union. Somebody working in the NHS contacted me on their own behalf to ask what they could do to stop the Tories’ smear campaign dragging the reputation of the Welsh NHS through the mud. Members do not need to take my word for it; they could take the words of doctors in Wales. The British Medical Association in Wales said very clearly that this was “a wicked”—[Interruption.] The Under-Secretary says from a sedentary position that this is about the trade unions, implying that it is somehow connected to the Labour party. He knows that that is not the case; he knows—[Interruption.]

Finance (No. 4) Bill

Debate between Alun Cairns and Owen Smith

Wednesday 18th April 2012 Commons Chamber

[Alun Cairns (Vale of Glamorgan) (Con)]

rose—

[Owen Smith]

I am not going to give way at the moment. I want to carry on with my speech, then I will give way again. Perhaps by then the hon. Member for Spelthorne (Kwasi Kwarteng) will have warmed up and will be able to give us some evidence, instead of more rhetoric.

--- Later in debate ---

[Owen Smith]

No, there is more from the Chancellor. Conservative Members ought to listen to this, because it is their very competent Chancellor speaking. A year later, in October 2010, he said:

“The public must know that the burden is being fairly shared. That’s why I said last year: we are all in this together. And I am clear…that those with the most”—

like those on the Treasury Bench—

“need to pay more. That is why… I have stuck with the 50p tax”.

Have I missed something over the past 18 months since this Chancellor has been in trouble? As far as I have seen, the economy has flatlined, growth is at absolutely zero, business investment is going nowhere and inflation is rising. The only thing that has fallen recently is unemployment. Thanks be to goodness that it has dipped today, but it is still at 2.6 million, and as I pointed out to the Minister on Monday night, 2,500 people were queuing for 200 jobs at a supermarket in my constituency last week. That is the reality of the economy under this Government, unfortunately.

[Alun Cairns]

rose—

--- Later in debate ---

[Owen Smith]

I shall give way to a Welsh colleague.

[Alun Cairns]

I am grateful. How does the hon. Gentleman reconcile his enthusiasm for the 50% rate with the view of the former Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), who said that the 50% rate was temporary? How temporary is temporary for the Labour party?

[Owen Smith]

The 50p rate was introduced, as I said earlier, when we were in the depths of the biggest global recession—[Interruption.] I add the word global, unless Government Members are still suggesting that the collapse of Lehman Brothers in the US was the fault of the Labour Government. Among the many risible claims of the present Government, that is right up there with “expansionary fiscal contraction”. While we are still asking the poor to pay the price for that global recession and piling misery upon misery on them, with VAT changes, increased job insecurity and wage stagnation, cutting the 50p rate is fundamentally the wrong thing to do.

--- Later in debate ---

[Alun Cairns]

I am grateful for the hon. Gentleman’s point. In fairness to him, he has presented a respectable view. I disagreed with it, but I expected him, as a columnist in the Morning Star, to present that sort of image. On that basis, he would want to tax as much as he can and spend as much as he can—something that I disagree with. There is a difference between the respectable point that he made and the unrespectable point made by the hon. Member for Pontypridd because of the confused message that he is presenting because of the uncertainty.

[Owen Smith]

With the greatest respect to the hon. Gentleman, I have absolutely no idea what his last sentence meant, but I will move on. If this was such a good Budget for business, why did the OBR conclude that over the next year business investment in Britain will go up by 0.7%, which is down by almost 8% on last year’s estimate? If business is supposed to be spending lots more money as a result of the 50p rate cut and many other measures in the Budget, why is that not shown in the OBR figures? Why is GDP going up by only 0.1%?

[Alun Cairns]

It is interesting that the hon. Gentleman is extremely selective in whom he quotes and when he quotes them. He chooses to quote the OBR’s figures when it suits his argument on one occasion, but chooses to quote the HMRC’s figures when it suits his argument on another occasion. That relates back to the uncertainty that I mentioned.

--- Later in debate ---

[Alun Cairns]

I am sure that the hon. Gentleman would recognise that there is no silver bullet. I suggest that there is a range of issues. It is partly to do with the eurozone, partly to do with the debt that we inherited from the previous Government and partly to do with the global environment. Thanks to the Chancellor and the Treasury team, we are putting Britain on the road to the recovery. The reduction of the rate from 50% to 45% is central to that because of the message that it sends to every investor around the globe, as I have outlined.

We must recognise that we have had the highest tax rate in the G20. That has an effect when international companies consider where to invest. The G20 countries are in the top league of where international companies spend their money. Obviously, I want us to be seen as the most competitive nation in the league, not for us to be at the bottom of the league. That is the situation that we inherited.

The message of the Labour party consists of nothing more than envy. Labour fails to recognise that the top 1% of earners pay 30% of the income tax in this nation. The marginal rates are exceptionally important, as has been mentioned. We need to create an environment in which Britain is open for business and make it an attractive nation to investors from the UK and from elsewhere.

The argument presented by the hon. Member for Pontypridd is hollow. He misses a number of points. First, the 50% rate was intended to be a temporary rate in the first place. In response to interventions, he said that he did not think that the temporary rate should be adjusted just yet. How temporary is temporary? He gave the impression in his response that the rate should remain at 50% for the remainder of this Parliament. That would take us up to eight years of this temporary tax. He said in another response that he could not predict the Budgets that would happen after the next general election. There are three years remaining in this term. He cannot have it both ways. He says that the temporary tax should last for eight years, but that he cannot predict what will happen in three years’ time. The reality is that the Labour party is merely presenting the politics of envy. It wants to be the tax-and-spend party once again. It was the tax-and-spend party when it left office, and it has done little to move on from that position.

[Owen Smith]

The hon. Gentleman can rest assured that there is no envy on my part of him or other Government Members. I did not imply what we would have done in my speech; I stated explicitly that we would not have got rid of the 50p rate for the duration of this Parliament. The reason for that was equally clear: the Opposition are still asking for an equitable distribution of difficulty in these difficult times, as opposed to the Government, who are giving a tax bung to millionaires. We would not have done that and we think that it is the wrong thing to do. He clearly thinks that it is the right thing to do.

[Alun Cairns]

The hon. Gentleman has repeated that by “temporary”, the Opposition mean eight years and that it could be even longer. On the one hand, he is not prepared to make a commitment for three years’ time, but on the other, he is prepared to make a commitment for the next three years. That is another inconsistency in his argument.

The Opposition’s strongest argument is about the uncertainty over the change in income when the rate changes from 50% to 45%. To be kind, one would say that the hon. Member for Pontypridd has been selective; some might say that he has not been wholly honest. Everything is uncertain. There is no guarantee about how the economy will grow, nor about how the European or the global economy will grow. There was exactly the same uncertainty when the previous Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), introduced the 50% rate. He predicted that it would bring in three times more than it has brought in.

--- Later in debate ---

[Alun Cairns]

If my remark caused offence to any Opposition Member, I will happily withdraw it. To rephrase what I said, the hon. Member for Pontypridd was inconsistent in his argument.

There is obvious uncertainty about the data that HMRC presents.

[Owen Smith]

In the interests of consistency, will the hon. Gentleman confirm that he agrees that there is gross uncertainty about the revenue receipts and about the £100 million loss? Does he therefore think that the Exchequer might lose more than that?

[Alun Cairns]

I am grateful to the hon. Gentleman for that intervention, because I can answer him directly. Exactly the same uncertainty that there is now existed when the previous Chancellor increased the rate from 40% to 50%. The economic situation has changed. Therefore, there will obviously be uncertainty in all the data, be they from the OBR, HMRC, the Institute for Fiscal Studies or any other independent forecaster. The Chancellor needs to make a judgment based on the data that are presented. [Interruption.] I will happily give way if the hon. Gentleman wants to intervene.

[Owen Smith]

I just want to point out that we know how much money was raised by the 50% rate. That is not in dispute or uncertain. It raised £1.1 billion. That is there in black and white on page 39 of the HMRC document on the 50p rate. It is the projections that are uncertain. It is uncertain that £100 million will be the loss to the Exchequer. However, we know that the static cost, if there is no behavioural change, will be £3 billion. We know all that.

[Alun Cairns]

The hon. Gentleman is missing the point. The increase from 40% to 50% raised only a third of what was projected when it was introduced. That is how uncertain things were. If it is a bad tax and is not raising what it is intended to raise, let us get rid of it and have a sensible tax that is a lot more business-friendly and attractive to international investors. If that is the Opposition’s best argument in opposing the reduction of the rate from 50% to 45%, it demonstrates how weak they are.

[Owen Smith]

I am grateful to the hon. Gentleman for giving way, because I did not get a chance to say this earlier. The notion that the rate raised only a third of what was anticipated is another half-truth that was included in the Budget speech. In the year when we set the rate, we anticipated that it would raise £1.3 billion. That is there in black and white in the Labour party’s final Budget. It raised £1.1 billion. That is not a third of what we anticipated, but £200 million shy of it.

[Alun Cairns]

There are uncertainties about the drafting of any Budget at any time. There will be uncertainties in the Budget next year and the year after, as there have always been for any Chancellor writing a Budget. In the end, it comes down to the fact that a Chancellor has to make a judgment. This Chancellor had to make a judgment about whether a marginal tax rate in excess of 60% was right for Britain to attract investors and create wealth within the nation. He did so on the basis of information from the OBR, HMRC and the Institute for Fiscal Studies that at a time when we needed growth more than ever, that marginal tax rate sent the wrong message to other nations, and that a reduction in the headline rate of tax from 50% to 45% was exceptionally important.

--- Later in debate ---

[Owen Smith]

I would be terribly happy for all the banks, including RBS and HBOS, to make more profit. That would clearly be a very good thing for the British economy; we are entirely agreed on that. At the moment, however, they are not being asked to bear a particularly heavy burden, and nor are the other banks that are already making significant profits—lower than in previous years, but still significant. It is not easy to square that with the Conservative Government’s previous commitment to honour our intention to make those with the broadest shoulders bear the greatest burden. The Government’s decisions on the 50p rate and the bank levy do not bear out their former agreement with us; rather, they speak of a Government who have decided to make a different set of decisions over the past few years, as borne out most recently by the 50p tax rate. The Government should think again about how much money they are raising from the banks and what is the appropriate amount that they should raise.

[Alun Cairns]

Will the hon. Gentleman give way?

[Owen Smith]

I will keep going for a moment and then happily give way.

The bank levy currently impacts on banks only after the first £20 billion in equities and liabilities is taken into account, capturing, in effect, the millionaires of the corporate world. When the idea of the levy was first mooted—initially by Labour Members and then after being picked up by the International Monetary Fund— [Interruption.] I am afraid that that is true. My right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) first mentioned a bank levy, and then the IMF picked up on it. It is a simple point, but I will happily give way if the Minister wants to intervene.

--- Later in debate ---

[Owen Smith]

As is in the Bill, have also cut a deal with Switzerland that allows people avoiding tax by the Government putting money into Switzerland to continue doing so. Again, on the plausibility of the Government’s estimates, they claim that it will net between £4 billion and £7 billion for the Exchequer, but the OBR thinks that highly questionable.

[Alun Cairns]

I am astounded by the Opposition’s attitude, particularly given that their major party donor used to use those benefits in Switzerland, which we have now closed, and to hear them brag about the previous Government’s anti-avoidance measures, given that their candidate for Mayor for London is using every scheme in the book to avoid paying tax. What influence have those changes had on him?

[Owen Smith]

The hon. Gentleman ought to read some of the Budget documentation. The Government have not closed anything in respect of Switzerland; they have opened it up and continued to allow people to put money into Switzerland. They have asked them to acknowledge how much they have there and then charged them a lower rate of tax than they would have been charged had they kept their money in the UK. What is worse is that it runs fundamentally contrary to the European train of thought, established across Europe and supported by the previous Labour Government over their last five years, which is that we want more transparency, not less, in our tax affairs. Unfortunately, we will have less transparency as a result of his Government.

--- Later in debate ---

[Owen Smith]

It absolutely does. On Monday night, I put it to the Chancellor that he and those on his Front Bench were entirely out of touch with the reality in constituencies such as mine and that of my hon. Friend. Pontypridd is fortunate, right now, to have the prospect of a new supermarket opening, which will create 200 jobs, but 2,500 people queued 600 yards down the main street to try to secure one of those jobs. They came not only from my constituency but from right across south Wales. That is the desperate reality that many people in this country are facing. I saw the queue myself, and I know that many of those people were young and eager to work. They also felt that the opportunities for them were diminishing under this Government, rather than increasing. They are looking to the Government, and the Opposition, for action. They want us to put on the table solutions that will deliver growth and jobs and that will stop the economy flatlining.

Unfortunately, the net effect of all the measures in the Budget, including those in clause 209, will be an increase of only 0.1% growth in GDP—[Interruption.] The hon. Member for Vale of Glamorgan (Alun Cairns) shakes his head, but those are the numbers in his Government’s documentation that have been agreed and validated by the OBR: growth of 0.1% in GDP and growth of 0.7% in business investment, which is down almost seven points from where we thought we were going to be just 18 months ago. That is a desperate state of affairs. How on earth can he defend it?

[Alun Cairns]

It has been said in the previous debate as well as in this one how cautious the Chancellor rightly needs to be in planning the Budget and in working with growth figures. Does the hon. Gentleman recognise the improvement in the UK’s economic position announced by the Institute for Fiscal Studies earlier this week, leading it to increase its growth predictions?

Commission on Devolution in Wales

Debate between Alun Cairns and Owen Smith

Thursday 3rd November 2011 Commons Chamber

[Owen Smith]

The hon. Gentleman and his colleagues call for accuracy in the context in which we set our remarks about the public spending cuts in Wales, but should they not set themselves the same standards when discussing the profundity of the long-term, systemic economic problems facing Wales, which are reflected in our once again qualifying for objective 1 funding? I profoundly regret that, as I am sure he does, but the fact that we qualify shows how deep seated the problems are.

[Alun Cairns]

I am grateful for that point, but the hon. Gentleman misses the key issue: Labour’s failure over 13 years. Labour Members salivate in decrying the 1980s. Wales was not the poorest part of the United Kingdom at the time, but it was when they left office. [Interruption.] The hon. Gentleman says from a sedentary position, “It is not true”. Well, I will happily hear about the economic indicator that points out that Wales is not the poorest part of the United Kingdom.

[Owen Smith]

I did not say, “It is not true”, and the hon. Gentleman makes a semantic point, because we are talking about fractions. Many parts of the UK have not benefited in lots of respects; in fact, they all share the characteristics of being post-industrial parts of Britain with the same deep-seated economic problems as Wales. Those problems are not something to be solved quickly, but the Assembly has worked extremely hard and been extremely effective in all sorts of areas of public life in Wales.

[Alun Cairns]

I am stunned by the complacency of the hon. Gentleman, an Opposition Front-Bench Treasury spokesman who really should have a better handle on these issues. He talks about semantics and very small percentages, but when Labour left office after 13 years of government Wales was the poorest part of the United Kingdom, despite all the great announcements that we heard during the period, on the Barnett settlement, Barnett plus, European money, match funding, PES—public expenditure survey—cover and how lucky Wales was to have a Labour-run Westminster Government as well as a Labour-run Welsh Assembly Government. The data are quite clear that there has been blatant failure. They highlight the fact that Wales is the poorest part of the United Kingdom, and I am aghast at the hon. Gentleman’s complacency.

--- Later in debate ---

[Alun Cairns]

I could not agree more with my hon. Friend, who further underlines the point.

The key theme is accountability, which was covered extremely well in the excellent report of the Holtham commission, which set the backdrop to the Silk commission, highlighting key issues relating to accountability and some of the points that I tried to make earlier. The report states that the public sector, and I would say the Welsh Government specifically, is

“in some ways detached from the economic circumstances of the citizens it serves”—

that is the need for better accountability—and

“simply blaming Westminster for inadequate resources”

is not an option. That is effectively the position we are in.

The change of Government at Westminster has produced a chorus of an argument from the Welsh Government in Cardiff Bay, to the extent that the level of debate is stymied to mere rhetoric. The best description of the Welsh Government’s approach came from a former Labour Member of this House who said that the Welsh Government is in danger of becoming an

“institutional chip on the Welsh shoulder.”

That encapsulates the approach. The accountability argument must be underlined time and again.

It is too easy for the Welsh Government to play the blame game, and I hope that the Silk commission will consider accountability extremely seriously. The Holtham report offers useful pointers. It states that if it is decided that there is merit in devolving fiscal powers, the tax should be one that

“is paid by a high proportion of Welsh residents…raises substantial revenue”

and

“is ‘visible’ to most citizens”.

It is not surprising, therefore, that in seeking to avoid my accountability argument the Welsh Government and the First Minister call for air passenger duty, stamp duty, aggregates tax, landfill tax, and other obscure taxes. The more obscure they are, the less accountability there is, so they can continue the blame game. That is unacceptable, and I hope that the Silk commission will reject that.

[Owen Smith]

Again, I intervene on a point of accuracy. The hon. Gentleman quoted extensively from the Holtham report, which he purports to have read, so he will know that those are the very taxes that Gerry Holtham refers to as potentially being among the minor taxes that would be transferred to Wales.

[Alun Cairns]

The hon. Gentleman mistakes my recognition of the quality of the Holtham report for an indication that I agree with all its conclusions, and I simply do not agree with all the conclusions. I said earlier that it is a useful backdrop to the Silk commission. That should be recognised.

To pursue the argument about accountability and the approach taken by the Welsh Government, in a similar vein it needs to be noted that over the past 12 years the Labour party in Wales used council taxes to raise additional funds and then put the responsibility on to local authorities, most of which, as a result of 13 years of Labour Government, were not Labour. The Conservative party ran the same number of councils in Wales as the Labour party, and that is a far cry from how it was at the time of devolution. Most of the funding for local authorities comes from the Welsh Government, so I would suggest that over the past 10 years or so there has been a deliberate strategy of squeezing funding from local government in Wales, forcing local authorities to raise more money in council tax. That is demonstrated by the fact that over the past five years the average council tax increase in England was 2.6%, compared with 3.8% in Wales. That amounts to a plan to make local authorities responsible for the additional revenue that they are raising instead of becoming accountable for themselves. I could go on to talk about the re-banding mistakes that were made in some areas, which squeezed even more council tax out of some of the people who were least able to pay.

I will close by sounding a note of caution about the volatility of many taxes. Whatever the Silk commission develops and comes up with, I hope that it will recognise the volatility between the level of income tax raised three years ago in Wales compared with the level raised now. There is a significant difference, and that will be another important factor for Silk to consider.

--- Later in debate ---

[Owen Smith]

No, it has not been done, as the hon. Lady says. It is very good to see her today—I am very pleased that we have an English Member taking part in the debate, which is extremely important. However, I say to her that what came out of that report was a commitment in the Conservative manifesto and the coalition agreement, which has now been enacted, to begin a debate on the West Lothian question. We are concerned about the direction of travel and the trajectory that many Members now feel has been set.

In recent debates in Westminster Hall and elsewhere, many Members have referred rather aggressively to resentment felt by English constituents about the supposed unfair stipend or subsidy afforded to, and enjoyed by, citizens in Wales, Scotland and Northern Ireland. As Opposition Members have tried to point out today, that is not an unfair stipend, but a reflection of the accurate needs, born of the industrial heritage and present problems, of Wales, Scotland and Northern Ireland. Neither, as my right hon. Friend the Member for Torfaen mentioned, is it a reflection of the relative receipt of revenues in Wales versus parts of England where a needs-based formula already applies: for example, greater subsidy—if we want to use that word—and support is afforded to the north-east, the north-west and even the south-west than is afforded to Wales. It is legitimate, therefore, for us to voice our concerns about the Government’s attitude to the Union. That is not scaremongering; it is merely a question and a set of observations on our part.

The other reason we are worried, of course, is that, traditionally, Conservative and Labour Governments have not been partisan in how they have addressed the constitution, but for the first time, judging from how the Parliamentary Voting System and Constituencies Act 2011 was addressed in this place, a partisan attitude has been taken to the constitution. I hold that view absolutely fully. It is a view that I have heard expressed on many occasions by Conservative Members, not in the House, but outside. They view the Act as being underpinned by partisan motivations, and I fear that we might be seeing a similar set of motivations here. I sense that the Tory party has been seduced by the prospect of hegemony in England in the long term, even if it means a truncated, fragmented UK. I, for one, as a Welshman and proud British citizen, do not want that to come about.

[Alun Cairns]

Speaking as a Conservative Member, I do not accept that point. In my mind, the purpose of the Silk commission is to provide accountability and stability for the long term, but the motives about which the hon. Gentleman talks were behind devolution in 1997, when it suited the Labour party in Wales, rather than Wales as a nation.

[Owen Smith]

I wholly dispute that. Devolution in 1997 was born of need and demand in Wales. It had been developing for a long time. It perhaps had not come fully to fruition in 1979, but by 1997 there was a clear demand for it, and that demand has thickened over the past 13 years, right through to the referendum, when we saw it greatly increased.

[Alun Cairns]

I am grateful to the hon. Gentleman for giving way; he is being extremely generous. If demand was so strong, why was there only a 50% turnout and 7,000 majority? That is how strong his demand was.

[Owen Smith]

Several Government Members have talked about what, to put it bluntly, is ancient history now and pointed to the size of the mandate and turnout, but we all know that politics is a precarious, parlous business. The Tory party clearly thought that it had a sufficient mandate at the last election. It did not get a majority, but nevertheless it is the ruling party. We have to bury that argument and move on. Right now, there is clear support for devolution in Wales, as was shown in the recent referendum. That is not in dispute. It ill behoves Government Members, who purport to support devolution, to keep dredging up these ancient concerns and this ancient history, because, frankly, it gives us the suspicion that they still have not quite bought into it.

I have a second concern, which, actually, I share with some Government Members—even, perhaps, the hon. Member for Monmouth (David T. C. Davies)—about the constant, cyclical nature of the interaction between demands and desires, legitimate or otherwise, for additional, incremental powers in Wales, Scotland, Northern Ireland and even, perhaps, England. That is a problem. It leads to perpetual pressure for change and to very few instances in which we—legislators in this place and the devolved Administrations, which have their own particular locus—can put our foot on the ball and contemplate the broader picture, the country’s longer-term trajectory. That is hugely important. The Silk commission ought to consider that wider context.

In particular, however, this House needs to consider that wider context and be the place in our country where we contemplate the aggregate impact of the changes to the particular discrete functions and powers of different parts of the UK and where we think long term about what the benefits and disbenefits might be. That is not to take an anti-devolutionist perspective, however. I am thoroughly committed to devolution and the principle of subsidiarity—pushing down power and democratic accountability as low as we can—which is why I talk in my excellent and recommended article for Compass about reinvigorating local government democracy in England, which would be a jolly good thing. However, I am also British—indeed, proudly so—and I feel that my values and those of the Labour party transcend national boundaries and the identity politics that stem from an obsession with national boundaries. My concern is that the wider picture—the longer-term perspective—is too infrequently considered in this place or, in particular, the devolved Assembly. I do not want Wales to be as politically peripheral in Britain as it is de facto geographically peripheral. I worry that at some point that will be the net consequence—the aggregate impact—of these things.

Let me turn briefly to some of the specificities of what Silk will consider. I will take only one—corporation tax—but for me, they all highlight the risk that we might face. Anyone picking up the Financial Times this morning could have read an article about Peter Robinson, the First Minister of the Northern Ireland Assembly, who has advocated adopting a 10% corporation tax rate to compete with the 12.5% rate in the south. My view is that this would be hugely difficult and dangerous. Although it might be advantageous for Northern Ireland in the short term, we should also consider the risk that it would necessarily lead to arbitrage between the two areas and to different pricing arrangements. If we had variable taxation bands between different parts of the mainland, we would certainly see arbitrage across the borders and we would need internal transfer pricing policy and legislation in this place and the other jurisdictions. Given the difficulties with legislative vehicles to deal with transfer pricing between European countries—the disaster, even—what on earth would they be like within the UK?

Westminster needs to hold the ring. Westminster needs to consider the risks. Westminster needs to be the place where this debate is thought about, in conjunction with the discrete and—from the perspective of the local jurisdictions—eminently reasonably changes that may be wished for. This place also needs to be where the broader economic context is considered, because, bluntly, some of the peripheral changes to taxation that we are talking about and that Holtham talks about—indeed, perhaps even the larger changes too—will not lead to the growth, jobs, wealth and opportunity that would be created by measures that the Government could be implementing right now, such as those in Labour’s five-point plan.

The Economy

Debate between Alun Cairns and Owen Smith

Wednesday 22nd June 2011 Commons Chamber

[Owen Smith (Pontypridd) (Lab)]

We have heard a lot today about learning the lessons of history, but what we heard from the hon. Member for Stourbridge (Margot James) shows that the Government clearly have not learned the lessons of their own history. In the last years of the Labour Government, we listened to the Conservative party talk about wanting more deregulation and complain that we were over-regulating. We concede now that we were not regulating the banking sector as vigorously as we should have done, yet still we hear calls for further deregulation. That is a lesson that Conservative Members really ought to learn.

Equally, Conservative Members ought to look much closer, and with a far less jaundiced and more objective eye, at the Government’s past year of performance. Any objective reading, any audit of how they have performed economically, must tell them, as it tells us, that it has been a disastrous year. Unemployment is higher by 1.5%, inflation is higher by 1.6%, output is down by 0.7% and manufacturing, which went up for a period as there was restocking and which boomed partly because of big deflation in the value of the pound, has now ground to a halt. We are not seeing a manufacturing-led recovery. Critically, growth, the key driver of our economy, is flat, non-existent, zero.

[Alun Cairns]

The hon. Gentleman focuses on manufacturing, but how does he contrast performance over the past 12 months with that over the previous 12 years, when manufacturing in Wales in particular, and in the west midlands, fell dramatically from representing close to a third of the economy to nearer 20%?

[Owen Smith]

I answer candidly that we have already said that we need a rebalancing of our economy. On both sides of the House, there was far too great an emphasis on the belief that we were in a post-industrial society and manufacturing was not an important part of the mix. We have learned the lessons, as I hope Government Members have. I hope that there will therefore be an active industrial policy from the Government, like the one that the Opposition are talking about. That is the only way in which we will improve manufacturing.

Funding Formula

Debate between Alun Cairns and Owen Smith

Tuesday 18th January 2011 Westminster Hall

[Alun Cairns]

I will come on to the convergence in a moment. None the less, it is a point that is well made and that should be recognised by the Labour party. It is important not to confuse freedom of devolution, which enables nations to pursue their own policies, with funding. There is naturally a link, but because there is a policy, subsidy or generosity in one particular area, it should not then be used as proof or evidence of over-funding when we consider the whole context.

[Owen Smith]

I was rising to make precisely that point. Does the hon. Gentleman fear, as I do, that the hon. Member for South West Bedfordshire (Andrew Selous) will not be happy when we have a needs-based formula, because those examples that he cherry-picked earlier will still exist? The politics of envy, which underpins some of his concerns, will still play into this debate.

[Alun Cairns]

That point only demonstrates the hon. Gentleman’s misunderstanding of the spirit and tone of the debate presented by my hon. Friend the Member for South West Bedfordshire. My hon. Friend identified the differences, but recognised that that freedom needs to take place when we consider devolution. The obvious things in Wales are free prescriptions and—this one has focused attention of late—tuition fees. To those hon. Members who are critical of the Barnett formula because it is advantageous to Wales, I say that our NHS waiting lists are much longer and that the cancer drugs fund does not apply, so there are considerable drawbacks, and they need to be taken in the context of the whole funding settlement. It is far too easy to pick a policy that has been prioritised by the Welsh Assembly Government without accepting the areas that may not have been prioritised. Health is the obvious one. In England, for example, there is a guarantee of no cuts in NHS spending, whereas in Wales there will be real-term cuts and financial cuts to the health service. That point should be recognised in the debate.

My hon. Friend the Member for Aberconwy (Guto Bebb) has referred to the positive contribution of the Holtham commission. The two volumes of the Holtham commission can be brought down to a few figures. At the moment, Wales receives £113, which will drop to £112, for every £100 that is spent in England; Scotland receives £120; and Northern Ireland receives £124. Holtham concludes that Wales needs £115, which is marginally more than it is currently being awarded; Scotland needs £105, which is a significant reduction from its £120 now; and the figure for Northern Ireland is not far from what it already receives. That is the first needs-based assessment that has taken place. If that is not accepted in general terms, it is certainly an exceptionally useful starting point of where the needs lie.

The hon. Member for Arfon (Hywel Williams) has said that, historically, Wales has been underfunded by £300 million, but that fails to understand the convergence that has taken place over the past 13 years or more. That £300 million is the current level, and it would have been a much smaller level in the past.

A very good point has been made about Crossrail. Despite the view that the Labour party in Wales is taking at the moment, we can compare the spending on Crossrail with that on the Jubilee line. The spending on the Jubilee line was Barnettised, but the spending on Crossrail by the previous Government was not, which highlights another way in which Wales was treated unfairly by the previous Administration. It is far too easy to point the finger, when a real debate is taking place on satisfying the needs-based requirement.

My closing points—I am conscious of the time—relate to the way forward. All the nations and regions need to engage in the debate about this extremely sensitive area. Those who are allied with the Scottish National party are a block not only to any form of debate—that position is natural, because of the way in which Scotland would lose out—but to changes elsewhere in the United Kingdom. As the hon. Member for Arfon builds up a strong relationship with the Scottish nationalists, he must recognise that that is blocking reform in Wales, because every part of the UK needs to engage in this debate if we are to come up with a needs-based formula that satisfies all the nations and regions of the United Kingdom.

Welsh Grand Committee (Scrutiny)

Debate between Alun Cairns and Owen Smith

Tuesday 2nd November 2010 Westminster Hall

[Owen Smith (Pontypridd) (Lab)]

It is a delight to serve under your chairmanship, Mr Caton. We are particularly lucky that a Welsh Member and a Welshman is in the Chair. That is particularly appropriate.

I offer my warmest congratulations to my right hon. Friend the Member for Cardiff South and Penarth (Alun Michael) on securing the debate and on highlighting the twin critical issues at its heart. The debate is about balancing the rights of the minority in the House, or the Opposition party, against those of the majority, or the Government party, in scrutinising legislation as it relates to Wales. There is also the larger, far more important issue of balancing the rights of the minority country, Wales, against those of its dominant partner, England, in their peculiar and, for the moment, stable union within the UK.

Too many Members to list have spoken with enormous passion about both those critical issues. Their eloquence and passion bears great testimony to just how deep the feeling is among Opposition Members that Wales—our country—is being ill served by the coalition Government. We feel that we are being disrespected, disregarded and, today, disfranchised.

[Alun Cairns]

Would the hon. Gentleman not acknowledge that, among the many crocodile tears that have been shed today, there is just a hint of self-interest?

[Owen Smith]

No, I would not. Throughout the debate, one of the most disconcerting things about the Government’s Front Benchers, and particularly the silence of their Welsh Front Benchers, has been the absolute failure to acknowledge that there are any legitimate questions to be asked about balancing the interests of Wales against those of England. The continued refrain has been that we are talking about balancing one seat and the votes in it against another seat and the votes in it. There is a legitimate issue there, and we have acknowledged throughout that the issue of equalisation is legitimate, but it is just as legitimate to address the issue of balancing the aggregate weight of Wales and Welsh seats against that of English seats—our Dai of 40 seats against the English Goliath of 533 seats. That is a legitimate question, and the Welsh Grand Committee should have met to consider it. The Secretary of State’s decision repeatedly to deny Welsh Members our right to discuss these critical issues is yet another example of the disrespect agenda that is the hallmark of this Government’s approach to Wales.

--- Later in debate ---

[Owen Smith]

Again, I completely agree. It is an absolutely telling indictment of the Government that they did not even think about the implications of the referendum because they are hellbent on railroading the proposed changes through in an attempt to rig not only the next election, but successive elections. This is about trying to secure Tory power in perpetuity, and we need to defend against that.

As various Members have said, the Welsh Affairs Committee is a Tory-chaired Committee with a Tory majority. It concluded unanimously that the proposed changes would have an impact on not only Wales, but the UK—on our constitution and the union between Wales and England.

[Alun Cairns]

This is the second or third time that I have heard the point about the make-up of the Welsh Affairs Committee, but it is made up in just the same way as every other Select Committee. Will the hon. Gentleman tell me when this Administration introduced the process and structure that led to the imbalance that he talks about?

[Owen Smith]

I will respond with a counter-question, I am afraid. As someone who sat with me on that Committee, does the hon. Gentleman deny supporting its conclusion that the Bill would gerrymander the map of Wales and should not be passed?

Contaminated Blood and Blood Products

Debate between Alun Cairns and Owen Smith

Thursday 14th October 2010 Commons Chamber

[Owen Smith]

I understand the right hon. Gentleman’s argument, which is a good one intellectually, but the rationale for the recommendation’s inclusion in the motion was, essentially, that the victims of this tragedy wanted the House to debate it. The Archer report is the only substantive inquiry that we have had. It came to that conclusion on compensation, so we felt it appropriate to ask that question of the House. However, I understand the right hon. Gentleman’s point about tying ourselves to recommendations that are made in another jurisdiction.

[Alun Cairns (Vale of Glamorgan) (Con)]

I pay tribute to the hon. Gentleman for pressing for the motion today. I am obviously keen to support him. On the debate about parity with the Republic of Ireland, the Minister in her statement talked about working with the UK’s devolved Administrations and with their Health Ministers. Does the hon. Gentleman also support the need for parity within the UK? Will he urge the Minister before us and the Minister in Wales, because we are both Welsh Members, to work on the review with the Department of Health in order to come up with at least some parity within the UK?