Welfare Reform (Welsh Valleys)

Debate between Ann Clwyd and Wayne David

Tuesday 11th November 2014 Westminster Hall

[Wayne David]

The hon. Gentleman has led me on neatly to my next point and the central part of my contribution this afternoon. That is to talk not about the work of the previous Labour Government—yes, we began the process of welfare change, but we did it fairly—but about what we have seen since: a completely unfair introduction of welfare reform, or so-called welfare reform, that, more accurately, has been a way of making crude cuts affecting some of the poorest and most vulnerable in society.

As the hon. Gentleman said, however, an excellent report was published by the Industrial Communities Alliance in Wales. It was written by Christina Beatty and Steve Fothergill of the Centre For Regional Economic and Social Research at Sheffield Hallam university. The report sets out in well researched detail the scale of the Government’s cuts on one of the most deprived areas of the United Kingdom and quantifies in great detail the impact that those cuts are having on the economy of the south Wales valleys.

It is important to remember that not all the cuts have yet been implemented but, when they are, the valleys will lose around £430 million a year. That is an average of £650 per adult of working age. Those are massive figures, especially when we realise that the impact on the valleys is far greater than it is on virtually any other part of the United Kingdom. Without taking into account the household benefit cap and the bedroom tax, the overall financial loss for the United Kingdom as a whole is £475 per working-age adult—for the south-east of England, £370.

The contrast with the valleys is sharpest in parts of southern England outside London. In parts of Surrey, Berkshire, Hampshire, Oxfordshire and Buckinghamshire, the financial loss per adult of working age is estimated to be little more than a third of the loss for the people living in the south Wales valleys. The Government’s welfare cuts are therefore accentuating the already huge differences between well off and poor areas, and are having a hugely negative impact on the local economy across the old south Wales coalfields from Torfaen to Ammanford.

If that were not bad enough, Beatty and Fothergill have dug down to ward level and shown that the financial loss per adult in the poorest parts of the valleys is truly horrific. By looking at official Government data, they have shown that in Maerdy in the Rhondda the overall financial loss per adult is £1,050 per year and in Pen-y-waun, near Aberdare, it is £1,040 per year. In my own constituency, the loss is £820 in Bargoed and £790 in St James. In St James, for example, which includes some relatively well off areas, the loss is greatest at sub-ward level, among some of the poorest people in Caerphilly. If that is true in my constituency, I am sure that it is also true elsewhere.

The huge loss of income has not only a hugely negative effect on the individuals and families concerned, but a massive effect on the local economy—a point made by my hon. Friend the Member for Llanelli (Nia Griffith). Over time, Beatty and Fothergill estimate that some 3,000 jobs in consumer services can be expected to be lost as a result of the Government’s welfare policies. The Government’s argument, of course, is that reforming welfare in such a way is increasing the incentive for people to take up employment—I am sure we will hear that from the Minister—but the trouble is that in many parts of the valleys the local economy is incredibly weak and there is little sign of significant growth in quality job opportunities. What growth we do see tends to be in jobs that are part time, have zero-hour contracts attached to them and are very low paid.

There is another factor. Beatty and Fothergill have pointed out that the valleys have an archetypal “weak local economy” with a large pool of people who are unemployed. The consequence is that bringing into the labour market more people who have been on long-term disablement benefits does not necessarily lead to those people getting jobs. Men and women with health problems or disabilities, with few formal qualifications and little if any skilled work experience, and often in the latter phase of their working lives, are rarely employers’ first choice.

[Ann Clwyd (Cynon Valley) (Lab)]

I am sure my hon. Friend will agree with me that the situation of disabled people in the valleys is particularly bad. We have the highest proportion of disabled people compared with other parts of the United Kingdom. Those people will be especially badly hit by the continuing cuts in welfare. Disability attendance allowance and housing benefit form part of a list of things that impact on them. Does he believe that particular attention needs to be paid to the needs of the disabled in the south Wales valleys?

[Wayne David]

Yes, indeed, that is absolutely correct. My right hon. Friend makes her point well. To begin with, we have a larger proportion of people who suffer from disabilities than many other parts of the United Kingdom, because of the industrial past of the south Wales valleys. Such people are being especially hard hit by the Government’s policies.

Many of the people who are losing benefits are not securing employment—certainly not of the reasonably well paid variety. They are suffering a huge cut in their income levels and their standard of living. The report by Beatty and Fothergill points to the resources coming to the valleys from the European Union and compares those to the financial loss from welfare reform. We all know that as west Wales and the valleys were originally designated an objective 1 area, and then a convergence area, they received significant European regional development fund and European social fund moneys. From 2014 to 2020, we will see additional EU aid amounting to £1.6 billion. That funding will be worth around £120 million per year to the valleys, but, as I said earlier, the valleys’ loss through welfare reform is estimated at £430 million a year. In other words, the welfare cuts will remove almost four times as much money as the valleys receive in EU regional aid.

Let us not forget that the ongoing welfare cuts will be running in parallel with the harshest cuts in local government services that we have ever seen. Having been shielded by the Welsh Government until now, local government in the valleys is being forced to introduce unprecedented cuts in expenditure, which will inevitably hit hard those who rely most on local authority services: the sick, the disabled, women, the old, the young and the disadvantaged. Not only will services be hit, but we are likely to see jobs being lost and local economies suffering through the knock-on effects of the contraction of local government. Although the Beatty-Fothergill report does not examine what those cuts will mean, there is absolutely no doubt that they can only make a bad situation very much worse.

The Beatty-Fothergill report demonstrates that Wales is being hit harder by welfare reform than almost any other part of the United Kingdom, and that the valleys are being hit “exceptionally hard”. It concludes:

“The South Wales Valleys, long afflicted by the loss of jobs in coal, steel and manufacturing, have been the target of many regeneration efforts, some more successful than others. Welfare reform unequivocally works in the opposite direction: the poor will become poorer, and the poorest areas will fall further behind.”

Nothing highlights more clearly the need for a Labour Government in Westminster after next year’s general election. That Government need to pursue—I believe they will—policies that have at their heart the need to regenerate the economy of the south Wales valleys. We need policies that will provide well paid jobs, build on the excellent work of the Welsh Government’s jobs growth fund and harness creativity and drive so that entrepreneurship becomes the hallmark of the valleys.

Coalfield Communities (Regeneration)

Debate between Ann Clwyd and Wayne David

Tuesday 26th October 2010 Westminster Hall

[Mr David]

My hon. Friend is spot on. The recent comments by the Secretary of State for Work and Pensions show a lack of understanding of contemporary south Wales, the history of its coalfield and the true determination of its people. Clearly, where there are jobs, people are prepared to travel to them. That is a fact.

In communities in the south Wales coalfield, including in my constituency, the CSR will have a truly devastating impact on the public sector. PricewaterhouseCoopers estimates, for example, that Wales as a whole will lose 52,000 jobs in the private and public sectors as a direct result. Services will be hit, the most vulnerable will suffer and benefit recipients will lose out hugely. The Institute for Fiscal Studies suggests that the CSR will hit the less well-off the hardest, which I am sure is correct, and that the places where the pain is greatest will be geographically concentrated. I suggest that places such as south Wales will be far harder hit than, for instance, the south-east of England.

[Ann Clwyd (Cynon Valley) (Lab)]

My hon. Friend can hear that I am croaking at the moment. Does he agree that the figures for disability in the whole UK show that some of the highest percentages of disabled benefit recipients are in the south Wales valleys, which many of us here represent? Does he also agree that the new tests imposed by the Government in their mad rush to cut benefits will be distressing for people who used to work in heavy industry, such as coal miners, if they are expected once again to undergo medical tests that are already proven not to work well? We have asked the Government to delay those tests until they have a better system in place. Does he agree with that?

[Mr David]

Yes, certainly. I am sure that all of us from coalfield areas are aware of increasing numbers of constituents coming to our surgeries and offices to express concern about how things will pan out over the next few years. My right hon. Friend has articulately put her finger on a concern felt by many people in places such as south Wales.

The crucial point I want to address is this. The Government, particularly the Chancellor, have belatedly accepted that job losses in the public sector will be significant, but they also say they believe that the private sector will grow quickly and soak up those who lose their jobs in the public sector. I suggest that that is not the case. In areas such as south Wales, there are many key factors, which I identified earlier, that will work against private sector growth. For example, the public and private sectors are interdependent, as the Federation of Small Businesses recognises.

A number of announcements were made just before the comprehensive spending review. For example, it was announced that the Severn barrage will not be constructed. If it had been, it would have been a huge boost for the private sector economy in south Wales. The defence training college has been shelved, and effectively ended. That would have been not a public sector but a private finance initiative, and would have created an estimated 5,000 new jobs in south Wales, but it has been scrapped. We also hear—again—that it is unlikely that the south Wales railway line will be electrified, which would have proved a huge stimulus to the south Wales economy and a job-creating initiative.

We do not have a strong entrepreneurial culture in south Wales. That is not to suggest that people themselves are not entrepreneurial, but historically, creativity has not been directed into the private sector. That is beginning to change, but it is a long-term process that will only come to fruition many years hence.

It is also worth pointing out that as a result of the policies pursued by the last Labour Government, private companies have not shed as many people as was widely anticipated. Many workers now work part-time or are still on the books but not taking up their full cash entitlements. It is therefore more likely that those people will be reactivated, rather than that large numbers will come off the dole queue and go directly into the private sector. Due to those factors, it is pretty clear that areas such as south Wales will not experience a great boost for the private sector; quite the opposite. It is likely that we will lose jobs in the private as well as the public sector.