Gross Domestic Product: Wales and the UK

Baroness Penn Excerpts

Thursday 6th July 2023 Lords Chamber

[Lord Wigley]

To ask His Majesty’s Government what are their latest figures for the gross domestic product per head of population for (1) Wales, and (2) the United Kingdom.

[The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)]

My Lords, the latest Office for National Statistics data show that in 2021 gross domestic product—GDP—per head, at current prices, was £25,665 for Wales and £33,745 for the UK. The UK Government have made significant interventions aimed at boosting GDP in Wales and across the UK, including the £4.8 billion levelling-up fund, the £2.6 billion UK shared prosperity fund and delivering on investment zones and freeports.

[Lord Wigley (PC)]

My Lords, do these figures not speak volumes? They underline the failure of successive Governments to close the gap between Wales and England. With the relevant economic levers being shared between Whitehall and Senedd Cymru, is it not essential that the two co-operate on these economic matters? Does the Minister appreciate how much this is undermined by the refusal of the Chief Secretary of the Treasury to attend the Senedd’s finance committee? Is she aware that her colleague, the noble Lord, Lord Bourne, told that committee in Cardiff last week that a duty should be placed on the Chief Secretary to attend such committees when required? He said that

“if it needs putting on a statutory basis … that needs to happen”.

Does she agree?

[Baroness Penn (Con)]

My Lords, perhaps I can provide a little reassurance to the noble Lord. Yes, the gap between GDP per head in Wales and the rest of the UK is too large, but Wales has had the highest growth in GDP per head since 2010 of all regions and nations across the UK, increasing by 15.7% compared with 6.9% across the UK. He talked about the Welsh Government and the UK Government working together. That is something that we have done successfully on city and growth deals across Wales that were developed jointly by the UK Government and the Welsh Government. This included £500 million for the Cardiff capital region and over £100 million in north Wales and Swansea. On his point about the Chief Secretary to the Treasury, he works hard and closely with the devolved Administrations—I know that is something he is very committed to—but I will take the noble Lord’s specific point away.

[Lord Anderson of Swansea (Lab)]

My Lords—

--- Later in debate ---

[Lord Anderson of Swansea (Lab)]

May I invite the Minister to examine all the relevant indices of poverty and deprivation? She will find that Wales is mostly at the bottom, with 75% of the average, whereas the Government in levelling up concentrates simply on north-south. Should not the Government by contrast look also at the east-west divide?

[Baroness Penn (Con)]

I reassure the noble Lord that levelling up is not viewed through the prism that he says it is. When it comes to the looking at the needs in Wales and the funding to be matched to them, that is what we do through the Welsh fiscal framework. In the 2021 spending review, the largest annual block grant in real terms was assigned to Wales since the devolution Acts were passed.

[Baroness Humphreys (LD)]

My Lords, for around 20 years, west Wales and the valleys qualified for EU Objective 1 funding, precisely because our GDP was among the lowest in the EU. With the figures for Wales published in May showing a decrease of 2.1% in GDP over the longer term in Wales, compared with the figures for the rest of the UK showing an increase of 2%, are we in Wales, in the Minister’s opinion, facing a short-term blip, or are we heading for a gradual return to our pre-Objective 1 status, as a result of the loss of EU funding?

[Baroness Penn (Con)]

The statistics that the noble Baroness refers to are more experimental than the ones that I used in my Answer, but they are being refined all the time and they can be subject to greater volatility due to the smaller size that they represent. However, the Government are delivering on their commitment to replace European funding in Wales. As I set out in my earlier Answer, that is just one of the UK Government’s investments in Wales that recognise its great potential to grow even further.

[Lord Browne of Ladyton (Lab)]

My Lords, talking of figures speaking volumes, the Minister will be aware that last month the annual fraud indicator for the United Kingdom, which of course includes Scotland and Wales as well as England and Northern Ireland, assessed it at £219 billion. Are those fraudulent transactions, the muling of that money and the transfer of it from shell company to shell company, and the export of it in crypto assets, counted as economic activity and therefore aggregated into GDP? When the money comes back into the country to buy houses and land, works of art and other things, is it counted as inward investment?

[Baroness Penn (Con)]

The classification of these matters is for the ONS, and I shall get the ONS to write to the noble Lord.

[Lord Livermore (Lab)]

My Lords, the Government’s approach to levelling-up funding has forced local authorities throughout the UK to compete in a process that lacks any published criteria. In the second round of allocations earlier this year, local communities across each of the four nations of the UK, including Wrexham, Moray, Bolsover and Belfast, each had bids rejected without any public explanation. Ahead of the third round of levelling-up funding, will the Minister work with ministerial colleagues, the devolved Governments and local authorities to improve the transparency of the bidding process so that cities, towns and villages across the UK can have access to funding that is both fair and seen to be fair?

[Baroness Penn (Con)]

Just to reassure the noble Lord with regard to Wales, in the first two rounds of the levelling-up fund, £330 million has been invested so far. That exceeds the commitment that 5% of those funds would be invested in Wales, but we always seek to improve our processes around those issues, and I shall happily commit to working with colleagues in the Department for Levelling Up to make sure that we build on the success that we have had so far with this fund.

[Lord Berkeley (Lab)]

My Lords, will the Minister take forward with much more vigour the idea of Celtic Sea offshore wind, which can only really be built in places such as Port Talbot, where there is deep water and lots of land? That might help redress some of the economic disasters that other noble Lords have spoken about.

[Baroness Penn (Con)]

My Lords, the UK has an excellent track record in delivering offshore wind, and I am sure that that will continue. As I have said, we are investing across Wales, and that includes two freeports in Wales—the Celtic Freeport and the Anglesey Freeport, which will both be backed by policy and planning permissions, as well as up to £26 million in funding in each area.

[Lord Bird (CB)]

My Lords, as long as there is a situation in government where most of the money spent is on emergency situations and coping with poverty and very little is spent on prevention of poverty and skilling people away from poverty, we will continue arguing about GDP and whether it is high or low in Wales or England. We do not spend money on dismantling poverty—we spend it on making the poor as comfortable as possible.

[Baroness Penn (Con)]

My Lords, I agree with the noble Lord about the importance of investing in prevention. That is why we have invested in our education system, and we have seen our educational outputs improve under this Government. It is why we are investing in prevention in our NHS. We also need to capture the importance of other aspects that contribute to our country when we look at these matters. That is why we are looking at incorporating measures when it comes to well-being, for example, and not just looking at the narrow measures of GDP.

[Lord Hain (Lab)]

My Lords, if the positive economic figures that the Minister cited for Wales are correct, is that because we have a Welsh Labour Government?

[Baroness Penn (Con)]

It is hard to tell from the other side whether there is a success story or not when it comes to Wales. I think that the best success comes when the UK and Welsh Governments work together in the interests of the people of Wales, and the record that we can see is testament to that.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, can I ask a question where I think, for once, the noble Baroness, who is an excellent Minister, might be able to give me a positive answer? The Advocate-General for Scotland has agreed, at my request, to instruct his officials to investigate ultra vires expenditure by the Scottish Government. That is a great step forward. Can the Minister give an assurance that her officials in the Treasury will work co-operatively with the Advocate-General’s officials?

[Baroness Penn (Con)]

I can give the noble Lord that assurance.