Support for the Welsh Economy and Funding for the Devolved Institutions

Beth Winter Excerpts

Tuesday 5th July 2022 Commons Chamber

[Beth Winter (Cynon Valley) (Lab)]

I congratulate the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) on securing this debate, and thank the Clerks on the Welsh Affairs Committee, who do sterling work for us.

I do not really know where to begin; as I listened to the hon. Member for Aberconwy (Robin Millar), I felt as though I was living in an alternate universe. I could not disagree with him more, unsurprisingly, and I will outline why. I start by saying how proud I am, as I know other hon. Members in this Chamber are, of Wales, the Welsh Government and what we have achieved. We are the only country in the UK to have had a Labour Administration since the inception of devolution, and currently they are pursuing in Wales progressive, bold, socialist policies, including the extension of free school meals to all primary school children, the universal basic income pilot, the living wage for key workers, and a major cost of living crisis support package. Contrary to what Conservative Members have said, the UK Government have actually cut funding for Wales. Looking at this year’s main estimate for funding in the memorandum to the Welsh Affairs Committee, I see that the cuts are significant, indicating over £2 billion in comparison with the previous year. I have that document if anybody wants to see it. The budget is going to be worth £600 million less over the spending review period because of mismanaged inflation, and, contrary to what Conservative Members have suggested, EU funding will be £1 billion less by 2024-25.

That reduction in funding is a clear example of the UK Government holding back Wales on its ambitious policy agenda. They are not providing the funding and investment we require, particularly during this historic cost of living crisis—the worst in living memory. The UK Government are continuing to pursue their agenda of ideological austerity and recentralisation of power in Westminster, bypassing the democratically elected Government of Wales, as we are seeing with the levelling-up fund, the community funds associated with the post-Brexit agenda, the United Kingdom Internal Market Act 2020 and the Elections Act 2022. In all sorts of areas, the UK Government are riding roughshod over the democratically elected Government of Wales. This goes against Welsh Government priorities and, as I have said many a time, it is an affront to democracy. The people of Wales backed a Labour Government who champion devolution and progressive policies and look to protect public services and, indeed, public ownership.

The Welsh Government’s Finance Minister has condemned “clear gaps in funding” in the spending review and called the spring statement a “threadbare” one that exposed

“an out-of-touch Chancellor”.

I could not agree more. It is vital that the block grant allows the Welsh Government to lift incomes and investment, even if the UK Government will not. Earnings in Wales and the proportion of people on low incomes in Wales are worse than in the rest of the UK. In my constituency, I commissioned some research on the post-covid economy that was conducted by the Bevan Foundation, looking at community wealth-building approaches. The evidence was shocking. The median earnings of working residents are well below both the Welsh and the UK averages. Another piece of research that was recently conducted on the cost of living crisis exposed harrowing experiences. Over 30% of respondents had skipped meals over the past year to keep costs down—over 60% in the case of benefit claimants.

The central issue facing both the UK Government and the Welsh Government is how to deal with the impact of inflation by lifting incomes in real terms. There are key immediate actions that can and need to be taken. On trade unions, as the Welsh Government pursue their new Social Partnership Council, the UK Government must not undermine Welsh Government legislation on industrial relations. On pay, the UK Government must listen to Wales TUC and consult the Welsh Government in responding to trade union public sector pay demands. On social security, the UK Government must adopt the Welsh Affairs Committee’s recommendation to reintroduce the £20 universal credit uplift and extend it to legacy benefits, and, in addition, use near-term inflation forecasts to increase benefits.

On levelling up, the UK Government must allocate adequate funding from the shared prosperity fund to Wales, and it should go through the Welsh Government, which is the Government of Wales. On other revenue sources, the UK Government must begin a process of equalising the role of the Welsh Government over the Crown Estate with that of Scotland, as has already been mentioned.

We also have to look at the powers in the long term and at how funding is allocated to Wales. The Barnett formula is inadequate and does not work. The introduction of a floor to prevent underfunding of public services in Wales and a discussion about devolving corporation tax and capital gains tax merit UK-wide debate, as recommended by the Holtham commission.

To conclude, there is a lack of trust in the UK Government delivering the funding necessary to alleviate the cost of living crisis from the people of Wales and my constituency of Cynon Valley. Because of that lack of funding, the Welsh Government are severely constrained in how they can deal with that crisis and, as I said at the outset, how they can push forward their innovative ideas, which they are doing in co-operation with other parties, and I again put on record that I fully support the co-operation agreement. It is because of those constraints that I support the First Minister pursuing an agenda to strengthen the Senedd and to give Welsh politics greater clout to fight its corner and to fight for the funding it deserves. I am sure that in time we will secure it.