Transport Funding: Wales and HS2

Debate between Geraint Davies and Jonathan Edwards

Tuesday 26th October 2021 Westminster Hall

[Jonathan Edwards]

As always, my right hon. Friend makes a pertinent point. It does not make any sense that the responsibility for operating the railways in Wales is devolved to the Welsh Government but the responsibility for the infrastructure remains in the hands of another Government.

To return to my point, the Silk commission recognised that the devolution of those powers and the equalisation of powers for Wales, Scotland and Northern Ireland, was right not only for operational reasons, but because of the financial implications and the historical underfunding of the Welsh railways that resulted from the powers being retained in Westminster.

[Geraint Davies]

The hon. Gentleman is being generous in giving way. Does he agree that one has to differentiate, as I do not think the hon. Member for Montgomeryshire (Craig Williams) did, between the amount of money we get for Wales and who spends it? There was a lot of talk about UK money—“The Government spends this. Don’t give the money to the Welsh Government.”—but the basic point is that we should get our fair share. Of the £48 billion that Network Rail spends, about £1 billion is spent in Wales, which certainly is not the 5% that we deserve.

[Jonathan Edwards]

Absolutely; that is the financial reality. We do not even get a population share, which would be 5% of rail investment. People might argue that 11% of the rail network is in Wales, so we should be getting more than our population share. Historical underfunding is a huge problem for us in Wales in terms of developing our economy and moving our country forward. I will return to some of those themes later.

--- Later in debate ---

[Jonathan Edwards]

That is a very interesting intervention. I am not defending the Welsh Government’s policy in its totality, but they want to move away from road and towards public transport. If we will not be using road, we have to invest in rail. This is the fundamental question facing us as Welsh representatives: given that the UK Government have shown clearly that they have no intention of investing in Welsh rail transport infrastructure, what are we going to do about it? The only way to address that is to take responsibility for ourselves.

[Geraint Davies]

Does the hon. Gentleman accept that the Welsh Government are not abandoning all investment in roads? They are doing a roads review, looking at how they can balance transport between road, rail and active transport in a sustainable way, which will inevitably—hopefully—lead to a bit more public transport and rail, including electrified buses and public transport on roads. We will have more roads, but we will not necessarily need the M4 relief road if on one in five days people are on a Zoom call instead of sitting in their car.

[Jonathan Edwards]

My understanding of the Welsh Government’s policy is no new extra roads. That does not mean that there will not be investment in road maintenance. However, the reality is that, if we are going down that road, there has to be investment in alternative modes of transport, which again furthers the case for us in Wales to receive the powers, so that we can get investment and make the decisions ourselves. That is fundamentally at the heart of this debate.

On one side of the argument are those of us who argue that Westminster will never invest in Wales, so we need rail powers in Wales that will bring the investment and allow the Welsh Government to make decisions on investing in our own country. On the other side are those arguing that the UK Government will eventually come good and start investing in Wales. That will not happen, so the only solution is for rail powers to be devolved to Wales and for the Barnett consequentials to flow to Wales from England-only projects, as happens in Scotland and Northern Ireland, which will enable Welsh Government Ministers to pursue the transport priorities of our own country.

Welsh Affairs

Debate between Geraint Davies and Jonathan Edwards

Thursday 27th February 2020 Commons Chamber

[Simon Hart]

No, I will not give way, because I must get on. I was talking about the benefits of HS2. Whether it is by direct connection to a new form of rail infrastructure, the like of which has not been seen since Victorian times, or whether it is by being able to tap into the supply chain opportunities, HS2 benefits not just those on the route that it will follow, or in the cities that it will join. It will help link up the UK, which will be good for the economic prospects of Wales.

[Jonathan Edwards]

rose—

[Geraint Davies]

rose—

Autumn Budget as it Relates to Wales (Morning sitting)

Debate between Geraint Davies and Jonathan Edwards

Wednesday 7th February 2018 General Committees

[Geraint Davies]

On the Budget’s implications for agricultural trade, is the hon. Member for Carmarthen East and Dinefwr aware that the World Trade Organisation struck down and penalised the EU when it said it would not allow hormone-impregnated beef into the EU? Still, the EU has resisted hormone-impregnated beef. Does he not think that, if we stand alone against the United States and it wants to impose hormone-impregnated beef on Welsh consumers, with the WTO behind it, we will have to like it or lump it?

[Jonathan Edwards]

The hon. Gentleman makes a valid point. The hon. Member for Caerphilly and I were in the United States a few years ago, and we had a very interesting discussion with the food lobby there. I guarantee that it carries a lot of weight, and that is a clear indication of some of the problems we will face in future.

I shall return to the Budget.

Mewn polisi ariannol y mae’r perygl arall. Mae polisi ariannol hynod lac gan y Banc Canolog wedi cynnal yr economi ers 2010, a bydd oes yr arian rhad yn diflannu’n raddol wrth i gyfraddau llog gychwyn ar eu taith tuag at normaleiddio.

Yn ystod y cyfnod hwnnw, daeth twf economaidd i ddibynnu fwyfwy ar wariant gan ddefnyddwyr fel canran o GDP. Bydd methiant i ail-gydbwyso oddi wrth economi a gynhelir gan ddyled cartrefi yn rhwystr sylweddol yn y blynyddoedd i ddod.

(Translation) Monetary policy is another danger. The ultra-loose monetary policy of the central bank has sustained the economy since 2010, and the area of cheap money will gradually be removed as interest rates begin their journey to normalisation. During that period, economic growth has become even more reliant on consumer spending as a percentage of GDP. Failure to rebalance from an economy sustained by household debt will be a significant barrier in years to come.

Personal debt is reaching the level it was at before the great crash of 2008. That should be of great concern to us all.

Mae dirwasgiadau yn dueddol o ddod bob degawd, sy’n golygu, naw mlynedd wedi chwalfa ariannol fawr 2008 ein bod yn nes at ddiwedd y cylch na’i gychwyn. Nid yw’r methiant i neidio’n ôl yn sydyn o’r chwalfa fawr ac i ail-gydbwyso yn sectoraidd a daearyddol, na dibyniaeth yr economi ar beiriant cynnal bywyd polisi arianyddol yn argoeli’n dda at y dyfodol.

(Translation) Recessions tend to come each decade, which means that nine years after the great financial crash of 2008, we are far nearer the end of the cycle than its beginning. The failure to rebound sharply from the great crash, the failure fundamentally to rebalance sectorally and geographically, and the reliance of the economy on the life support of monetary policy do not bode well for the future.

The failure to rebound quickly from the great recession, the failure to rebalance sectorally and geographically, and the decade-long dependence on the life support of ultra-loose monetary policy do not bode well for the future.

O ystyried graddfa’r her, nid yw’r Mesur Cyllid yn addas. Cyn ymdrin â rhai o gymalau’r Mesur hwn, carwn ganolbwyntio ar rai o’r darpariaethau sydd, ysywaeth, ar goll.

Mae model economaidd y Deyrnas Gyfunol a ddilynwyd ers degawdau gan holl bleidiau sefydliad San Steffan wedi ei seilio ar hyrwyddo gweithgarwch a chyfoeth yn Llundain a de-ddwyrain Lloegr. Dylai’r anghydraddoldebau daearyddol o ran cyfoeth fod yn destun cywilydd i wleidyddion San Steffan. Mae naw o’r deg rhanbarth tlotaf yng ngogledd Ewrop yn y wladwriaeth Brydeinig yn ogystal â’r un cyfoethocaf. Yn anffodus, wrth gwrs, mae gorllewin a gogledd Cymru ymysg y tlotaf. Dylai’r Trysorlys fod yn ceisio ymdrin â’r record gywilyddus hon, ac eto does dim yn y mesur cyllid hwn fydd o ddifrif yn mynd i’r afael â’r heriau o’n blaenau.

Efallai mai un o ganlyniadau Brexit fydd y bydd cwmnïau ariannol Dinas Llundain yn adleoli i Baris, Frankfurt a Dulyn. O ystyried hynny, dylai Llywodraeth Prydain ymateb drwy ganolbwyntio ar sectorau economaidd eraill, yn enwedig gweithgynhyrchu. Dylai hyn arwain at symud y pwsylais ymaith o dde-ddwyrain Lloegr i’r cenhedloedd a’r rhanbarthau.

Yn anad dim, dylai Cymru gael y grym cyllidol i lunio ein heconomi ein hunain. Mae’n warthus fod gan yr Alban a Gogledd Iwerddon setliad cyllidol a threthiannol llawer gryfach na Chymru. Oherywdd hyn, bydd economi Cymru dan anfantais sylweddol. Dydw i methu deall pam nad yw gwleidyddion o’r pleidiau Unoliaethol a bleidleisiodd o blaid rhoi mwy o bwerau i’r Alban a Gogledd Iwerddon yn barod i ddarparu ar gyfer ein cenedl ni ein hunain.

Hyd yn oed os ydym yn rhoi i’r neilltu yr anghydraddoldebau cyfansoddiadol, mae’r sefyllfa yn golygu fod Llywodraeth Cymru yn llai abl i ymyrryd yn ein heconomi. Os mai Brexit caled fydd hi, dylid datganoli portffolio cyfan o drethi, gan gynnwys treth teithwyr awyr, treth ar werth a threth gorfforaeth.

Dylai buddsoddi mewn seilwaith gael ei wasgaru’n fwy cyfartal ar draws y wladwriaeth Brydeinig.

(Translation) Considering the scale of the challenge, the Finance Bill is in no way fit for purpose. Before addressing some of the measures in the Bill, I will concentrate on some provisions that are sadly missing. The UK economic model, which has been followed for decades by all the establishment parties in Westminster, is based on promoting activity and wealth in London and the south-east of England. The geographical wealth inequality should be a matter of shame for Labour and all politicians in Westminster. Nine of the 10 poorest regions in northern Europe are in Britain, as well as the richest. Unfortunately, west Wales and north Wales are among the poorest. The Treasury’s overriding aim should be to address that shameful record, but nothing in the Finance Bill will seriously get to grips with the challenges facing us.

One consequence of Brexit might be the relocation of London-based financial companies to Paris, Frankfurt or Dublin. Given that, the British Government should focus on other economic sectors, and manufacturing in particular. That should shift the focus away from London to the nations and regions.

First and foremost, Wales should be empowered to create its own economy. It is disgraceful that Scotland and Northern Ireland have stronger financial settlements than Wales. Given that, the Welsh economy will be at severe disadvantage. I cannot understand why politicians from Unionist parties vote in favour of giving more power to Scotland and Northern Ireland, but are unwilling to do so for our own nation. Putting aside the constitutional imbalances, that means that the Welsh Government are less able to intervene in our economy. If we are to have a hard Brexit, a portfolio of taxes should be devolved, including air passenger duty, VAT and corporation tax.

Infrastructure investment should be more evenly spread across Britain. Why should Welsh taxpayers’ money be spent on English projects?

Steel Industry

Debate between Geraint Davies and Jonathan Edwards

Thursday 3rd November 2016 Westminster Hall

[Jonathan Edwards]

I am grateful for the hon. Gentleman’s intervention. I was endeavouring to make the point that the Liberty-Excalibur deal potentially offers a future in which green steel, as it is called, and primary steel are produced side by side in the two blast furnaces at Port Talbot. Keeping those two blast furnaces open is vital for the viability of Port Talbot. He is completely correct.

I have a simple message for the Minister: this could be a huge success story for Wales and the UK as a whole. My last ask today is for him to agree at least to meet the leaders of the Excalibur-Liberty deal to see whether there is an option for the UK Government and the Welsh Government to put their weight behind a bid that seems to have unanimous support in Wales. Diolch yn fawr iawn.

[Geraint Davies (in the Chair)]

I call Anna Turley. We have all been waiting for her speech.

Debate on the Address

Debate between Geraint Davies and Jonathan Edwards

Wednesday 27th May 2015 Commons Chamber

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

It is a pleasure to take part in this debate and to respond to the Gracious Speech on behalf of Plaid Cymru. It is also a pleasure to follow the right hon. and learned Member for Beaconsfield (Mr Grieve), whose speech I will refer to later in my contribution, especially his very valid points on the Human Rights Act. I would like to begin by congratulating the Conservative party on its victory—it is probably the only positive thing I am going to say about the Government over the next five years, so I thought I had better get it out of the way now.

It is fair to say that not many political commentators were expecting a Conservative majority Government, and therefore the legislative landscape announced today is significantly different from what had been anticipated. Before commentating on the content of the Gracious Speech, I would like to say that this Government seem to me, despite being a single-party majority Government, to be far weaker than the previous coalition Government. A majority of 12 can disappear very quickly, especially knowing the independent inclinations of many Tories.

The Gracious Speech includes many potential pitfalls for the new Government, not least the Achilles heel of the Conservative party—Europe. I often felt during the previous Parliament that the Liberal Democrats served a very useful function for the Prime Minister, not only in terms of voting fodder, but primarily by allowing him to tame the Eurosceptic, right-wing element on his Back Benches by saying that he was being held back by his junior coalition partner. That buffer has now gone, and the new Administration could well find themselves at the mercy of restless and troublesome Back Benchers very soon.

Turning to the Gracious Speech, I would like to concentrate on a few of the most important aspects as far as Wales is concerned. On becoming parliamentary leader of the Plaid Cymru group, I highlighted three key immediate aims for my party, based on the new Government’s likely legislative programme. The first is to ensure that Wales gets more than crumbs from the Westminster table. Faced with an electoral revolution in Scotland, there is little doubt that Westminster will have to concede significant powers to the Scottish Parliament. The recommendations of the Smith commission are not likely to prove enough, as we will discover when the proposed Scotland Bill progresses. In Northern Ireland, even Unionists are demanding further powers from Westminster. Most recently, the UK Government conceded full corporation tax powers. With that in mind, I remind them of the findings of their own commission on further powers for Wales: it recommended that if corporation tax powers were given to Northern Ireland, they should also be given to Wales.

In England, it is reported that the cities and local government devolution Bill will fully devolve powers over transport, planning, housing and—critically—policing. That means that some cities in England will have more powers than the sovereign national Parliament of Wales. What is more, those powers are being handed out across the UK without any requirement for referendums, while both the Labour and Conservative parties conspire to put as many stumbling blocks as possible in the way of further progress for Wales.

My country will not be left behind. I warn the UK Government that the most powerful message in Welsh politics is about equality with Scotland. There will be a heavy price to pay at the ballot box at next year’s National Assembly elections if the Westminster parties continue to treat Wales like a second-class nation.

Unionists have one chance left to save the Union. The situation is crying out for a statesman with a vision to create a sustainable framework for the future. It is clear to me that the asymmetric nature of constitutional developments within the UK is unstable. Far be it from me to offer advice; as a Welsh nationalist, I am committed to campaigning for the political independence of my country. However, if the UK is to survive it is clear to me that only a genuine partnership of equals, based on confederal principles, will work. As I said in my acceptance speech earlier this month, the old Union is now dead and during this Parliament a new one will have to be forged if the British state is to survive. My colleagues and I will be fighting for the best possible deal for our country.

[Geraint Davies]

The Tories have said that they will legislate to stop income tax going up in England. Would the hon. Gentleman support the devolution of income tax to Wales? Does he think that that is a clever Conservative trick that says to Wales, “Instead of getting your fair share, raise your own tax on the back of your own people”?

[Jonathan Edwards]

The hon. Gentleman is conflating two separate issues. There is the issue of fair funding for Wales, and we have a proud record of fighting for a better deal for Wales; we get a bad deal from the Barnett formula as it is currently constructed. Given that the Unionist parties have conceded that the Barnett formula will remain in stone, we believe that Wales will have the same amount of money as Scotland, which is around £1.4 billion extra for our devolved services.

Direct Westminster control has clearly completely failed the Welsh economy; the latest Eurostat figures put the communities that the hon. Gentleman and I represent at the bottom of the European Union pack, while inner London is by far the most prosperous. The only solution is for us to have control of the levers for job creation so that we can intervene in our economy.

Our second major aim as a parliamentary group will be to ensure that the Westminster Government do not steamroller legislation through this place against the wishes of the National Assembly for Wales. Although it has been reported that the Government are rowing back from their intention to scrap the Human Rights Act, it is difficult to see how they might introduce a so-called British Bill of Rights without repealing the Act first. Any attempt to scrap the Human Rights Act will therefore be of significant concern. The issue will be pressing in Scotland and Northern Ireland, where justice responsibilities are, of course, devolved; the Human Rights Act is a vital part of the Good Friday agreement. In Wales, the Human Rights Act is written into the Government of Wales Act.

I have called on the National Assembly to hold an urgent vote on a motion indicating its support for the Human Rights Act. If the Westminster Government were to ignore the sovereign will of the National Assembly for Wales, the matter would more than likely end up in the Supreme Court. That would have significant constitutional implications. I urge the new Secretary of State for Justice to listen to the advice of the former Attorney General, the right hon. and learned Member for Beaconsfield (Mr Grieve), who said that the Human Rights Act underpins devolved powers to Wales and that it is embedded in the constitutional settlement of devolution. The Westminster Government would find it extremely hard to scrap the Act without the express consent of the Welsh, Scottish and Northern Irish Governments.

Our other major concern is the proposed legislation to enact a referendum on the UK’s membership of the European Union. I often think that the Prime Minister is tactically very clever but strategically not as astute. His posturing on Europe is a case in point. Tactically, committing to a referendum brilliantly protected his party from the UKIP insurgency and has managed to placate his restless Back Benchers—and, indeed, some of his Front Benchers. Strategically, that posturing was deficient, as it now blatantly endangers the UK’s economic future with an out vote, while also exposing his party’s major Achilles heel.

The Welsh national interest is best served by being a part of the European Union. The EU’s redistributive mechanisms have led to billions of pounds of investment in regional aid and support for the agricultural sector in Wales, in addition to access to the single market—vital for an exporting nation such as mine. Needless to say, the two main policy fields that the Westminster parties have wanted to renegotiate are the two that benefit my country the most: regional policy and agricultural support. We will seek to amend the proposed referendum Bill to ensure that the national interest of Wales is protected. If the UK is a genuine partnership of equals, Wales must not be forced out of the European Union against its will. We will seek to ensure that the constituent parts of the UK have a veto that protects their national interests when it comes to any proposed referendum. Diolch yn fawr iawn.

Wales Bill

Debate between Geraint Davies and Jonathan Edwards

Wednesday 10th December 2014 Commons Chamber

[Jonathan Edwards]

The commission’s remit is not one of its own choosing, but the SNP decided to act in the best interests of the country and move the process forward. Making out that the Smith commission proposals are what were included in the vow is not right. It was essentially home rule or devolution max, and on any definition of devo max, it means the full devolution of all powers apart from defence, foreign affairs, the monarchy and military policy. That is not included in the Smith commission proposals, which were less significant than what was promised to the people of Scotland on the eve of the referendum.

As I was saying, the Smith commission is vastly more progressive in its trajectory of travel, offering 100% of income tax in comparison with the Wales Bill offer of only a paltry income tax sharing arrangement—and even then, only following a referendum many years down the line.

[Geraint Davies]

(Swansea West) (Lab/Co-op): Does the hon. Gentleman accept that if Wales has its own powers to set both a higher and a lower rate of tax and it chooses to reduce the higher rate so that a lot of millionaires move to Monmouthshire, the overall tax take to the United Kingdom would be dramatically reduced because those people would all evade tax by moving to Wales? Does he think that is a good thing to set in motion, and does he have any idea whether the Government have calculated the cost of that possibility?

[Jonathan Edwards]

I am interested in this line of tax harmony across the UK being put forward by the Labour party. In Wales, of course, we had at the last count 22 local authorities all setting different rates of council tax, and we are a key part of a single market across the European Union with its different members setting different tax rates. If Labour Members’ arguments were to hold water, surely they would argue for tax harmonisation across the whole of local government in Wales and across all member states of the European Union. It does not make much sense to me.

[Geraint Davies]

Will the hon. Gentleman give way again?

[Jonathan Edwards]

I think I have answered the hon. Gentleman’s point.

In conclusion, the general election is fast approaching, and I can assure this House and the people of Wales that Plaid Cymru will fight that election on the basis that we will not allow our country to be treated as a second-class nation by the Westminster establishment.

[Geraint Davies]

I come here with an open mind about these tax issues, but I must confess that I have major concerns because I fear that the incentive for the Government to devolve tax powers is not one of freeing the nation of Wales to make its own decisions, but one of distracting attention from the fact that Wales is grossly underfunded both in revenue under the Barnett formula by some £300 million and in capital receipts. If we had our fair share of HS2, for instance, we would have an extra £2 billion.

[Jonathan Edwards]

The hon. Gentleman and I are both Swansea city supporters and I am grateful that he has been kind enough to allow me to intervene.

[Geraint Davies]

I can see that the hon. Gentleman is wearing black and white.

[Jonathan Edwards]

This is my wedding suit, or rather the suit I had with my wedding suit. It has led to much comment. [Interruption.]

--- Later in debate ---

[Jonathan Edwards]

I am grateful to you, Madam Deputy Speaker, for saving me because my good friend was distracting me on the basis of some spurious points. Is it the position of the Labour party, should it form the next UK Government, that HS2 will be seen as an England-only project and not a UK-wide project, thus giving Wales its rightful consequentials of £2 billion, which the hon. Gentleman mentioned?

[Geraint Davies]

rose—

Recall of MPs Bill

Debate between Geraint Davies and Jonathan Edwards

Monday 27th October 2014 Commons Chamber

[Geraint Davies]

The point about Chris Mullin is well made. Different people with different temperaments in different situations, with different constituencies with different profiles and majorities, will face different stresses and strains—not just actual and in your face, but behind the scenes. As I have said, that might have a very corrosive influence on democracy itself, and we should stand fully against it.

All of us like to think that despite pressure behind the scenes or otherwise, one would put principle before popularity. With fixed-term Parliaments, we know that we will have five years of making difficult decisions, but have the time to explain such things. However, we might be faced with instant demands or pressures, which—let us face it—might be orchestrated by political parties against those in particularly marginal seats. There would be issue after issue, and requests to do this and to do that. People from 38 Degrees, or whatever it is called, are just the tip of the iceberg. Lots of other groups would insist on the immediate satisfaction of their demands. It is easy to get groups of people to send in letters without their thinking through the issues. It would all become a sort of crowd mentality, and before we knew it, people who should be MPs would be intimidated and not stand, and it would also interfere with the quality of people who came forward.

[Jonathan Edwards]

Surely the defence against the scenario that the hon. Gentleman presents is the fact that the threshold, as suggested in the amendments of the hon. Member for Richmond Park (Zac Goldsmith), would be 20% of the electorate, and that people would physically have to visit the town hall and put their name to a recall petition. [Interruption.] Well, it would be 20% to initiate the final recall mechanism for a recall by-election. In my constituency, that would be more than 11,000 people. If 11,000 people went to the town hall in Ammanford and wanted my recall, I would resign myself.

[Geraint Davies]

Yes, but my understanding is that 5% would be needed to start the process.

My issue is with recall being within the armoury of those who want to intimidate people for any reason. On the face of it, it might be for a policy reason, but I thought that we were supposed to be discussing behavioural issues in relation to conduct and doing the right thing. Obviously, if we break a law, we should not be above the law, but I might be an MP and support the wrong football team. People may laugh at this, but people might say, “We don’t want someone for Liverpool who supports West Ham”, and there might be enough of them to mount a challenge, which would be a massive distraction.

Housing Benefit (Wales)

Debate between Geraint Davies and Jonathan Edwards

Thursday 1st May 2014 Westminster Hall

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

It is a pleasure to serve under your chairmanship, Sir Roger, as it is to speak in this debate. Indeed, it is a pleasure that the No. 1 conclusion in the report makes the case for rent controls in the private rented sector. That was an amendment that I suggested when we were deliberating over the report, and it received the support of the majority of the Select Committee, for which I am extremely grateful.

The under-occupation penalty for recipients of housing benefit in the social rented sector is the signature regressive social security policy of the current UK Government. Labelled the bedroom tax, in Welsh it is called the treth llofftydd—when there is a hashtag in Welsh on Twitter, we know we are in trouble.

The bedroom tax, as the Select Committee Chair, the hon. Member for Monmouth (David T. C. Davies), said, is part of the UK Government’s efforts to reduce the housing benefit bill. I, too, pay tribute to his chairmanship. It is a pleasure to be a member of the Committee and to work with him. He is extremely fair to me as the single Plaid Cymru member of the Committee. Despite his persona in the Chamber as a ferocious, right-wing beast, he is a very kind Chairman.

The UK Government, of course, have a three-prong strategy for reducing the housing benefit bill. First, there is a cap on benefits, which the official Opposition now support, with additional regional elements, should they form the next Government. Secondly, the annual uprating of welfare payments is pegged at 1%, which means that there are real-terms cuts to social security support every year. Thirdly, there is the bedroom tax, or under-occupancy penalty.

Despite all that, in its response to the 2014 Budget the OBR projected that housing benefit expenditure will increase by £1 billion by 2018-19. If they have time, I ask Members to read that report on their way back on the train this evening. Page 146 states:

“The largest driver of the rise in spending on housing benefit has been caseload growth in the private rented sector.”

The report goes on to say that the trend towards renting is driven primarily by the huge increase in house prices, which means that young people are unable to afford to purchase their own home. Only those who are supported by their parents are able to afford a deposit. The last bit of page 146 states:

“The rising proportion of the renting population claiming housing benefit may be related to the weakness of average wage growth relative to rent inflation. This explanation is supported by DWP data, which suggest that almost all the recent rise in the private-rented sector housing benefit caseload has been accounted for by people in employment.”

That makes my case for me. The key reason for the increase in the housing benefit bill, which we will see despite the regressive policies introduced by the UK Government, is spiralling rents in the private rented sector.

The Financial Times reported in 2012 that rents had increased by 37% since 2007, and it projected a 35% increase in rents over the following five years. That was before the housing bubble that we are now experiencing, with the OBR projecting that house prices will increase by 9.2% in the third quarter of 2014 alone. The OBR envisages a 30% increase in house prices over the next five years. When we couple those statistics with stagnant wages, it is unsurprising that more and more people in employment are falling into the trap of requiring housing benefit. Often when we discuss this issue, people miss that housing benefit is an in-work benefit; it is not for people who are unable to work but for people who are working now.

House prices are projected to reach 2008 pre-crash levels by 2019, which means we are in a greater boom and bust cycle than we were in 2008. As wages are stagnant, the bubble is being fuelled by increased debt. We are living in worrying times.

[Geraint Davies]

Will the hon. Gentleman acknowledge that bank lending to businesses is 30% down since 2008 but that bank lending for mortgages is beyond 2008 levels? House prices are going up, rent is going up but real wages are going down. When interest rates go up, we will have a sub-prime debt disaster on our hands.

[Jonathan Edwards]

The hon. Gentleman and I are singing from the same hymn sheet. We were promised a rebalancing of the economy and a move towards business investment and exports, but we are seeing the same old boom and bust policies that have been the hallmark of the UK economy for many decades. The danger is that the boom and bust on this occasion might be even more serious than that built up in 2008.

Finance Bill

Debate between Geraint Davies and Jonathan Edwards

Monday 1st July 2013 Commons Chamber

[Geraint Davies]

In essence this debate is about political choices and not just the technical efficiencies of marginal rates of tax. When this Government took over from Labour in 2010, two thirds of the deficit had been created by the banking community and a third by pump-priming in response to the financial tsunami after a history of sustained growth under the Labour Government. The new Government decided to focus not on growth, but on cuts to get down the deficit, which was a fundamental error that has led to a flatlining economy. They then had to decide who should bear the brunt in order to pay down the deficit—80% in cuts and 20% in taxes—and the answer that the Conservatives and the Liberal Democrats came up with was that it should be the poorest who were hit hardest.

The recent spending review and infrastructure plans replayed the same Tory agenda: the cuts will hit hardest in the poorest areas, including Wales and the north, and 80% of the investment in infrastructure for growth will benefit London and the south-east in order to shore up the Tory and coalition votes. This new clause is about making a move in the other direction so that the very rich make a slightly greater contribution, which will be redistributed to people in the middle and at the lower end of the income scale.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

The hon. Gentleman may have read an Institute of Welsh Affairs blog today by Gerry Holtham, the well-respected Welsh economist, who was scathing in his criticism of the hon. Gentleman’s party for adopting Tory austerity policies. How concerned is the hon. Gentleman, on the back of his criticisms of the UK Government’s austerity policies, about the fact that his party has adopted the very same strategy?

[Geraint Davies]

A moment ago I talked about Arab oil sheiks and now I am going to talk about Welsh milk shakes. On a serious note, what the Labour party has said is that when we take over in 2015, should the people of Britain give us their confidence, as I hope they will, we will inherit—this is self-evidently true—the current Government’s spending plans for 2015-16, so we will carry them out. As we make progress, I hope that the focus will switch to growth more than cuts, as it did after we inherited the Conservative party’s spending plans when we took over in 1997. We ran with those plans for a year and then we had consistent growth. The economy grew by 40% from 1997 to 2008 before the financial tsunami caused by sub-prime debt. I imagine that we will do the same in 2015. We offer no apology that we will have fiscal discipline alongside a focus on growth and that we will get people into jobs to pay down the debt. We will also change the composition of cuts to the rich and poor in certain areas.

--- Later in debate ---

[Jonathan Edwards]

It has been a number of weeks since we debated the provision in earlier stages of the Bill. My concern about the mansion tax policy, which I support in principle, is whether agricultural land would be included as a part of the estate that would be taxed. Does the hon. Lady agree that we must ensure that farmers are protected?

[Geraint Davies]

But only Welsh farmers—[Interruption.]

National Assembly for Wales

Debate between Geraint Davies and Jonathan Edwards

Wednesday 6th February 2013 Commons Chamber

[Geraint Davies]

It is a good idea, but that does not mean that it is about the respect agenda. I think that perhaps the idea came from this place without proper consultation and it just so happened that the Welsh Assembly Government agreed with it. Will the Minister tell us whether there was consultation on that part of the Green Paper. My understanding is that there was no consultation on any of it. Was there, in any sense, an element of the respect agenda, or was it just a blind coincidence of view?

There is also a move towards the resurgence of dual candidacy whereby somebody can stand in a first-past-the-post election and, should they fail, reappear like a vampire figure through the list mechanism and find themselves transposed into the National Assembly without a mandate, having failed to win in the first place. In other words, losers will be winners; I will be talking about Bob Dylan later.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

The hon. Gentleman holds the strong view that the Green Paper was an attempt to gerrymander the political system in Wales. However, the implementation of the double jeopardy rule that prohibits people from standing in the list and in a constituency was the worst kind of gerrymandering by the right hon. Member for Neath (Mr Hain) when he was Secretary of State for Wales. Is the hon. Gentleman proud that the electoral system that we now have for the National Assembly for Wales is mirrored in only one country in the world—Ukraine?

[Geraint Davies]

It is a shame there is no one from Ukraine present to speak up for themselves—no disrespect to Ukraine, but that matter could be taken up in another place, namely Ukraine.

On double candidacy, the proposition was put in a manifesto which was voted for in an election. There was a White Paper and it went through a proper system. Of course, it is possible to disagree with something that has been properly considered and passed in a democratic way—I respect that and I am sure that we all share that view—but we are complaining about proposals that were put through in a one-sided and seemingly political way without proper collaboration with the institution that would then have to run the situation, namely the National Assembly for Wales.

Could the Minister confirm whether the boundary changes are now dead and buried in the aftermath of the vote here, particularly in the light of a Wales Office spokesperson saying that it is now not in anyone’s interests to change the boundaries as proposed by the Green Paper?

--- Later in debate ---

[Geraint Davies]

The evidence certainly points in that direction. Thankfully, there are different institutions in the United Kingdom that can take forward different policies and ideas. For example, in Wales people can go to university for £3,000 a year or about £10,000 across three years, rather than pay £30,000. In this place, the Conservatives say, “It is impossible to have lower fees. Where would the money come from?” That idea and many others show that there are different ways of doing things. That is healthy for democracy.

The attempt to use the power that this place has had historically to blunt the blade of innovation in Wales is quite wrong. Unfortunately, all the evidence suggests that these changes are being proposed for party political gain.

[Jonathan Edwards]

The hon. Gentleman is being very gracious in giving way. I am sure that he will be glad to hear that Gareth Bale has just scored for Wales and that we are beating Austria 1-0.

There has been cross-party consent in Wales on creating a fairer electoral system. The Richard commission published its report in 2004 and argued for 80 Assembly Members elected by single transferable vote. Does the hon. Gentleman agree that parties across the divide, both here and in the National Assembly, should come together and look again at those proposals?

[Geraint Davies]

There is a case for having a broad debate about the best way forward. That is part of the Silk discussion and I agree with that. I am surprised that Plaid Cymru’s position is that there should be co-determination as opposed to devolution on these matters. Perhaps that is a change in its position and it is now less devolutionist than I appear to be. That is there for the record.

I will be helpful and give the Minister time to respond and to answer any questions that other Members may have. Clearly, there are more questions than answers in the aftermath of the great boundary victory—a constitutional change for which we can thank the Liberal Democrats, who are here in abundance. I can barely see the green leather, there are so many of them here tonight!

We need to move forward with effective democracy. It would help to have coterminosity of seats for Assembly Members and MPs. Obviously that could change in the future. It would be good to have stability in our relationships with constituents and for decisions increasingly to be made where they have the greatest impact.

Inward Investment (Wales)

Debate between Geraint Davies and Jonathan Edwards

Thursday 29th November 2012 Westminster Hall

[Geraint Davies (Swansea West) (Lab/Co-op)]

It is a pleasure to welcome this report, which I was pressing for. Wales sits within the UK economy and the global marketplace, and we all need to pull together in both the Welsh and the UK Governments to provide the best opportunities for Wales in a changing environment and to give Wales the tools to do the job. I will cover the basic ground of the report and what we should be doing in Wales, including in the councils, focusing primarily, as has been said, on the UK Government’s responsibilities to present Wales as an accessible, adaptable and attractive location for inward investment in a global marketplace.

Obviously, we cannot compete on labour costs as we did in the past with China but we have electronic global market reach and clearly competitiveness is about added value and skills. Emerging markets in China, India and south America should be seen as major opportunities for emerging consumer markets of high value products, whether arts or science-led, for the Welsh economy. We should refocus our efforts in that way.

Following the global financial tsunami in 2008, Wales is particularly vulnerable, because the proportion of people in the public sector is greater, and as the Government begin to reduce the investment in public sector jobs and wages, consumer demand is disproportionately hit. We know that the root of very low or static growth in the UK is the collapse of consumer demand, which was still going up in 2010, albeit with a deficit, but the announcement of 500,000 job cuts deflated that and we are now bouncing along. The issue is to keep money going into local economies, and to target investment in the most productive area.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Does the hon. Gentleman agree that the big headwind in household expenditure has more to do with the huge personal debt bubble and asset bubble built up under the last Labour Government—£1.4 trillion, and 100% of GDP? That is an incredible record and far higher than any other state in the developed world. Is that not why consumer spending is collapsing?

[Geraint Davies]

I was not expecting to hear cries for austerity from Plaid Cymru, but there you go. They come from all sorts of directions.

Very briefly, you will know, Mr Bone, that between 1997 and 2008 Britain enjoyed a period of more rapid growth than had been seen since the war with paid back debt, massive growth in employment, and reductions in welfare costs. After the financial tsunami of 2008, my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) and Barack Obama got the fiscal stimulus going so that we did not go into a global depression, which the hon. Gentleman seems to be calling for. In 2010, we then had a deficit, which the coalition Government inherited. Two thirds of that was due to the bankers and one third was due to excess investment above earnings to pump-prime the economy and keep it growing. The current Government then decided to focus more on cuts than growth to get the deficit down, ending up with virtually zero growth, and the deficit has been growing ever since. I do not know whether the hon. Gentleman wants to cross the Floor to the Conservative side, but when history is written, it will be seen as a painful place to be.

--- Later in debate ---

[Geraint Davies]

That is kind of you, Mr Bone; thank you.

I want to mention the issue of city regions. In terms of working together in a critical mass in a global marketplace, one benefit of trying to bring together the four local authorities of Swansea, Neath Port Talbot, Pembrokeshire and Carmarthenshire, plus the universities and industry, to argue the commercial case as well as the social case for electrification of the railway to Swansea was that there was a refocusing on the common interests of that area.

I am very pleased that the Welsh Government have taken the initiative in doing a consultation on city region status and have given the go-ahead for the Swansea Bay city region to move forward. Swansea has always been seen to be, to a certain extent at least, in the shadow of Cardiff, so it is interesting to note that Cardiff itself contains about 300,000 people, but the continuous urban footprint of Neath Port Talbot and Swansea, going to Llanelli, is one of about 400,000 people —the biggest urban footprint in Wales. We can work together within that and within Carmarthenshire, haloing out to Pembrokeshire and, indeed, Ceredigion—there is not really anywhere to go beyond that. The hon. Member for Ceredigion (Mr Williams) is very welcome in the Swansea Bay region. I am talking about working together to have a diverse skills base. Working with the universities and the local authorities to get coherence, focus and value for money is very important.

I have already welcomed the rail electrification. It was regrettable that we had to work so hard to get the Government to agree to an extension from Cardiff to Swansea, but that was very good news. As I have said, the next thing that we want is to be able to say that we have super-connectivity.

Of course, the Swansea Bay brand has been created partly through football. The Minister will know that Swansea won 3-1 against West Brom last night. That sort of news is transmitted to 600 million people in 200 countries. That is important because the name Swansea is then known. Increasingly, people are hearing of Swansea who may not even have heard of Cardiff. That is amazing.

[Jonathan Edwards]

I just want to add to the excellent point being made by the hon. Gentleman. As colleagues know, I have just returned from my honeymoon in Cape Verde, and I actually watched the Swansea game against Liverpool live on TV in my hotel room.

[Geraint Davies]

I bet the hon. Gentleman’s wife was happy about that, with him shouting for a goal, but there we are. I wish him a long and happy marriage while watching Swansea. I thank him for that intervention, which was very welcome.

On a serious note, the Swansea brand is of course a global brand, so there is an opportunity to attach various values to it, including the fact that it is a nice family and business environment by the sea. With internet connectivity, why would people want to be in the expensive congestion of London, for instance, when they could be overlooking Swansea bay? The fact that there are sporting successes, good schools, a good health service and so on is critical to that.

I mention that point partly to move on to the regional pay issue. The Government have been considering the case for regional pay, and I will say two things about that. First, reducing the pay of people in the public services in Wales by some 20%, which is the implicit agenda, would remove even greater amounts of economic power from the consumer markets in Swansea and, again, push down the private sector; but as important or possibly more important, GPs and other public servants would think that they would be better off getting a job in Bristol, where their pay would be higher, and suddenly we would be denuded of some of the best GPs and other public servants. That would have implications for inward investors, who are being taken, for instance, from London.

Let us consider how inward investment works. UKTI promotes the UK. Someone says, “Okay, I’ll go to the UK. That sounds great in terms of stability, environment, access to Europe and everything else, but where shall I go in the UK”—that is the next decision—“and how do we have added value there?” Of course, in Wales, we have environmental opportunities. We want to increase accessibility, skills and research and development. However, if the families going there suddenly do not have the right GP or education services because of wage deflation in Wales, that will be very bad for inward investment.

--- Later in debate ---

[Jonathan Edwards]

Diolch yn fawr, Mr Rosindell. First, may I apologise to Members for rudely interrupting proceedings to perform my telling duties in the series of close votes we have just had in the main Chamber?

Before the Divisions, I was remarking on the importance of transport links, which is clearly emphasised in the report. Wales is located at the centre of one of the most important trading routes in the European Union, so it is vital, with the ongoing negotiations among our partners at a European level, that there is at least a southern link running through south Wales and linking the Republic of Ireland with Britain and Europe. Personally, I would also like to see a northern link going through north Wales, which would then fund the improvement of transport infrastructure there. I welcome the fact that the Government are actively looking at that, and I am glad to put that on the record.

I want to touch briefly on the bilateral negotiations on funding for the Welsh Government and on the recent Silk commission, which reported as I left on my honeymoon. Both those things impact directly on the Committee’s report. First, on the bilateral negotiations, I was disappointed that there was no reform of the block grant; there was not even a Barnett floor, let alone reform of the housing revenue account subsidy scheme. On the borrowing powers that were announced, the reality is that we could not buy a packet of crisps using the current powers. The Welsh Government Finance Minister has been completely outfoxed, yet again, by the Treasury.

The conclusions of the bilateral negotiations might, however, come into play if the recommendations of the Silk commission are implemented, so their full implementation could be of value. To access the borrowing powers announced in the bilateral agreement, we need fiscal levers to raise revenue, so the more tax-sharing arrangements there are between the Welsh Government and the UK Government, the better. That is why it is imperative that we do not stick just to the minor taxes preferred by the Welsh Government—stamp duty, the aggregates levy and the long-haul airport tax—but devolve sharing arrangements for income tax, which would enable the Welsh Government to have far greater leverage in terms of their borrowing powers. Given that their capital budgets are being cut by 42%, they need those borrowing powers, not only so that they can level out peaks and troughs using fiscal levers, but so that they have power to invest. The current position of the First Minister is therefore completely bizarre, and it is a huge let-down to the people of Wales.

Fiscal powers are important with regard to political accountability, which is something that finds favour with Conservative Members, but the main reason we should have fiscal powers is that they would incentivise the Welsh Government to turn the Welsh economy around. At the moment, given that they get a block grant, there is no incentive for them to develop it. If they were responsible for raising their own revenue, there would be an incentive to generate wealth to invest in public services.

[Geraint Davies]

Is the hon. Gentleman’s position that Wales should have devolved power over income tax, and that a proportion of that could be used as a revenue stream to pay back borrowing, but that Wales should not use tolls to pay back borrowing which, as I said, is a tax on inward investment and trade?

[Jonathan Edwards]

The hon. Gentleman has a long-standing position on this. He has explained my position on the importance of the devolution of income tax quite adequately. The reality is that if we devolved an income tax-sharing arrangement, we would, even if we did not change the level, have huge leverage to borrow far more. Personally, I would like the Welsh Government to have responsibility for setting tax bands, but the reality is that we are nowhere near getting into that debate.

On the tolls, I would like the Welsh Government to have responsibility for the Severn bridges, because they are the major access route to the south Wales economy. There would be a leverage potential on the revenue, but that is not my primary reason for supporting this. I would like the Welsh Government to have responsibility for the tolls and to set them at a rate that would enable them, on top of maintaining the bridges, to have money to reinvest in wider Welsh infrastructure, but that rate would be far lower than at present.

I look forward to next week’s autumn statement, and plenty of progress on the bilateral negotiations and the Silk commission.