Support for the Welsh Economy and Funding for the Devolved Institutions

Jessica Morden Excerpts

Tuesday 5th July 2022 Commons Chamber

[Jessica Morden (Newport East) (Lab)]

It is a pleasure to follow my hon. Friend the Member for Aberavon (Stephen Kinnock), who made an excellent speech. I shall be speaking in a similar vein. I am also grateful to the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) for securing the debate, along with the Welsh Affairs Committee, which pressed for it to take place. I greatly miss being a member of the Committee, which does valuable work, not least in sending us copies of the Library briefing for today’s debate. That briefing confirms the decrease in funding for Wales’s final budget, which was disputed earlier by some Members.

In fact, the Welsh Government’s budget over the next three years is likely to be worth at least £600 million less in real terms because of higher than expected inflation. With the outlook for inflation, economic growth and additional funding looking bleak, the spending power of the Welsh Government is likely to deteriorate further, which is why they have called on the UK to update its settlement. As other Members have pointed out, we are also set to lose more than £1 billion of vital EU funding, with the UK Government failing to honour their 2019 election pledge to replace and

“at a minimum match the size of”

EU structural and investment funds.

Against that backdrop, the Welsh Government face even more pressures in seeking to address the cost of living crisis, which should be a priority for all Governments in the UK. However, even in these hard times, the Welsh Government are trying their hardest with what they have at their disposal to help households that are struggling to get by—unlike the UK Government, who are out of ideas and out of touch with what people are really going through; refusing, as others have said, to bring in an emergency budget; and raising taxes during a cost of living crisis.

After Ofgem announced increases to the domestic energy cap, Rebecca Evans, the Welsh Finance Minister, set out a £330 million cost of living package of support, which goes beyond that announced by the UK Government. The Welsh Government provided the £150 cost of living payments to all households in council tax bands A to D and expanded the support to those in higher bands in receipt of council tax reduction. As other hon. Members have said, this included free school meals throughout the Whitsun and summer holidays, and additional funding for the winter fuel support scheme for 2022-23 will ensure that the scheme can once again provide people on low incomes with a non-repayable £200 cash payment towards their energy bills later in the year. That is on top of the Government’s £200 rebates on bills from October.

The average band D council tax bill in England is £167 more than it is in Wales. Even with the stuff that the Government have brought in recently, we pay £17 less in Wales. As has been said, we have a Labour Administration in Wales who are really serious about supporting the public through this perfect storm of rising costs. They stand in stark contrast to this Government and a Chancellor who had to be dragged kicking and screaming into introducing a windfall tax on oil and gas profits to partly fund cost of living support for households.

As the right hon. Member for Preseli Pembrokeshire mentioned, the cost of living crisis in Wales has been made worse by the shortcomings of the benefit system. In its March report, the Welsh Affairs Committee rightly identified that current benefit levels are inadequate and called for an urgent review of the Government’s cruel decision to end the £20-a-week universal credit uplift, as well as a re-evaluation of policies including the five-week wait, the benefit cap, the two-child limit, the bedroom tax, the shared accommodation rate of universal credit for under-35s and the freeze of the local housing allowance rate at March 2020 levels. Everything on that list is relevant to today’s debate, and I would add to it the lower rate of universal credit for under-25s. That has caused hardship for many constituents, with housing associations in Newport East reporting under-25s spending all their universal credit on utility bills and having nothing left for food. It is worth pointing out that cuts to universal credit and working tax credit will take around £286 million out of the Welsh economy, with more Welsh families being hit proportionally harder.

I mentioned the loss of EU funding earlier. The loss of £243 million in rural funding and the £772 million shortfall in EU funding is likely to mean the loss of £1 billion of vital funds. The Minister will be aware of the considerable scepticism that exists around the shared prosperity fund. The Welsh Government have also voiced concerns that the fund will redirect economic development funds away from areas where poverty is most concentrated. My hon. Friend the Member for Rhondda (Chris Bryant) also made that point. This is a missed opportunity to ensure that funding reflects the distinct needs of Welsh communities. The fact that the Welsh Government have been totally ignored in the decision-making functions around the fund appears to be a deliberate attempt to undermine the principles of devolution, as referenced by the Public Accounts Committee in its report.

There has also been frustration with how the levelling-up fund has operated in practice. Only three of the 10 successful Welsh bids for the first round of the fund came from south Wales, and none from Gwent. I urge the UK Government to put this right in the second round and to look carefully at bids such as the one for the regeneration of the town centre in Caldicot, which has cross-party support. Sixteen local authorities in Wales did not benefit from the fund at all in the first round, and it would be interesting to hear what Ministers are doing to address that.

On rail, Wales has 11% of the UK rail network but receives only 2% of rail enhancement funding from the Government. We are now set to miss out on billions of pounds of consequential funding from HS2.

On police funding, no area of the UK has been safe from damaging Tory cuts, but Ministers in this place have shown no recognition of the specific challenges facing Welsh police forces. For example, no Welsh force receives national and international capital city grant funding. That is relevant to Gwent police in my area and that of the Under-Secretary of State for Wales, the hon. Member for Monmouth (David T. C. Davies), which needs to draw on additional resources to support events in Cardiff in the neighbouring South Wales police area, as well as at the international convention centre and Celtic Manor in the constituency of my hon. Friend the Member for Newport West (Ruth Jones).

Similarly, Welsh forces have not been able to utilise their apprenticeship levy contributions in recent years, and they currently pay around £6 million a year more than their English counterparts towards the training of officers. That issue has been raised before in this place, including by my hon. Friend the Member for Merthyr Tydfil and Rhymney (Gerald Jones), but Ministers have—

[David T. C. Davies]

Will the hon. Lady give way?

[Jessica Morden]

I will not, on this occasion, because another Member wishes to speak and hon. Members have intervened many times during the debate.

As I was saying, Ministers have incorrectly attempted to pass the buck on to the Welsh Government for that issue. It is not a devolved issue, and it is time Ministers took some responsibility.

There are additional strains on finances that Welsh police forces just do not need, especially when we consider that the headline £5.2 million of extra grant funding for Gwent in the police grant report published earlier this year is effectively written off to fund the long-term costs of the final tranche of the police uplift programme and the 1.25% increase in national insurance contributions. The UK Government continue to leave police forces in Wales to fend for themselves rather than funding them properly.

Finally, it is worth remembering that Government Members have voted to cut the £20 universal credit uplift, voted against free school meals for children during school holidays, voted for an increase in NI contributions and voted against a windfall tax. That is the record they stand on as we debate this estimate.