Spring Budget 2024: Welsh Economy

Debate between Nia Griffith and Jessica Morden

Wednesday 17th April 2024 Westminster Hall

[Jessica Morden (Newport East) (Lab)]

I congratulate my neighbour, my hon. Friend the Member for Newport West (Ruth Jones), on securing this very important debate; in fact, I believe that this is the second year running that she has secured it. As always, she made her points well, as did all the speakers so far. I echo her comments on Gaza and the middle east. We share the city of Newport, and I know that that is a matter of great concern.

As my hon. Friend and neighbour set out, this is a Government clinging on to power, having presided over 14 years of managed decline. They lack the interest, vision and appetite to deliver the fundamental change that our country needs. We have had some excellent contributions from Members who will have had direct feedback from their constituents, be it on the doorsteps in places such as Monmouth, or in their surgeries. I certainly have: over the Easter recess we carried out a cost of living survey in Newport East, and people told us very strongly just how held back they feel by this failing Tory Government.

My hon. Friend put it well when she said that “never have a British Government asked their people…to pay so much for so little.” Having played fast and loose with the public finances, the Conservative party is passing on the cost of its incompetence to those who can least afford it just as public services, on which so many of them rely, are crumbling under the weight of its cuts. My hon. Friend the Member for Llanelli (Dame Nia Griffith) is quite right: the spring Budget is smoke and mirrors, and people are not taken in by it.

Let us take ourselves back to 2019, when those on the Government Benches stood on manifesto commitments not to raise taxes; to reduce debt; to reduce poverty; and to help people with cost of living pressures. Three Prime Ministers and five Chancellors later, and with the Tory chaos almost halving the Government’s parliamentary majority, those promises lie in tatters. As hon. Members have already said, it is the case, despite cuts to national insurance, which we support, that the income tax threshold freezes mean that taxes are rising at a record pace. They are now at a 70-year high, and rising in each year of the spring Budget’s forecast period. That will make households in Wales £700 worse off, as my hon. Friend the Member for Newport West said. I was very struck by what was said to me by a constituent I met in Magor on Saturday on the issue of the income tax threshold freezes, which was raised by my hon. Friend the Member for Llanelli. The constituent described to me how her small monthly pension was hit by the impact of that and how unfair that was.

[Dame Nia Griffith]

I am sure that my hon. Friend will mention what I forgot to mention, which is that pensioners do not pay national insurance, so they have had no benefit whatever from the NI cut.

[Jessica Morden]

I thank my hon. Friend for making that very pertinent point. There is a big impact on pensioners, as she has said.

The UK debt to GDP ratio is at its highest in 70 years, with no sign of falling. The number of people living in absolute poverty is expected to increase this year to 12 million, with 4.2 million children living in poverty. This year, 62,000 householders in Wales will face the Tory mortgage bombshell—which hon. Members have mentioned—as their fixed-term rates expire, with the average homeowner expected to face a £240 hike in their monthly bill. As hon. Members have said, this is the first Parliament on record for which living standards are set to be lower by the end than they were at the beginning. The Tory Government are breaking promises and breaking records—and all to the detriment of Welsh people struggling to make ends meet. The Prime Minister has joined his predecessor in backing the sort of enormous and entirely unfunded tax cuts that led to the swift demise of her premiership—this time in the form of the abolition of national insurance. Perhaps the Minister will explain to us in this debate, because the Prime Minister could not—he repeatedly failed to answer the question at Prime Minister’s questions today—what the Tory Government will cut to find the £46 billion needed every year for their new policy, or whether they plan to extend their tax-raising record by piling further costs on to Welsh working people.

Not only have the tired Tory Government lost any semblance of economic competence—driving down business confidence—but they have lost their moral compass. Over the last few days, my constituents Colin and Janet Smith have been sharing with the media the story of their decades-long fight for justice for their son, Colin, who tragically died aged seven, having contracted AIDS and hepatitis C from contaminated blood administered by the NHS. For years after his death they faced bullying, abuse and the loss of employment, due to the stigma surrounding his illnesses. I know the family very well, and the absolute tragedy of what he was put through. Members of the House will know that the Smith family’s story is not unique. They have campaigned tirelessly alongside so many others for the truth and for just compensation, so I would like the Minister to tell us why, despite the final recommendations on compensation having been delivered to Ministers by Sir Brian Langstaff, chair of the inquiry, more than a year ago, when he said the Government could get on with making the compensation payments, there is not a single word about it in the spring Budget. I think that is an absolute disgrace.

Welsh steelworkers are right to feel betrayed by a Government willing to countenance 3,000 redundancies across south Wales while our European steelmaking competitors make historic investments in green steel. The almost-overnight end to our virgin-steelmaking capability in Port Talbot is not an inevitability. Rather than relying on imports from across the world, exposing us to the same global risks that precipitated the energy crisis, Ministers must revisit the multi-union plan, described by Tata itself as credible, to work with our steelworkers towards a just transition to the greener future for steel that we all want.

As my hon. Friend the Member for Llanelli mentioned, a Labour Government in Westminster would invest £3 billion in green steel within the first term, protecting livelihoods and the future of our sovereign British steel manufacture, which is vital for our plan to make Britain a clean energy superpower by doubling onshore wind, tripling solar and quadrupling offshore wind.

It is not too late for the Government to change direction on this, and it would be particularly important for my hon. Friend the Member for Newport West, with the Llanwern steelworks in Newport. It would not be the first time a Conservative press release has sounded suspiciously familiar to Labour colleagues. Whether it is the narrowing of the non-dom tax loophole or the half-hearted levy on oil and gas giants, the Prime Minister appears to be slowly realising that the path to a fairer, brighter future for Wales and Britain is through the progressive policies of a Welsh Labour Government working with a Labour Government in Westminster.

The consequential funding that will flow from a UK Labour Government to Welsh public services will be critical. Importantly, my hon. Friend the Member for Pontypridd (Alex Davies-Jones) mentioned the cost burden on local government too. Our public services face intense challenges, particularly in the context of the value of the Welsh Government’s budget having dropped by £1.3 billion in real terms as a result of the Tories’ economic mismanagement.

Some progress was to be welcomed from the spring Budget. We have repeatedly called on the Government to get a move on with the new nuclear site at Wylfa. The purchase of the site is therefore good news, but we are still nowhere near seeing the prospect of clean energy and thousands of good jobs returning to Anglesey. Had they not dithered for five years, we could have seen the plant 50% complete, with up to 8,500 construction jobs under way, around 900 permanent jobs to follow and £400 million for the local economy in wages.

What we saw in the spring Budget was a Conservative Government without a proper plan to grow the economy, without an industrial strategy to match the ambition of our talented Welsh workforce and without the appetite for investment in a greener Wales. Those will only be achieved with a UK Labour Government working with a Welsh Labour Government and a Secretary of State for Wales who stands up for Welsh interests.

Cost of Living in Wales

Debate between Nia Griffith and Jessica Morden

Tuesday 22nd February 2022 Westminster Hall

[Jessica Morden]

Before the vote, I was talking about the soaring household gas and electricity prices and about how households in Wales and the UK would see their energy bills rise to nearly £2,000 a year from April, when the energy price cap lifts. I agree with the excellent intervention by my hon. Friend the Member for Neath (Christina Rees) about the interventions of the Welsh Labour Government in Cardiff and how they have used the levers at their disposal to do all they can to ease the cost of living crisis for Welsh people. I will talk more about that later.

The proportion of households spending at least 10% of their budget on fuel bills will be trebling from 9% to 27% and, on top of that, taxpayers will be asked to foot an estimated £120 a household to shoulder the extra costs of the energy companies that have gone under in the last year. Based on that increase alone, National Energy Action Cymru estimates that 280,000 households in Wales could be in fuel poverty come April. That is a further 100,000 households since October 2021, and all that at a time when pay is not keeping pace with rising prices. When we factor in inflation, average weekly pay packets across Britain fell in December by 1.2% and TUC research suggests that real wages are set to fall by £50 a month this year, after taking into account the cost of living, with incomes after tax forecast to drop by 2%. That represents the biggest fall since records began in the 1990s. Although the national living wage may be going up, the proliferation of insecure, casual jobs and cuts to in-work benefits mean that a higher minimum wage does not mean higher living standards.

[Nia Griffith (Llanelli) (Lab)]

Does my hon. Friend agree that, although many people think of benefits as going to people who are not in work, there are in fact a lot of benefits that go to people who are in work? The fact is that there have been swingeing cuts to tax credits since 2010, and even though there was some adjustment to the taper last year, that alone is not enough. With rampant inflation, there now needs to be a real effort to make sure that those tax credits are actually worth something, to make it worthwhile to be in work. At the moment, people face horrendous poverty because of that accumulation of 12 years of cuts.

[Jessica Morden]

I thank my hon. Friend for that intervention. She is absolutely right: the levels of in-work poverty are really terrifying, and it is those on the lowest incomes who are feeling the squeeze most acutely. As she said, that is made worse by the Government’s £20 cut to universal credit in the autumn, which impacted 8,630 households in my constituency. Research from Wales TUC and the Bevan Foundation suggests that Wales was particularly hard hit by the cuts to universal credit and working tax credit, especially when it comes to the in-work poverty that she mentions.

Of the 280,000 individuals in receipt of universal credit in Wales, around 104,000, or 37%, are in work—the highest proportion of any nation or region in the UK. In April, universal credit will increase by 3.1%, just as inflation is predicted to peak at 7.25%. As the Child Poverty Action Group has highlighted, that means that the real value of universal credit for families with children will fall by around £570 a year on average.