Coalfield Communities (Regeneration)

Owen Smith Excerpts

Tuesday 26th October 2010 Westminster Hall

[Mr Wayne David (Caerphilly) (Lab)]

I want to say a few words about the comprehensive spending review and its likely impact on the south Wales coalfield. To begin with, however, I want to refer to some of the key features of the central south Wales coalfield.

First, like many other coalfield areas in the UK, there is a relatively large public sector in my area. Local authorities, the health service and the Welsh Assembly Government are all big and major employers in my area. Secondly, following the decline of the coal industry, we have seen a diversification of the economy. Nevertheless, there are still very low wages and a low skills base in my area, and that is common throughout the region.

Thirdly, we have a relatively small private sector, and what private sector there is remains closely linked to the public sector and dependent for many contracts on that sector—we cannot differentiate between the private and public sector in any meaningful way in south Wales.

Fourthly, again like many other coalfield areas in Britain, there is a legacy of ill health in my constituency. If we look at the heads of the south Wales valleys in particular, we see a very high concentration of incapacity benefit claimants. That is a clear legacy of heavy industry. Since the demise of the coal industry, much of that welfare dependency has become intergenerational and there is a whole range of complex social issues to be considered.

Within that context, my Caerphilly constituency is right at the heart of the south Wales coalfield. Just to the north of Cardiff, it is a constituency where the coal industry was at one time by far the most dominant employer. Relatively recently, however, it has been hit by the closure of two of the largest collieries, Bedwas and Penallta, in the wake of the 1984-85 miners strike. Today the local authority is by far the biggest employer in the Caerphilly borough. Caerphilly borough council employs no fewer than 8,000 people; as I say, it is by far the biggest employer in my constituency.

As well as people being employed in the local public sector, people are of course prepared to travel. Travel-to-work patterns in the area give the lie to the recent comment by the Secretary of State for Work and Pensions that people are not prepared to travel. The facts clearly belie that statement. I am aware of constituents of mine who travel to Newport to work in the public sector: in the passport office—sadly, it is due to close—the patent office and elsewhere. They travel to Cardiff to work in the Welsh Assembly Government offices, the tax office, the offices of the Department for Work and Pensions and Companies House. Many people from Caerphilly travel over the mountain and down into Cardiff.

[Owen Smith (Pontypridd) (Lab)]

Does my hon. Friend agree that the recent statement by the Secretary of State for Work and Pensions reveals on his part—and, I fear, on that of many Conservative Members—a deep misunderstanding of the endemic nature of unemployment and incapacity in areas such as my hon. Friend’s constituency and mine? It is fundamentally insulting to the people of those communities and implies that they are workshy, when the reality, as he describes, has to do with the communities’ industrial heritage.

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[Mr David]

Yes, certainly. I am sure that all of us from coalfield areas are aware of increasing numbers of constituents coming to our surgeries and offices to express concern about how things will pan out over the next few years. My right hon. Friend has articulately put her finger on a concern felt by many people in places such as south Wales.

The crucial point I want to address is this. The Government, particularly the Chancellor, have belatedly accepted that job losses in the public sector will be significant, but they also say they believe that the private sector will grow quickly and soak up those who lose their jobs in the public sector. I suggest that that is not the case. In areas such as south Wales, there are many key factors, which I identified earlier, that will work against private sector growth. For example, the public and private sectors are interdependent, as the Federation of Small Businesses recognises.

A number of announcements were made just before the comprehensive spending review. For example, it was announced that the Severn barrage will not be constructed. If it had been, it would have been a huge boost for the private sector economy in south Wales. The defence training college has been shelved, and effectively ended. That would have been not a public sector but a private finance initiative, and would have created an estimated 5,000 new jobs in south Wales, but it has been scrapped. We also hear—again—that it is unlikely that the south Wales railway line will be electrified, which would have proved a huge stimulus to the south Wales economy and a job-creating initiative.

We do not have a strong entrepreneurial culture in south Wales. That is not to suggest that people themselves are not entrepreneurial, but historically, creativity has not been directed into the private sector. That is beginning to change, but it is a long-term process that will only come to fruition many years hence.

It is also worth pointing out that as a result of the policies pursued by the last Labour Government, private companies have not shed as many people as was widely anticipated. Many workers now work part-time or are still on the books but not taking up their full cash entitlements. It is therefore more likely that those people will be reactivated, rather than that large numbers will come off the dole queue and go directly into the private sector. Due to those factors, it is pretty clear that areas such as south Wales will not experience a great boost for the private sector; quite the opposite. It is likely that we will lose jobs in the private as well as the public sector.

[Owen Smith]

I am grateful to my hon. Friend for giving way once more. He might be interested to know that yesterday, on behalf of the shadow Secretary of State for Wales, my right hon. Friend the Member for Neath (Mr Hain), I met a group of 20 or so US companies, many of which have invested in this country, some of them in south Wales. I explored with them their belief in their ability to hire new people and invest in the current climate. The clear message that I heard from them was that, in their view, there is no capacity right now to take on the people who will be laid off in the public sector. They are worried that the impact of the CSR will strip demand from the economy, and they are not in a position to hire the people who will be thrown on the scrap heap.

[Mr David]

That is a useful intervention and it underlines my point. It is a myth that the private sector in areas such as south Wales will undergo a great burgeoning; that simply will not happen. It is depressing to recognise, but that is the reality. We must be honest with ourselves and our constituents so they realise that if this Government stay in power and do not change their policies, at least for the next few years, the immediate future will be bleak indeed. To conclude, I hope that the Government will listen and accept objective reality, because many people are concerned that an ideological fixation drives this Government’s policies, irrespective of public opinion.