Employment in Wales

Debate between Owen Smith and Jonathan Edwards

Tuesday 27th January 2015 Westminster Hall

[Owen Smith]

I agree. That has been the yawning hole at the heart of what we have heard so far from Conservative Members, and I suspect it will not be filled by the Minister. In the past, our work has defined us in Wales, and work is in danger of defining us once more as a low-wage, low-security economy. That is becoming the reality of the world of work for people in Wales, which frankly is not good enough.

I do not expect the Minister to recognise that picture, and I am sure he will talk to us in a moment about the recovery and the extra jobs that his Government have created, but unfortunately the facts do not bear out his arguments or the arguments of the hon. Member for Aberconwy because the statistics are relatively clear. Despite all the rhetoric, the truth is that in May 2010, when the last Labour Government left office, there were in total 1,471,000 economically active people in Wales. Today, on the latest numbers, there are 1,471,000 economically active people in Wales. That is the reality. We have not seen a surge in new jobs in Wales; we have seen a displacement of jobs, often from the public sector to the private sector and absolutely from more secure, more stable, better paying jobs to worse jobs.

The other statistics are even more damning. In Wales, according to the Office for National Statistics labour force survey, the number of economically inactive people has gone up from 989,000 to 1,039,000; the economic activity rate has gone down as a percentage; the employment rate has remained absolutely static at 54.4%; and the economic inactivity rate has gone up from 40.2% to 41.4%, which is in part a reflection of the offsetting effects of public sector job losses in Wales over the period. Some 351,000 people were employed in the public sector at the beginning of the Government’s term; the figure is now 315,000. That is a reduction of 36,000, part of the 1 million public sector jobs that have been lost.

That is the truth of the headline statistics, but let us look a little deeper at the nature of the jobs that people are currently enjoying. There are perhaps more jobs in the private sector, but the truth is that productivity in Wales and in Britain is down; corporate and personal tax receipts in Wales and in Britain are down; investment in Wales and in Britain is down; and consumption in Wales has flatlined.

My hon. Friend the Member for Vale of Clwyd made the point earlier in relation to the respected leader of the CBI, John Cridland, who says that, if we have a low-wage economy with increasing numbers of people who are unable to pay for white goods or even basic services, we will have lower consumption, less productivity and less growth in Britain. Those are the basic economic facts in Wales, and the reason for that is simple: the Conservative party set out to create and—let us give it its due—has succeeded in creating a low-wage, low-security economy in Wales and in the rest of the UK. That has been the Conservative party’s objective—greater flexibility but, unfortunately, at the expense of working people.

It is a reality that wages are down on average by £1,600 per family over this Parliament. It is also a reality that Wales already has the lowest disposable incomes of any part of the UK—just £14,623 versus an average in England of £17,066. The Conservatives have succeeded in overseeing a shift in the nature of our employment from a relatively secure, better paid work force to a less secure, worse paid work force. The facts do not lie. Total temporary employment across Wales has increased by 28%, and in the same period the number of people on permanent contracts in Wales has decreased by 25,000, more than 2%.

There is a direct transfer of people from being full-time employees to effectively being part-time employees. Some of those people are calculated and recorded as FTEs, but that is because of the nature of their zero-hours contracts. There are 300,000 people in Wales on less than a living wage, and far too many of those people—more than 40,000—are currently on zero-hours contracts, which have been the great explosion and change in our economy. That shift from permanent, properly contracted work, in which people have rights to maternity pay, paternity pay and sick leave, towards a low-wage, insecure, zero-hours-driven culture is unparalleled in any other period of modern economic history.

I will give one illustration, involving a young woman in my constituency whom I met a fortnight ago. She is 17, just about to turn 18, and she works in a local pizza restaurant. She goes in to work at 10 o’clock, when she is expected to be there. She has no guarantee of how many hours she will work that day: it might be six, eight or two. The nature of her contract is such that she can be laid off by the company for a period of its choosing during her working day if demand in the pizza restaurant drops below a certain level. She cannot afford to go home and wait for the company to call her to bring her back in, so she sits in the back room of the pizza restaurant for up to four or five hours in the middle of the day, waiting for the volume of customers to pick up later in the evening so she can be taken on.

It is an utter scandal that that sort of practice is going on in Britain—and not just occasionally; it is becoming the norm, just as minimum-wage jobs in Britain are becoming the norm, not the exception. The minimum wage in this country is becoming a ceiling on wages, not a safety net. Governments of all colours must recognise that, and the fact that we must do something about it.

[Jonathan Edwards]

I agree with everything that the hon. Gentleman is saying about the situation in Wales. It is true not least of the care sector in Carmarthenshire, where the Labour council has privatised social care by outsourcing it to private contractors, and many workers are in the same scenario. They are not paid for travelling between calls, so in very rural areas, such as some parts of Carmarthenshire, they can travel for half an hour and not be paid for that working time.

During the recent passage of the Social Services and Well-being (Wales) Bill in the National Assembly, Plaid Cymru tried to deal with that situation by outlawing zero-hours contracts in the social care sector. Can the hon. Gentleman explain why the Labour Government in Wales refused to support that amendment?

[Owen Smith]

As the hon. Gentleman will know, the situation is far more complex than he allows, although I will say straightforwardly that I do not believe that we should have 15-minute calls. One of the areas on which we will absolutely need to concentrate when Labour wins in May is the care sector, in which women are exploited all the time. More than 60% of the women in Gower, Ogmore and the Vale of Glamorgan who work part-time contracts, many of them zero-hours, are paid less than the living wage. That is the truth for many people in this country.

Equally, House of Commons figures show that areas of Wales, including the Rhondda and Dwyfor Meirionnydd, account for the nearly 40% rise under this Government in people shifting into working for the minimum wage or less than the living wage. Those are sea changes in the nature of the economy experienced by working people. Not all those changes started under this Government; we must be honest about that—the stagnation in wages started around 2007-08—but the unprecedented pace of change and the shift to low-wage, high-insecurity work has been exacerbated and compounded under this Government. In my view, that is scandalous.

The Welsh Labour Government have done their best to mitigate those trends. Initiatives such as Jobs Growth Wales have created 12,000 job opportunities for people in Wales, and tuition fees have been capped in order to hold open the door to advancement and social mobility through education. The Welsh Government have stood up for the lowest-paid workers against this Government—by maintaining the Agricultural Wages Board, for instance.

However, the truth is that we still have a significant problem in Wales, and it will take a Government in Westminster with the right policies—and, frankly, the right ideology—to change that. That is what we will see in this country when the Labour party wins in May: a rise in the minimum wage, intervention in our markets to freeze consumer prices for people suffering under high energy bills and the backing of small business through a reduction in tax cuts to large corporations and an increase in benefit to smaller companies.

Crucially, we will deal with zero-hours contracts and scrap the bedroom tax, which perniciously affects the most vulnerable in our society. That is the sort of Government programme that we need to deal with the issues in Wales. It is not what I anticipate we will hear from the Minister, which is why I hope we will see a Labour Government preside over Glamorgan, as well as the rest of Wales, come 8 May.

Wales Bill

Debate between Owen Smith and Jonathan Edwards

Wednesday 10th December 2014 Commons Chamber

[Owen Smith]

I am happy to agree that that is how the article went on, but it did indeed describe devolution as “constitutional vandalism”. I shall not forget that, and nor should the country of Wales, for which the right hon. Gentleman is now Secretary of State.

The Government have undertaken a U-turn on this. Let me refresh the House’s memory. Just a few months ago, the Secretary of State’s party wholly opposed the removal of the lockstep. In fact, his Department and the Treasury produced a substantive Command Paper, Cmd 14, which said:

“The Government is firm in its view that the income tax structure is a key mechanism to redistribute wealth across the whole of the UK, which is why the ‘progressivity’—

a word I think they made up—

“of this system is properly determined at the UK level.

The inclusion of the lock-step is also consistent with the principle that fiscal devolution should not benefit one part of the UK to the detriment of another—this could occur if the Welsh Government is able to set a substantially lower rate for higher/additional taxpayers without needing to change the basic rate”.

That is what the Secretary of State seems to be suggesting —that we set lower rates in Wales than in England.

We do not demur from the sentiment expressed in the Command Paper, but nor do we greatly object to the Government changing their mind on this issue. That is partly because they are reflecting the views of all parties in the National Assembly—it is appropriate and good that the Secretary of State has listened to them on this —and partly in the light of the Smith commission findings, which have shifted the debate significantly by proposing 100% devolution of income tax to Scotland. In fact, it could be argued that there is now a case for going further than is proposed in the Bill. It seems unlikely to me that the people of Wales would find it acceptable to be asked in a referendum about having lesser tax varying powers than those on offer in Scotland.

Many of us in the House now recognise that perhaps one of the mistakes of the previous Government was to allow asymmetry to develop between different parts of the UK in earlier rounds of devolution. That has driven pressure for greater change in Wales to reflect changes in other parts of the country. In fact, the case has now clearly been made for a constitutional convention to consider all the issues in the round and to try to derive a lasting settlement acceptable to all parts of the UK.

The Government have not yet agreed to a constitutional convention, and in its absence we must still consider the Welsh Government’s rationale for taking up powers to raise taxes, if those powers were accepted at a referendum.

[Jonathan Edwards]

Labour’s policy is to have a constitutional convention. Is the hon. Gentleman saying that, in the event that we have a Labour UK Government, there will be a constitutional convention, and if so, would it halt the Smith process and the proposed Bill for Scotland?

[Owen Smith]

No. I am saying that if there were a Labour Government, we would have a constitutional convention to look at the whole of the UK. Therefore, wherever we were in the Smith commission proposals, which will continue on their course, that would need to be fed into the convention. A constitutional convention would not need to slow down or stop further devolution to Scotland, but it would have to take cognisance of what was happening in Scotland.

Whatever further changes are made in Wales should reflect what happens in Scotland, because the willingness to accept asymmetry has diminished in Wales and elsewhere. Many of us feel that such asymmetry inherently leads, over time, to instability in the existing settlement.

In the absence of a convention, we must consider why the Government think that Wales should take up the new powers. I want to start not with Labour, but with the current Government. Why do they now feel that the Labour Welsh Government should have an unfettered ability to raise taxes or to lower them to levels below those in England? The Secretary of State has made a couple of soundbites or comments today to illustrate why he thinks we should do so—he talked repeatedly about accountability and responsibility—but I must say that none of them was quite as blunt and honest as the rationale he gave to the Institute of Welsh Affairs a few weeks ago. He said clearly that his objective in providing the tax varying powers was to

“end the politics of the begging bowl in Wales”—

[Interruption.] The Secretary of State says, “Absolutely,” but I find that quite an offensive position for him to take. He should not describe Wales as, in effect, a supplicant, and nor should he suggest that we are a scrounger or a shirker asking for handouts. It is not for him to suggest that the cure for the

“politics of the begging bowl”,

as he injudiciously puts it, is to force the Welsh people to raise taxes within their own borders. I do not espouse such a dog-eat-dog, race-to-the-bottom version of Britain, and nor should he.

--- Later in debate ---

[Jonathan Edwards]

I watched with great interest the hon. Gentleman’s prophecy of doom on “Sunday Politics”. I have also read the OBR report and looked at all the tables on the Welsh devolved figures, and they do not reflect his claims about a £1 billion loss. Indeed, the only table on this issue in the report suggests that the Welsh devolved tax base will increase over the next five years by £500 million. The shortfall that he mentions might be as a result of the raising of income tax personal allowances that has been announced by the UK Government, but the Silk commission made it clear that the indexed deduction method for the partial tax raising arrangement in the Bill means that that would not come into effect. Is not the hon. Gentleman guilty of scaremongering? Project fear is alive and well in Wales once again.

[Owen Smith]

No, it is project reasoned analysis of the numbers, and that project shows clearly a £66 billion shortfall over the past five years and a projected further shortfall across the UK over the next five years. We will see a worse performance in terms of corporate and income tax receipts across the UK as a result of the low- wage, deeply insecure, second-rate economy that the Tory Government are building. Wales has been particularly ill served by what has happened because of the additional fragilities of our economy due to our industrial heritage and the preponderance of low-wage jobs in Wales.

The reality is that—[Interruption.] The Secretary of State shakes his head, but he should think about this. He said earlier that the indexed method cited in Holtham means that Wales would effectively be incentivised to grow its tax base at a faster rate than England’s to enjoy uplifts under these powers. The truth is that over the past five years the Welsh tax base has declined at a faster rate than that of England, as the figure is 4.8% in Wales whereas the UK average is 4.2%. That means that Wales would have been worse off under the indexation had the provisions applied in the last five years, which is a further illustration of the need for the Government to undertake some proper, detailed analysis to let the Welsh people know whether we would be better or worse off.

Wales Bill

Debate between Owen Smith and Jonathan Edwards

Tuesday 24th June 2014 Commons Chamber

[Owen Smith]

It was well worth waiting for the Secretary of State to intervene, but I think that the answer is no. Had he been paying attention, he would know that the First Minister has been very clear—[Interruption.] He says “Ah!”, but I think that there is no surprise in hearing that the First Minister has said that income tax-varying powers for Wales are not a priority, for all the reasons I have enumerated many times in this Chamber. If the Secretary of State was to debate some of these issues with me, rather than standing behind the Exchequer Secretary when it comes to all these detailed parts of his brief, perhaps we would have a clearer idea of his understanding of these issues.

[Jonathan Edwards]

Is the hon. Gentleman therefore concerned that the 22 local authorities in Wales can all put forward different levels of business rates?

[Owen Smith]

That is a tendentious and off-piste point, and I do not intend to busy the Chamber by bothering to respond to it.

We are still suspicious of the Government’s motives, not least because the leader of the Conservative party in Wales, Andrew R.T. Davies, has said explicitly that he wants to cut taxes for the wealthiest people in Wales. That is what we suspect that the Tory party would do if, heaven forfend, it were ever to assume power in Wales. We also still have suspicions that the Government are not really serious about doing this for Wales; in truth, we feel that it is more evidence that Wales is of interest to them only as a stick with which to try to beat the wider Labour party. We have heard this on health, on housing, and on education. Again, their perspective is to try to drive wedges into gaps that do not exist.

If the Government were serious about this, they would have undertaken some of the work that they have done in Scotland. When we last met here to debate this Bill on 6 May, we were anticipating a report by the Government—in fact, it was late by then—on the costs of implementing a similar scheme in Scotland. It did not come out on 30 March, as promised, but on 6 May—on the day, slightly unfortunately, of our debate. The report is entitled “Second Annual Report on the Implementation and Operation of Part 3 (Financial Provisions) of the Scotland Act 2012”. It contains welcome news, because it concludes that the total cost for Scotland will not be the £40 million to £45 million originally anticipated, but a mere £35 million to £40 million. That is what it will cost not Her Majesty’s Government but the Scottish Government to implement a separate Scottish tax regime.

One would have thought that if the Government were serious about implementing this, the cost to Wales should be measured, but the Treasury and the Wales Office have undertaken no such analysis. That is particularly troubling because of the point made by my hon. Friend the Member for Alyn and Deeside (Mark Tami), who is no longer in his seat. There is more complexity in implementing this scheme in Wales because of the greater population density on the border between England and Wales—on either side of Offa’s Dyke, or the line between life and death, as the Prime Minister refers to it. Just 4% of the Scottish population and 0.5% of the English population live within 25 miles of the Scottish border, whereas 48% of the Welsh population and fully 10% of the English population live within 25 miles of the Welsh border.

In Scotland, such measures would potentially affect just 450,000 people who travel back and forth across the border, whereas in Wales the number is likely to be closer to 6.5 million. The implementation costs for Wales are therefore likely to be greater, if not the volume of communication that the Government will have to undertake. Were they serious about this, we might have heard some analysis from them today, but we have heard not a jot.

--- Later in debate ---

[Owen Smith]

Absolutely, so perhaps the Secretary of State could come back to the Dispatch Box to explain why that connection was never made in Scotland, and why, in Scotland, the powers relating to the amount of borrowing were a function of the capital expenditure budget. Can he explain why that difference occurred? Obviously, he cannot, so once again, we know that the Government have simply made it up as they went along.

My last point deals with our fair funding amendments. We remain convinced that the Government do not intend to provide fair funding for Wales, and that any extension of devolution of taxation to Wales ought to be subject to a clear understanding, and agreement by the Welsh Government that the fair funding issue has been dealt with. The Exchequer Secretary acknowledged earlier that the issue of convergence has been accepted by the Government in the floor that has been put beneath the Barnett formula. The Holtham commission said that there was a shortfall of about £300 million—perhaps it is now as little as £150 million—in Wales, but we are convinced that the Welsh Government ought to be the arbiter of whether that fair funding test has been met. That is why we would encourage the Government to adopt our proposal of a back-stop power for the Welsh Government to determine whether fair funding is afforded to Wales.

[Jonathan Edwards]

Diolch yn fawr, Mr Deputy Speaker. It is a pleasure to serve under your guidance as we discuss this vital Bill, which will empower the Welsh Government with an element of fiscal responsibility for the first time. I would have hoped that all MPs representing Welsh constituencies were united in the view that one of our major roles as elected Members is to ensure that the Welsh economy is able to perform far better than it has in the recent past. Considering the incredible wealth inequalities that exist within the UK, with Welsh communities all too often at the bottom of the wealth league, I would have hoped that every political party was united in a mission to turn around the decades of neglect served upon Wales by successive UK Governments.

Far too many politicians in Wales rejoice at the underperformance of the Welsh economy, as it enables them to preach that Wales is far too poor, too small and too weak to succeed as an independent country. Their assertions are plainly ridiculous; Wales has all the ingredients to be a successful nation. We are a country that is rich in natural resources. Our people are highly talented, producing global leaders in science, academia, sport, culture and economics. The real question we should ask ourselves in Wales is: how do we find ourselves in such a predicament? Are we, as a people, content to languish at the bottom of every performance table and at the top of all poverty measurements?

If I was a unionist, I would be ashamed of the fact that gross value added per head in inner London is 12 times larger than that in west Wales and the valleys—the communities I represent. Westminster is not working for Wales, which is why my party believes that the potential of the people of Wales can be achieved only if our own democratic institution has the tools to move our country forward. History shows that changing the colour of the Government in Westminster will make no difference: the Westminster parties are all signed up to the same economic agenda that has failed Wales for far too long, and the people of Wales increasingly understand that. All polling indicates that they want the National Assembly empowered with more political responsibility. A poll by the Silk commission found that 64% believed that income tax should be devolved to the Welsh Government, so it is disappointing, to say the least, that the efforts of Plaid Cymru to improve and strengthen the Bill in Committee hit the infamous Westminster wall. In Committee, we endeavoured to preserve the integrity of the proposals of the Silk commission, which of course were the foundation for this Bill. Disappointingly, all the Westminster parties reneged on the cross-party agreement that had been made during the commission. The Bill undermines what was agreed in the Silk commission, cherry-picking from a comprehensive package. On more powers for Wales, the three Westminster parties are three peas in a pod, despite the protestations of their representatives in the National Assembly.

In Committee, Plaid Cymru put forward sensible and reasonable amendments that would have improved the Bill. Those included removing the damaging lockstep on the proposed income tax-sharing arrangement between the UK and Welsh Governments; inflation-proofing the borrowing powers included in the Bill; and empowering the Welsh Government to issue bonds and tax credits, as has been done in Scotland. We also tabled a series of constitutional amendments on matters as simple as enabling the National Assembly to determine its own name; to set its own number of elected Members; and to determine its own electoral system. Needless to say, none of the amendments was accepted by the UK Government and neither would Labour offer its support, preferring instead to table wrecking amendments that would further dilute the effectiveness of this Bill. I suspect that has something to do with the anti-devolution cabal currently ruling the roost in the Labour Westminster shadow Wales Office.

--- Later in debate ---

[Owen Smith]

I echo the Secretary of State’s thanks to colleagues from all parts of the House who have engaged in debate and scrutiny of this Bill on the Floor of the House over what feels like quite a long period of time. We have had a constructive set of discussions, which have revealed some of the divisions between Ministers and their Conservative colleagues in the Welsh Assembly and exposed the clarity of the Opposition’s support for devolution.

I join the Secretary of State in thanking Paul Silk and the members of his commission for preparing the groundwork for this Bill, and also for reflecting on the future of Welsh devolution, not just in respect of fiscal powers but beyond that. I am sure that we will debate the measures in the second part of the Silk report at some future stage.

Labour supports much of this Bill, and will not oppose it on Third Reading. In particular, we support the Government’s decision to afford Wales borrowing powers. I have said on many occasions in this House that, in not being able to borrow, Wales has been at a disadvantage compared with other parts of the UK. We have acknowledged that that was a mistake of previous devolution legislation. Wales is a legislature that should be able to borrow in order to invest in vital infrastructure. It is welcome that the Government have recognised that, and are moving to afford Wales those borrowing powers. It is a shame that the borrowing powers are not the same as those that will be enjoyed in Scotland, but, overall, we are supportive of the measure.

We are supportive, too, of the proposal to devolve stamp duty, land tax, landfill tax and other minor taxes. Business rates are also to be fully devolved to Wales. We look forward to the Welsh Government, with their progressive values, using those powers in a fair and progressive manner to deliver, hopefully, innovative and progressive solutions for Welsh people in respect of land and businesses taxes.

I also welcome the move towards a more symmetrical position between Wales and Scotland. Wales is not Scotland, and the history of our two countries is very different. The way in which we came to support devolution is very different, and I have often said that. That asymmetry can be explained by our different histories and the different degrees of support for devolution in Wales and Scotland at the point of the initial referendum. However, that position has changed, which could be due in part to the impending referendum in Scotland. The Secretary of State rightly referred to it as a momentous moment for British democracy and for our country. It is right that we consider how things have moved, and why people’s support for Welsh devolution has strengthened. It seems increasingly clear to us, and also to the Government, that a more symmetrical system of devolution might add to the stability of the devolution settlement and diminish the cause of separatism.

We are disappointed that the Government have failed in this Bill to undertake any serious analysis of how the costs and benefits of tax devolution will be weighed for Wales. Any Government who were truly serious about affording these powers to another Parliament and Assembly should have undertaken that sort of analysis. Indeed, this Government did undertake that sort of analysis in respect of the Scottish proposals to take on taxation powers. I cannot therefore understand why the Government and the Secretary of State for Wales in particular have refused to insist that colleagues in the Treasury undertake a similar measure for Wales.

The argument has been made that a considerable gap is now expected between the passing of the Bill and the adoption of these powers, but there was a considerable gap—three years or so—between the passing of the Scotland Act 1998 and the uptake of its powers, and that did not prevent the Government from seeing the necessity of undertaking the work in advance.

It is also disappointing that the Government have failed to offer any real guarantee about whether Wales will be better or worse off under these provisions. We still do not know whether the block grant will be eroded over time. Initially, it will be protected, but the Exchequer Secretary told us again here today that if Welsh gross domestic product and revenues grew more slowly than those of England, Wales would have less money over time to spend on vital public services. Given the problems of meeting the demand for public services in Wales because of our specific demographics and history, and of a £1.6 billion cut to the Welsh budget since the Conservatives came to power, it would be better for the Government to give some sort of guarantee to the Welsh people that they would not be worse off.

[Jonathan Edwards]

Does not that point indicate that the hon. Gentleman has no faith in the Labour party’s abilities to improve the Welsh economy while in control of the Welsh Government ?

[Owen Smith]

No, it does not indicate that at all. It indicates that we are not fantasists. We understand the fiscal reality of Wales, which expends £35 billion a year in public expenditure and raises £17 billion a year in tax revenues, leaving a very large shortfall. We understand that that shortfall is made up by virtue of our being part of a generous Union that shares risks and pools rewards across the UK. Our fear is, of course, that Plaid Cymru Members wish to use this—honourably, from their perspective, as they believe in a separate, independent Wales—to fuel their cause of separatism. We are not interested in fuelling their separatist cause. That is why we have asked questions about the Bill.

We are concerned that the Government have failed to take this opportunity today to use the Bill to take forward the reserved powers model. For the reasons that I mentioned earlier, we think that it would be beneficial for Wales to be placed on a similar footing to Scotland in respect of the devolution model, and the Government could have taken that step in the Bill.

The biggest failing relates to the measuring of benefits and costs to Wales. We will now need to rely on noble Members of another place to undertake further scrutiny of the long-term impact on Wales of the volatility of tax revenues and of the costs of establishing an Exchequer function for Wales. The reason why the Government have not undertaken such scrutiny is that, I fear, they are not terribly interested in Wales. If they were more interested in Wales, they would not have implemented £1.6 billion-worth of cuts. If they were interested in Wales, they would not constantly mislead the public, as we have heard this evening, and seek to divide and rule in Britain when it comes to the respective merits of our health care systems, housing, education and all manner of other things where the Secretary of State chooses to bad-mouth Wales. If they were genuinely interested in assisting Wales, he would have demanded that the Exchequer Secretary undertake a similar analysis to the one that he undertook with Scotland.

The bit of the Bill in which the Government are most interested—as I suspect are nationalist hon. Members—is the bit on dual candidacy. We have heard eloquent and compelling arguments from Labour Members as to why it is right that we banned dual candidacy. It is not right for losers to be turned into winners, as was the case in Clwyd West, in the Secretary of State’s seat. The public do not understand how political alchemy is used to transform people who have been rejected under first past the post, and to put them back into office via the back door. The Secretary of State and his colleagues have wholly failed to explain why they are doing that, other than for narrow party political advantage.

It is fair to say that we have not had many laughs here in the last couple of days, debating this rather dry and dusty devolution Bill. One thing that has amused me is the attempt to paint my party, and indeed me, as somehow anti-devolution. That is as amusing as it is risible because, of course, the Labour party is the party of devolution. We campaigned for it for 100 years; we delivered it, and we will continue to deliver it. We have concerns about tax-varying powers because we do not want them turned to what we think would be malign intent—to fuel the separation of Wales from England. The Secretary of State is right to say that we face a very important choice in Britain; the Scottish people face an important choice. We do not want to fuel separation by encouraging tax competition, with one part of Britain undercutting another in a race to the bottom. That is anathema to Labour values and anathema to the values of the people of Wales.

Wales Bill

Debate between Owen Smith and Jonathan Edwards

Wednesday 30th April 2014 Commons Chamber

[Jonathan Edwards]

As I said, I think the Bill will be viewed as an important milestone in the constitutional development of our country, but it will not surprise the hon. Gentleman to hear that my ambition for Wales is greater than what is set out in the Bill.

[Owen Smith]

A moment ago the hon. Gentleman said that Labour was in some way seeking to undermine the Bill, and I am aware from media reports that that is the line Plaid Cymru is taking in the media. I wish to place on record that that is the opposite of what we are seeking to do. We are probing the Bill today but we will support it. We are looking to strengthen the powers held by the Welsh Assembly in many regards, and we are seeking greater symmetry on tax powers with Scotland. Crucially, we will be tabling amendments to secure fair funding in advance of any of those changes, and looking to ensure that we move to a reserved powers model—all of which I am sure the hon. Gentleman would support.

[Jonathan Edwards]

If that is indeed the hon. Gentleman’s position, I am sure he will join us in the Lobby when we vote on the new clauses later.

The second major context in which this debate takes place is the seismic events happening in Scotland. As I said yesterday in the Welsh Affairs Committee, the second part of the Silk commission’s work will be superseded by the result of the independence referendum, one way or the other. Even the Bill could be superseded by events in Scotland, as its proceedings in the Lords are likely to happen after the people in Scotland have cast their vote in the independence referendum.

--- Later in debate ---

[Owen Smith]

That is as may be. I merely say once more that this is not a straightforward, open-and-shut case, as it has been presented by the Government. We know otherwise—from the evidence of Clwyd West and other seats in Wales, from public opinion and, frankly, from what our constituents tell us about their dissatisfaction, which extends to the broader issue of the list and first-past-the-post system. We know that the public do not understand candidates being rejected under first past the post and then sneaking into the Assembly by the back door.

[Jonathan Edwards]

The hon. Gentleman says that he has been inundated by representations from constituents on this matter. I have to be honest and say that I have never had any discussion with a constituent on this issue. How many of the good people of Pontypridd have been on the phone to him?

[Owen Smith]

I am tempted to say that very few of my constituents—or, I suspect, those from any constituency in Wales—ever want to talk to me about the constitution, which seems to exercise Plaid Cymru all the time. Most people in Wales do not want to talk about the constitution: they want to talk about the cost of living crisis and the other problems that we have in Britain.

In conclusion, the evidence of the recent past in Wales suggests that the previous system was being abused. We have made a clear, principled non-partisan argument that the current system should be retained as it is. In so doing, we are striking a chord with the views of the Welsh Affairs Committee, which did not come to a final conclusion but did say, as a point of principle:

“we consider it unadvisable for electoral systems to be changed frequently. Successive changes to electoral systems risk being perceived as partisan by the public.”

This is clearly a partisan change. The public will see it for what it is and I am sure they would support us when, later this evening, we vote against clause 2 standing part of the Bill.

--- Later in debate ---

[Jonathan Edwards]

That is an important intervention. The Labour party’s position is that it is worried about tax competition, yet, based on its tax policy, the only tax competition that could happen would favour England and other parts of the British state.

[Owen Smith]

Let us be absolutely clear: Labour has not argued, and is not arguing, for a tax increase in Wales. We know that the Conservative party is saying that it wants to cut taxes for the wealthiest in Wales. We are seeking to future-proof the legislation so that a Labour Government in Wales would be able to mitigate against further Tory tax cuts for the wealthiest, and introduce tax justice in Wales.

[Jonathan Edwards]

That is the crux of the argument, and the division between the Labour party and my party. My view is that we should empower the National Assembly and have a mature debate in Wales about what the level of taxation should be. I think the hon. Gentleman is aware of where my political conscience lies—I tabled an amendment to the Finance Bill to reinstate the top rate to 50p. Let us have the debate. Let us trust our Assembly Members to have the debate and let us see the National Assembly mature. The one thing that devolving responsibility for these powers will do is lead to the maturing of the Assembly. Hopefully, we will see the growth and development of our democracy in Wales.

When the Welsh Affairs Committee carried out the pre-legislative scrutiny of the Bill, we had independent witness after witness—I hasten to add that my hon. Friend the Member for Arfon (Hywel Williams) had taken over my role in the Committee for that period, as I was enjoying my paternity leave with my son Llywelyn—giving evidence, except of course the Secretary of State and Treasury Ministers, arguing that the lockstep should be removed. Those giving evidence included the leaders of all the parties in the Assembly, not least the leader of the Liberal Democrats and the Conservatives in Wales. Several distinguished economists, academics and experts, as well as the Chair of the Select Committee on Political and Constitutional Reform, also gave evidence. When the Welsh Affairs Committee visited Scotland following the initial Silk report, there was much excitement about its proposals. Academics, economists, civil servants, Ministers and Back Benchers in the Scottish Parliament were all in favour of Silk’s proposals for Wales, as opposed to what they have in the Scotland Act 2012.

I need not remind Labour Members present that the Labour First Minister, Carwyn Jones, said that the lockstep is a “Tory trap” and that it should be removed. He said the lockstep was “a long way short” of what was considered to be good for Wales, adding that

“binding the rates together is not right for Wales”.

That is a clear indication of the need to remove the lockstep on income tax varying powers.

We in Plaid Cymru are seeking, through amendment 21 and several other amendments, to maintain the integrity of the original cross-party Silk commission recommendations. We believe that the Welsh economy needs that sensible package of reforms in order to increase its ability to bring about economic growth and create jobs. We believe that it is a necessary tool, which will help us to begin to rebalance the economy of the British state by giving greater power to the nations and regions, and will help Wales to begin to lift itself from the bottom of the UK economic league table.

In its present form, the Bill requires Wales to hold a referendum on the lockstep model of income tax and win it in order to gain access to the higher limit applying to borrowing to fund investment. We believe that Wales needs access to that money in order to invest sensibly in infrastructure, secure a good return on its investment, and provide jobs that will have a beneficial effect on the state of the Welsh economy. We are all mindful of the huge cuts in its capital budget that the National Assembly has suffered under the coalition Government.

Given that the lockstep was not the compromise agreed by the parties during the Silk commission’s deliberations, it would surely make more sense to devolve the model without the need for a costly referendum. It is simply an income tax sharing model, with a 90-10 split between the United Kingdom and Welsh Governments. Giving the Welsh Government the ability to vary tax is a theoretical exercise that, as the Treasury well knows, cannot become reality with a lockstep—hence the strings that are attached in the Bill. The big prize of what we propose would be the increased borrowing capacity that I believe is required to help the Welsh economy to regenerate and renew itself.

It is clear that all the other parties are now putting narrow self-interest ahead of the Welsh economy by attaching conditions and caveats to Wales’s gaining of greater fiscal and financial powers. The Tories and Liberal Democrats have their condition of the lockstep, while Labour has its caveat in regard to reform of the Barnett formula, on which its members continue to contort and refuse to commit themselves despite citing it as a precondition for greater financial powers for Wales.

As for the debate in Wales, Andrew R. T. Davies and Kirsty Williams have announced some exciting tax policies that they wish to pursue in relation to the ability to vary taxes. Unfortunately, their colleagues down here in London are completely undermining what they have pledged to the people of Wales in various policy announcements. That is a big hit to their credibility, which may be why the Secretary of State introduced the lockstep: perhaps he wanted to undermine Andrew R. T. Davies.

There has already been much public debate in Welsh civil society about the issue of the lockstep and the power to vary income tax bands individually in Wales. There has been controversy as the lockstep row has engulfed the Conservatives. The Welsh Secretary has claimed that the mechanism would not prevent Welsh Ministers from using the powers—although they have not been used in Scotland since 1999—and has suggested that a 1p cut across all three bands would increase Wales’s competitiveness, a claim which, according to the Welsh Government, would cost £200 million a year. Meanwhile, the leader of the Conservatives in the Assembly rejected the lockstep in his submission to the Welsh Affairs Committee hearing on the powers, prompting a damaging fall-out with the Secretary of State. All the Tory Assembly Members were seconded down here to No. 10 Downing street to try to repair some of the damage.

We are often given the impression that it is the Treasury that does the overruling in all these matters. If Scotland does not have it, Wales surely cannot have it. However, the ability to vary income tax bands individually, as per Silk, would truly allow for the ability actually to vary income tax in Wales, and would be a significant step in the maturing of our democracy. As I said in our first debate this afternoon, it would provide a very positive narrative for the Westminster parties in relation to Scotland, demonstrating that they were serious about reforming the settlement of the UK and going beyond what Scotland has at present.

--- Later in debate ---

[Owen Smith]

The Exchequer Secretary can continue to attempt to suggest that I do not understand the Bill, but I understand it perfectly. I understand perfectly how lockstep works, but equally understand that this Government have cut taxes for the wealthiest in Britain. They have exclusively cut the additional 50p rate to 45p. I also know that his party in Wales has proposed that it would like to go further with Wales, so he will forgive us if we are suspicious of the “tax cuts for the wealthy” motives of the Conservative party. I think we will continue to be suspicious. Unless he would like to get to his feet and tell us that he does not intend that his colleagues in Wales should cut taxes for the wealthiest, I suspect that he will not wish to intervene further.

On the subject of the complexity and cost of the Bill, the Exchequer Secretary left us entirely without answers about how it will work. In order to illustrate its complexity, I highlighted that he has today moved a poorly drafted clause that will see a Welsh Tory Member of the European Parliament who does not live in Wales and who does not have a residence of any description in Wales, but who lives in England, designated as a Welsh taxpayer. The logic of that is entirely lost on me, but I should have thought that he would want to check who his European Members are in Wales and where they lived before he determined that they would get a tax break—in her case, a £700 tax break—were his Government to do what the Secretary of State for Wales has suggested and cut all the tax bands in lockstep by 1%. That is the tax cut that she would get in Wales, despite the fact that she does not actually live in Wales.

[Jonathan Edwards]

The hon. Gentleman’s point about Kay Swinburne is an interesting one. Based on that, where does he expect that Stephen Kinnock will pay taxes should he be successful in winning Aberavon? Would it be in Aberavon, in Copenhagen or where he pays tax at the moment, in a tax haven in Switzerland?

[Owen Smith]

rose—

Wales Bill

Debate between Owen Smith and Jonathan Edwards

Monday 31st March 2014 Commons Chamber

[Owen Smith]

That is not inevitable at all. I shall discuss the issue later in my speech, when I will answer the hon. Gentleman in full.

[Jonathan Edwards]

In Scotland, the hon. Gentleman’s party proposes to devolve responsibility for 40% of the Scottish block grant in terms of tax revenues. How does that sit with the doomsday scenario of tax competition that he has just outlined?

--- Later in debate ---

[Owen Smith]

We will take not a single lesson from any Government Members about how to provide for the most vulnerable people in Britain, because this Government have left people in Wales £1,600 a year worse off and they have overseen the largest reduction in living standards since the 1870s. The last time living standards fell this far was during the time of the Paris commune and the Franco-Prussian war—that is how disastrously this Government have handled the economy in Wales. We will take no lessons—absolutely none—from them.

Given the opportunity, we would put a different question with regard to income tax varying powers for Wales, and we will seek to amend the Bill in order to do so. It would be different in two regards. First, as several Members have suggested, we would increase the amount of money by which tax might be reduced in Wales from 10p to 15p. The two reasons for doing so are very simple. First, we believe it would increase borrowing, given the causal link the Government are drawing between the volume of taxes and the amount of borrowing. Secondly—I would have thought that Members from the nationalist party in Wales would be pleased with this—it would provide a far neater degree of symmetry between what we are proposing for Wales and what we are proposing for England. We remain concerned that constant chipping and changing of the constitution, which the current Government seem keen to allow to continue, is not in the interests of the stability of Britain or Wales. We will seek to legislate to introduce symmetry between Wales and Scotland, both on the model of devolved powers and on taxation.

[Jonathan Edwards]

We welcome the fact that the hon. Gentleman is proposing to increase the level of income tax, but my understanding of what he said over the weekend is that he wants to keep the lockstep but remove the ability to vary the rate up or down such that it would only to be able to move up. Would he, therefore, label his new policy “lockstep-plus”?

[Owen Smith]

No, I would label it as a progressive change and I will explain why we feel the need to introduce such a change.

The second way in which we would change the question relates to our concerns about the fact that this Tory Government and an increasingly right-wing nationalist party in Wales are proposing to cut the top rate of tax. [Laughter.] Nationalist party Members laugh, but the economic adviser to their leader says he wants to cut only the top rate of tax. I do not know what we are meant to conclude from that, but it sounds pretty right wing to me. An alliance between the nats and the Tories in Wales seeks to reduce taxes just for the wealthiest, but we feel that that would be entirely out of step with the progressive values of Wales. That is why we will give the Welsh Government the ability to set a progressive rate for Wales, to guard against further Tory tax cuts for the wealthiest and to ensure that those Welsh values of social justice and fairness in taxation can be preserved by the Welsh people in the event of the Tories wishing to increase the injustice and unfairness of the tax system in Wales and across Britain.

Finance (No. 4) Bill

Debate between Owen Smith and Jonathan Edwards

Wednesday 18th April 2012 Commons Chamber

[Owen Smith]

The word “uncertain” is used so many times in the various documents that I have lost count. In fact, I must apologise to the Committee. On Monday evening, I said, perhaps with my dander up, that there were three instances in the HMRC document of the words “uncertain” or “uncertainty”, when there are in fact 32 such references—one for just about every page. I shall read out some excerpts from the document later.

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

The reason that amendment 6 was not selected for debate was that the House had already divided on that matter. Unfortunately, the hon. Gentleman’s party abstained on that occasion. On his amendment, it is my understanding from the Clerks that there must be an additional rate in the Bill. Is there not therefore a danger that the Government could use his amendment to drop the top rate of tax to 40p, thereby creating a tax break on a tax break? Several Members made that point on Monday.

[Owen Smith]

I suppose that there is a risk of that happening, because the Chancellor has wanted to reduce the rate to 40p all along. He might even want to go lower; perhaps we will get an indication later of how low he and his Ministers think they can go on income tax. With respect to the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), the reason that he gave was not the reason that his amendment was not selected. It was not selected because it is only the Government who can choose to put up taxes—

--- Later in debate ---

[Jonathan Edwards]

It is a pleasure to serve under your chairmanship this afternoon, Mr Hoyle, and to contribute to the debate. I shall speak to amendments 7 and 76, in my name and that of the hon. Member for Foyle (Mark Durkan), relating to the cut in the additional rate of income tax, and consequential amendments. I intend to press amendment 76 to a Division at the appropriate time unless, of course, it is accepted by the Treasury.

Despite heavy lobbying over the past year to remove the 50p additional rate of tax, the switch to a lower rate of 45p was one of the more surprising announcements in the Budget last month. It had been assumed by many that the Government mantra of being “in it together” meant that it would be politically necessary to show that all parts of society were paying more tax and facing the same level of public service cuts. Many therefore assumed that the 50p rate would be with us for at least as long as the Government maintained their plan A for cutting the deficit. After all, pressing issues such as Barnett formula reform have been conveniently parked in the name of the war on the deficit.

For my party, the issue is a matter of principle, irrespective of the timing and the state of the wider economy. Those with the broadest shoulders should bear the burden of taxation. A progressive taxation system based on the Scandinavian model is part of our political DNA. Someone who earns at the additional rate of £3,000 of taxable income per week is clearly in that category. Only a handful of people who earn that kind of money reside in my constituency. We therefore support the maintenance of the current 50p additional rate.

As I made clear in my speech on Second Reading on Monday, my opposition to this tax cut is on the record, as I voted against it during the Budget votes last month. The income tax rates for 2013-14 were one of the founding resolutions of the Budget, and offer very little scope for change today. My amendment 6, which would mean that the additional rate would be 50%, appears on the amendment paper but was not selected.

Hon. Members can therefore imagine my surprise that the official Opposition did not join my colleagues from a variety of smaller parties in opposing this measure on 26 March. That was the vote against a cut in the additional rate, but the Labour party unfortunately abstained, apart from two honourable exceptions. The hon. Member for Leeds West (Rachel Reeves) representing the official Opposition kindly allowed me to intervene on her during the debate on Monday. I asked her to confirm whether this was a deliberate or a tactical abstention. Her response was that the Opposition had voted against the whole Finance Bill and that was sufficient.

The hon. Lady’s answer would have been a semi-appropriate response, were it not for the fact that, if my memory serves me well, her party divided the House on resolution No. 8 on higher income benefit. Clearly, some resolutions were more important than others that evening.

[Owen Smith]

Just to clarify, as my hon. Friend the Member for Leeds West (Rachel Reeves) made plain, we had already voted against the whole Bill. There was a further reason for not supporting the hon. Gentleman’s amendment, which was that unfortunately it would have wiped out all the rates of taxation, not only the 50p rate.

[Jonathan Edwards]

I am sure the hon. Gentleman read the leaked e-mails from Labour insiders the following day, which were widely reported on the Guido Fawkes blog and which indicated that this was a major balls-up—excuse the pun.

Regional Pay (Public Sector)

Debate between Owen Smith and Jonathan Edwards

Tuesday 10th January 2012 Westminster Hall

[Owen Smith (Pontypridd) (Lab)]

It is a pleasure to speak under your chairmanship for the first time, Mr Chope; happy new year.

I, too, offer my congratulations to the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) on securing this important debate, which, as he has rightly pointed out, will be one of the defining debates in respect of economic policy over the coming period. He made a series of telling and well argued points. It was slightly ironic to hear a nationalist Member of the House arguing in effect in favour of collective bargaining on a national, British basis right across the UK. Nevertheless, it was a very interesting point.

[Jonathan Edwards]

I make no apologies for what I said, because at the moment sovereignty over these issues resides in this place, and as someone who has been sent here to represent the ordinary working people of Carmarthenshire, I will continue to do so as long as that is the case.

[Owen Smith]

I am grateful to the hon. Gentleman for that intervention and pleased that he makes no apologies for what he said. I entirely agree with the arguments that he made in respect of solidarity and collaboration right across the UK for people who have similar interests across Britain, whichever area of the country they live in. I wholeheartedly share his views about that, which is why I am a Unionist, not a nationalist, on today of all days.

I congratulate the hon. Member for Arfon (Hywel Williams), my hon. Friends the Members for Newcastle upon Tyne Central (Chi Onwurah) and for Sedgefield (Phil Wilson), who made a powerful speech, and of course the hon. Member for Montgomeryshire (Glyn Davies), who I am delighted is taking up the challenge of telling the Secretary of State for Wales and the Chancellor of the Exchequer that we need a proper review to address this very complex issue—as he described it—as opposed to a couple of private letters to the heads of the national pay review bodies.

Public sector workers must wake up every morning wondering what this Government will do to them next. We have seen the continuing pay freeze; we have seen additional cuts in wages when inflation is taken into account for the next two years; we have seen the 3% additional effective cut in wages as a result of the changes in public sector pensions; and 710,000 public sector workers, up from the 400,000 previously admitted to, are waiting to see whether they will be in a job at the end of this spending period.

Against that backdrop, there was the bombshell in the Chancellor’s autumn statement that regional pay will be re-examined. The Chancellor said that the evidence suggests that regional pay should be considered, because there are disparities between pay bands in the public sector across the UK. As we know, the Chancellor is very keen on evidence-based policy, so I thought that I would assess the evidence in respect of regional pay to date, because we have some experience of it.

London weighting is well established. It is a means of trying to deal with the problems, particularly in respect of housing, for people working in London on lower public sector wages. The previous Government sought to expand that by looking at key worker status and further help for key workers in London. As several hon. Members have said today, and as the Chancellor said repeatedly when he appeared before the Treasury Select Committee, we also have the experience of the Courts Service. However, the Chancellor has been slightly less than fair with the facts in respect of the Courts Service. The fact is that the Courts Service changes that were introduced in 2008—the previous Labour Government introduced zonal pay and five zones across the UK—were a significant improvement on the disparities that existed hitherto. The Courts Service came together in 2005. There was a merger involving the magistrates courts, the county courts, the Crown court and the Supreme Court. Before that point, more than 50 rates of pay were being applied across the Courts Service, so we went from 50 to five. The reality is that despite protestations by some of the unions at the time, most members happily opted into that service; indeed, more than 95% did so.

Opposition Members, who believe in evidence-based policy, would like the Government properly to review the experience of workers in the Courts Service. They should consider retention, rates of pay and the way in which the system has facilitated movement or otherwise across the country, and bring that to the table as part of the evidence for the current proposal.

--- Later in debate ---

[Owen Smith]

The hon. Gentleman knows that I was not in the House in 2008, but as far as I am aware, we introduced the policy in the Courts Service and there was further consideration. The former Prime Minister, my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), certainly talked about regional pay, but we did not introduce it in other areas. At the end of our period in government, there had been some experimentation in respect of the Courts Service, but we did not introduce the policy elsewhere.

Let us look at what happened at the Courts Service and consider where we go from here, because there are significant risks. At the time, the Government, and certainly the Treasury, understood that there were risks. My hon. Friend the Member for Sedgefield has mentioned the Treasury paper in 2004-05, which stated that

“extremely devolved arrangements are not desirable. There are risks of workers being treated differently for no good reason. There could be dangers of leapfrogging and parts of the public sector competing against each other for the best staff.”

That takes us to the motive: why have the Government now decided to bring this forward? If it was not a good idea a few years ago, why is it a good idea now? The reason is, of course, found in the two issues that they have with the public and private sectors. First, they believe in a totally outmoded, almost Manichean split—the public sector is bad, bloated and inefficient and the private sector is good, lean, hungry and eager to work. That is their understanding.

Secondly, the Government have a thoroughly outmoded notion that cutting the public sector and effectively forcing people to transfer to the private sector—through actively cutting jobs, as we heard was the strategy in the Budget, or through reducing regional pay, as we now hear might be the strategy—will somehow inflate the private sector. There is absolutely no evidence to support that. It is a totally misguided prescription, and one I fear that the Government will repeat.

The Treasury has said that the reason for looking at getting rid of national pay bargaining is to produce

“an economic reform to boost regions of the economy that are over-dependent on the public sector. All the evidence is that flexible public sector pay to reflect local labour market conditions will allow the private sector to flourish.”

Show us the money and show us the evidence, because we cannot see it at the moment. We can see a pamphlet with a lot of inflammatory language about the Manichean split between the fat public sector and the lean and hungry private sector from a think-tank which is pretty close to the Prime Minister and which some would say is a free-market, right-wing organisation, but apart from that I do not see a lot of evidence to support the position.

I suspect that the Minister will come out with some inflammatory comparisons, but I hope that she will not. We have heard so often about paramedics earning 16% more in the public sector than in the private sector, and I hope that we will not hear such unnecessary and unfair comparisons now. As the Institute for Fiscal Studies itself has said, such comparisons do not take into account the fact that there are invariably older and more experienced workers with better qualifications in the public sector. When such factors are taken into account, the differential between the public sector and their private sector counterparts is perhaps only 2%.

[Jonathan Edwards]

The hon. Gentleman makes a very important point. This morning, the Bevan Foundation responded to the debate by stating that the IFS figures do not compare like with like and that it is deeply misleading to use the figures in that way.

[Owen Smith]

I entirely agree. The evidence is shaky and a leap of faith is required—just as we were meant to believe that cutting the public sector would lead to a flourishing private sector. As we have heard, there is no reasonable basis for making that leap of faith. On job creation in the public versus private sector, we learned that in the last quarter, for every 13 jobs lost in the public sector, only one was created in the private sector. That is the reality of what is happening in the economy. We should not take, with any degree of faith, the Government’s reassurances that changing regional pay will make a key difference.

On both sides of the House, we have come to understand that fairness is an important theme in modern politics. In politics, we seem to be tussling daily over who can be the fairest, and the Government have to stand against the test of fairness on this issue. They need to answer the question whether it is fair to target public sector workers once more to pick up the bill for a crisis in our economy that they did not cause. Is it fair for the Government to implement a policy that will once more impact disproportionately on less affluent areas that have greater health problems due to the legacy of heavy industry and other issues? Is it fair to implement a policy that will suck demand out of their economies and further reduce the incomes of people living there?

The Government have a manifestly failing economic strategy to reduce the deficit that has led, on their admission, to an increased level of borrowing— £158 billion extra is being borrowed as a result of the their policy. That is why they are thrashing around looking for extra savings and why they are countenancing further unfair and destructive measures. They need to think hard about the policy, conduct a proper review and provide evidence to substantiate their dangerous claims.

Severn Crossings Toll

Debate between Owen Smith and Jonathan Edwards

Thursday 19th May 2011 Westminster Hall

[Owen Smith (Pontypridd) (Lab)]

This, again, has been an interesting and worthwhile debate—certainly worth while from my perspective, not least because it gives me the opportunity to say that I, too, find it utterly inexplicable that my right hon. Friend the Member for Torfaen (Paul Murphy), the former Secretary of State for Wales, for Northern Ireland and for Wales again, is not in the other place. However, it is a delight for us to be able to enjoy his wisdom for a few more years in this House.

The Severn bridges are a hugely strategic part of the infrastructure of Wales. The Select Committee report was extremely timely because it addressed, as we have not seen addressed in the House, that question of their strategic importance. Furthermore, important post-2017 decisions, to which hon. Members referred earlier, beckon whichever Government are in power when the bridge comes into public ownership.

I hope that the Government learn from some of the things revealed by the report, which affords us an opportunity to be taught about how important infrastructural developments, such as the second Severn bridge, might be financed in future. That development came at the outset of the debate on private finance initiatives—very different PFI structures are put in place for infrastructure these days—but, clearly, lessons can be learned, in particular about the contractual nature of the agreement made between the Government and whoever is developing things.

The report gave us the opportunity to explore, although not really get to the bottom of, the economic impact of the bridge tolls on Wales. My hon. Friend the Member for Swansea West (Geraint Davies) talked at length about the inevitable economic consequence of what I think we all agree is a high toll, obliging people looking to trade and travel across the bridge to commit extra resources. That must, at some level, be an impediment to developing trade between Wales and England and to developing the Welsh economy.

[Jonathan Edwards]

The policy of the previous Welsh Government was to seek responsibility for the bridges at the end of the concessionary period. Can the hon. Gentleman inform the people of Wales what the policy of the new Welsh Government is? If the rhetoric of standing up for Wales is to be believed, surely gaining control over the main supply route into Wales would be a main objective.