Government Policies (Wales)

Debate between Owen Smith and Wayne David

Wednesday 26th November 2014 Commons Chamber

[Owen Smith]

I will make a little more progress and then give way.

However, devolution does not show that, of itself, even with a Labour Government in Wales, it can fully inoculate Wales against the virus of Tory economics. Unfortunately, the “trickle-down” belief of Tory economics that wealth will be spread by favouring the people who already have the most and punishing those with the least is demonstrably leading to lower living standards in Wales. In a moment, I will enumerate some of the symptoms of that virus that we can see right across Wales.

[Wayne David (Caerphilly) (Lab)]

My hon. Friend knows that today the Welsh Government have published their latest index of multiple deprivation, which shows that Lansbury Park estate in Caerphilly is now the most deprived community in Wales. Does he share my anger at that fact? Does he agree that nothing shows more clearly the real impact of central Government policies on poor communities in the south Wales valleys?

[Owen Smith]

I do share my hon. Friend’s anger, and I will express it here today. I also express my anger that Government Front Benchers laugh when we hear of the scale of the poverty that is still being visited on people right across the country.

Wales Bill

Debate between Owen Smith and Wayne David

Tuesday 6th May 2014 Commons Chamber

[Owen Smith]

From a sedentary position, the Exchequer Secretary draws a distinction between the higher rate and the top rate. I fully accept that what I mean is the higher rate, by which I mean the 40% rate, as opposed to the additional rate of 45%.

[Wayne David]

Does my hon. Friend agree that the essential point is that, although we have asymmetrical devolution in the United Kingdom—there is a great deal of variation between the devolution settlements in Scotland, Wales and Northern Ireland—we still have one British economy? Having variation is one thing, but having huge divergence is something else altogether.

[Owen Smith]

The essential point we are making is that we, unlike the Conservative party, are not in favour of tax competition. We are not in favour of one part of the UK undercutting another, but the Secretary of State and the Tory party are. It is very simple.

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[Owen Smith]

Absolutely; Silk said precisely that. I am saying today for the clarity of the Committee that we believe that the current Government employed the argument for party political purposes. They attempted to stop the Welsh Government doing what they wanted to do, which was to maintain the Agricultural Wages Board for Wales. That would have had significant benefits for some of the lowest paid workers in Wales. On that basis, I believe we can say firmly that Wales would be better off if we moved to a reserved powers model, with the greater clarity and additional safeguards that it would bring.

Finally, Madam Chair—[Interruption.] I beg your pardon, Sir Roger; I did not see you slip into the Chair, but it is a great pleasure to serve under your chairmanship once more. On the background to these clauses, we did not have much chance to discuss the so-called fair funding lock. The ability of the Welsh Labour Ministers in Cardiff Bay to determine whether they think the funding settlement for Wales is fair and adequate, in advance of their moving to adopt any of the powers of income tax—or any of the other taxes—is an important test. I hope that the Government will rise to that challenge at some point in the future.

[Wayne David]

I rise to support amendment 7. I recognise that it is a probing amendment, but it is nevertheless important to discuss the volatility of stamp duty land tax revenues in Wales. I will also speak to amendment 43 and the need to move to a reserved powers model for the National Assembly for Wales. I am aware that those two issues are not really related, but both are in this group of amendments, and in my view both are extremely important.

As the Silk report states, stamp duty land tax is a “relatively volatile tax”. Indeed, as the director of CBI Wales said only last year, SDLT raised about £210 million in Wales in 2007, but only £115 million in 2008-09. That is a relatively small amount, accounting for about 2% of the Welsh block grant, but a variation from £115 million to £210 million in two years is not insignificant. As Silk himself stated, the devolution of stamp duty land tax could pose potential risks for the Welsh budget.

Let me be clear: I am in favour of the devolution of stamp duty land tax, but I would like reassurance from the Minister about precisely how that volatility will be managed. The essential point is that devolving SDLT has consequences for the block grant, which would be reduced by the amount of SDLT collected in Wales. I would like a fuller and clearer explanation from the Minister about exactly how the block grant offset will be determined. Will borrowed resources be used to meet any shortfall when the receipts from land tax are less than expected? Does the Minister agree with the Silk report that the value of the deduction should be decided between the UK and Welsh Governments, and not by the UK Government unilaterally? I suggest that the deduction should take into account the volatility of the tax and the forecast revenue in Wales. I would therefore like specific reassurances from the Minister that these admittedly esoteric but nevertheless extremely important issues will be clearly addressed, so that we know precisely what we have before us.

My second point is about whether we move from a conferred powers model of devolution for Wales to a reserved powers model. In my view, there is no perfect model of devolution. In Northern Ireland and Scotland there is a reserved powers model, but—let us be honest—those models have their problems. We will all have heard about Scotland and Antarctica. For those who are not au fait with that problem, there was an issue of whether Antarctica was included in the devolution model for Scotland. It was not on the reserved powers list, and therefore the assumption was that it was devolved to Scotland in issuing licences and permits for people to operate in Antarctica when they were based in Scotland. Of course, that was an oversight by drafters, and it was put right retrospectively. I simply cite that example to show that there is no perfect model of devolution. We can cite other difficulties that arose when Scotland adopted the reserved powers model, but the fact that no model is perfect does not mean that a reserved powers model for Wales would not be a huge step forward. It would be a huge step forward, because we have heard—very eloquently—from the shadow Secretary of State about numerous examples of issues that have been taken to the Supreme Court by the Wales Office. At root, the problem is a lack of clarity, which would not exist if we had more clearly defined the reserved powers model.

We are all concerned about the Conservative party’s determination to prevent the Welsh Government from introducing measures to protect Welsh agriculture workers, and the case for moving to a reserved powers model has been well put by the UK’s Changing Union project. Under the title “The benefits of a ‘Reserved powers’ model of devolution”, it said:

“A ‘Reserved powers’ model of devolution would benefit Wales and the UK as a whole. A ‘Reserved powers’ model would provide much greater clarity about the legislative powers of the National Assembly for Wales. This will benefit civil society organisations, politicians, civil servants and the general public—in short the democratic process as a whole. A ‘Reserved powers’ model would place the relationship between Cardiff and London on a more stable, adult footing and help reduce the number of unnecessary disputes”—

which have been alluded to already in this debate—

“between the two levels of government. A ‘Reserved powers’ model of devolution for Wales would place Welsh devolution on the same footing as devolution for Scotland and Northern Ireland making it far more likely the UK will be able to develop more effective mechanisms to manage intergovernmental relations between central government and the devolved territories.”

That is an effective summation of the strong case for moving to a reserved powers model. I emphasise that there is no ideal model of devolution. Inevitably, devolution is a dynamic, but if we had this model, it would be far better than what we have at the moment.

Wales Bill

Debate between Owen Smith and Wayne David

Monday 31st March 2014 Commons Chamber

[Owen Smith]

No, I was not saying that for a moment. I was saying that I thought that the people of Wales looked askance at losers standing on two separate tickets— first past the post and on the list—to get themselves elected. We have seen why the Opposition oppose that; we believe in democracy and we believe in democracy being seen to be done. We also know why the Government want to reintroduce it in Wales and to allow people to stand both under first past the post and on the list. That reason is captured clearly in the explanatory notes to the Bill, which say explicitly that the measure will benefit smaller parties with a smaller pool of candidates—that is, the Tory party in Wales.

[Wayne David]

Does my hon. Friend agree that the proposed change is in danger of giving the impression that there is somehow a political elite whose members are nevertheless elected even when they lose elections?

[Owen Smith]

That is precisely the impression that it gives. The rationale, as I say, is very clear. The policy only benefits the minority parties in Wales—the Tory party, of course, is a minority party in Wales. It specifically benefits Leanne Wood, the leader of Plaid Cymru in Wales, who intends to stand under first past the post and on the list. I put it to the Secretary of State that the people of Wales will not look well on his gerrymandering elections in Wales in this fashion.

Coalfield Communities (Regeneration)

Debate between Owen Smith and Wayne David

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.