Autumn Budget as it Relates to Wales (Morning sitting)

Simon Hoare Excerpts

Wednesday 7th February 2018 General Committees

[Alun Cairns]

My right hon. Friend will recognise that this is a dynamic environment and costs in the energy industry are changing at various stages. Indeed, there has been a significant change in energy costs since this project was first proposed.

[Simon Hoare (North Dorset) (Con)]

My right hon. Friend will remember as acutely as I do the debates about the merits and demerits of the Cardiff bay proposals in the ’80s and early ’90s. I am sure we all accept the need to make an economic case and to ensure value for public money, but does he accept that the message that the tidal lagoon proposal sends about a commitment to renewable energy and to the industrial base of Wales is very strong? That must be taken into account when making the economic assessment of the proposition.

[Alun Cairns]

I absolutely accept my hon. Friend’s point. Ultimately, however, the project must prove to be value for money because otherwise taxpayers will risk paying more than they would for an alternative source of energy, in addition to pushing up consumer prices. Two years ago, we were considering the crisis in Tata Steel, which is adjacent to the proposed site for the Swansea bay tidal lagoon. One of Tata’s core concerns was the rising cost of energy. It is not in anyone’s interest for a project to go ahead that risks driving up energy costs. It is therefore only right that we scrutinise this project to establish whether it provides value for money, as is believed.

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[Christina Rees]

Yes, I agree wholeheartedly.

[Simon Hoare]

I thank the hon. Lady for giving way, and her colleagues for keeping the seats they picked up in June warm until we pick them up next time. She has been very good at explaining how her party would spend and spend—one can only assume it would be by taxing and taxing, and borrowing and borrowing. Does she not accept that one of the first duties of the UK Treasury is to try and make sure that we live within our means, balance our books and set the framework for economic growth to deliver the taxes to pay for the services?

[Christina Rees]

Eight years of cuts and where has it got us? Your policies have driven up the debt. I really do not see where you are coming from.

--- Later in debate ---

[Jonathan Edwards]

Mae’n anrhydedd enfawr i wasanaethu dan eich arweinyddiaeth chi, Mr Owen, yn enwedig yn siarad, am y tro cyntaf, yn iaith y nefoedd. Rwyf yn gobeithio y bydd yr egwyddor yma yn cael ei ymestyn i Bwyllgorau eraill y Tŷ yma—er enghraifft, y Pwyllgor Materion Cymreig dan arweinyddiaeth yr Aelod anrhydeddus dros Fynwy.

Rydym yn cyfarfod i drafod Cyllideb enbyd o siomedig. Roedd dadansoddiad y Swyddfa Cyfrifoldeb Cyllidebol, a ddaeth yr un adeg â’r Gyllideb, yn wirioneddol ddiflas, gyda rhagolygon wedi eu hisraddio ar gyfer buddsoddi gan fusnes, cynhyrchedd a thwf economaidd—a hyn am yr ail Gyllideb yn olynol.

Mae’n glir bod yr athroniaeth o gywasgu ariannol ymledol—expansionary fiscal contraction—a ddilynwyd gan y Trysorlys ers 2010 wedi methu yn llwyr. Holl bwynt llymder a thorri yn ôl ar fuddsoddi cyhoeddus oedd y dylsai fod wedi arwain at gynnydd enfawr mewn menter a buddosddi preifat.

Ynghyd â’r toriadau mewn buddsoddiad seilwaith, y gwrthwyneb sydd wedi digwydd, fel y gwnaethom ni rybuddio dro ar ôl tro—a hyn oll gyda’i gilydd yn arwain at lefel cynhyrchedd cronig. Yn wir, lefelau cynhyrchedd cronig y wladwriaeth Brydeinig oedd prif stori y Gyllideb.

(Translation) It is a huge privilege to serve under your chairmanship, Mr Owen, particularly while speaking the language of heaven for the first time in the House. I hope that this principle will be extended to other Committees of the House, such as the Welsh Affairs Committee, which is chaired by the hon. Member for Monmouth.

We meet today to discuss the dreadfully disappointing Budget. The OBR’s analysis was truly depressing: for the second Budget on the bounce, it downgraded forecasts for business investment, productivity and economic growth. The philosophy of expansionary fiscal contraction pursued by the Treasury since 2010 has completely failed. Austerity and cuts to public investment were supposed to lead to a bonanza in private enterprise and investment—that was the whole point—but of course, as we consistently warned, the reverse happened, together with cuts in infrastructure investment. All that led to chronic productivity levels—indeed, that is main story for the UK.

The chronic productivity challenge that the UK faces was the major issue in the Budget. The situation that we find ourselves in was of course totally foreseeable.

Y canlyniad yn y pen draw yw bod y Trysorlys wedi colli ei dargedau dyled gan filltiroedd. Roedd hyn i fod dan reolaeth erbyn 2015—bwriedid iddo fod yn brosiect bum mlynedd—ond mae’n edrych fel petai cywasgu ariannol pellach am barhau tan ddiwedd y ddegawd nesaf. Ni fydd haneswyr economaidd y dyfodol yn garedig iawn i’r Llywodraeth Brydeinig.

Rydym yn gwynebu cenhedlaeth goll o ran safonau byw, gyda’r wasgfa fwyaf ers rhyfeoloedd Napoleon yn debyg o barhau tan o leiaf 2025, yn ôl y Resolution Foundation. Mae’r sefyllfa yma wedi cael ei greu, wrth gwrs, gan y cwymp mewn sterling.

(Translation) The end result was that the Treasury missed its debt and deficit targets by a country mile. That was all supposed to be under control by 2015. It was supposed to be a five-year project, but it looks like further fiscal contraction will now continue until the end of the next decade. Economic historians of the future will not look kindly on the UK Government. We face a lost generation in terms of living standards. According to the Resolution Foundation, the biggest squeeze since the Napoleonic wars is likely to continue until at least 2025. Of course, that came about as a result of the collapse of sterling.

According to economists, the collapse in the currency represents the least successful devaluation in history. Unlike the devaluation in China, which was driven by the People’s Bank of China to make the manufacturing sector competitive, the devaluation of sterling was a direct result of markets betting against the currency, which does not reflect well on what will happen following Brexit. The fact that there has been no export boom following the devaluation of the currency—as well as the fact that the currency has not rebounded after more than a year of promises, and with the British Government outlining their position on Brexit—does not bode well for the future.

[Simon Hoare]

Is the hon. Gentleman aware that manufacturing output and exports are at their highest for a decade?

[Jonathan Edwards]

The export boom that would be expected from a 20% devaluation in sterling has not occurred. That is the factual reality of the situation. The fact that the currency is not rebounding, despite the British Government apparently outlining what they want from the Brexit negotiations, indicates that the markets are betting against the British Government.