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Legislative Programme and Budget Statement (Wales)

Indeed. The hon. Gentleman makes a good point, which I will address in a moment. On Sunday, The Observer reported a study by leading economists that finds that the poorest families in Wales will lose 21.7% of their household income as a result of the Budget and the public spending cuts—more than a fifth of their income. Even worse, they are being hit fully six times harder than the richest families. That was the first such study to take account not just of the tax and benefit changes proposed in the Budget and elsewhere, but of savage cuts in public spending. In other words, the poorest lose a fifth of their income and, even worse, they are being hit fully six times harder than the richest residents in Wales. Not only will pensioners pay more in VAT, but they were shamefully excluded from the much-vaunted £1,000 rise in the basic tax threshold. Perhaps that is something on which the hon. Member for Brecon and Radnorshire and his colleague can table another amendment—he would have enthusiastic support from Labour Members. Pensioners did not benefit from that so-called fair tax change insisted on by the Liberal Democrats; they are excluded from it. Welsh pensioners have suffered a double attack through VAT going up and their not getting the increase in the tax threshold. Increasing VAT to 20% will affect everyone, most of all pensioners and those in poverty. The Financial Times has said that areas such as Wales that rely most on the public sector will be hit hardest by the deep cuts in public spending that have been announced. Worse still, those big cuts are based on a big lie: that the public finances are so terrible that the cuts must be faster and deeper than Labour’s tough deficit reduction plan, which would have halved borrowing within four years. The Prime Minister and the Chancellor have been deliberately scaring the public, with the Liberal Deputy Prime Minister and his Business Secretary joining in enthusiastically. However, as the Government’s own Office for Budget Responsibility said two weeks ago, the situation they inherited is actually better than what was forecast as recently as Labour’s Budget in March. Borrowing is £9 billion lower this year and would have been £22 billion lower over the coming four years; growth is higher and unemployment is lower; business bankruptcies and home repossessions are running at half the rates of the 1980s and 1990s, during Tory recessions—all because of Labour Government actions and investment to support jobs, businesses and struggling home owners, which have left Britain much better placed than America or the rest of Europe to recover from the worst global recession for 80 years. These brutal cuts are not ideological or economic—the new Con-Dem Government are not cutting savagely because they need to. They are cutting savagely because they want to. One thing has certainly changed since Labour left office: the eurozone countries, especially Greece and now Spain and Portugal, are today in real difficulty. Without Labour’s progressive influence, fiscal conservatism is now dominant in Europe—it is running riot—with huge cuts on the way in public investment and jobs. As President Obama has warned, that endangers world recovery. It also means a downturn in the very European markets where the vast majority of our trade takes place. Now is precisely the moment not to cut public spending savagely, because it will put at risk the still fragile British recovery. Cutting deeper and faster repeats the mistakes of the Tory Governments of the 1930s, 1980s and 1990s. We are coming out of recession, but our economy and the economies of many countries around the world have not fully recovered. Our recovery is fragile, and the global recovery could easily be derailed. Only Governments can step into the breach during such difficult times. Cut off that support and the risk is palpable. The private sector is not yet robust enough to replace Government investment, nor is it getting anything like the support delivered by Labour. John Maynard Keynes—a signed-up Liberal—will be turning in his grave, not just at this damaging folly, but at the manner in which the Liberal Democrats have breathtakingly somersaulted, trading the tens of thousands of jobs that will be lost in Wales and the hundreds of thousands of jobs that will be lost across Britain for their own jobs in government. The Deputy Prime Minister, the Welsh Liberal Democrat leader Kirsty Williams and even the once-saintly Business Secretary are now arguing the precise opposite of what they did during the election campaign only a few weeks ago. Big cuts based on a big lie—a real tragedy for Wales. There are two big challenges facing Wales: first, how to secure jobs and growth; and secondly, how to get borrowing down in a way that is fair to everybody. The new Government’s first Budget has failed the fairness test and goes back to the same old Tory, right-wing agenda of attacking pensioners, hitting people on low incomes, causing unemployment to rocket and making our hardest-working families pay the price. The only difference is that, this time, the Budget is defended to the hilt by the Liberal Democrats. What we have from the Con-Dem Government is a strategy for cuts, but where is the strategy for growth—the lifeblood of this country? Growth is essential to secure a future for ourselves and our children. Without growth, Wales will be condemned to years of decline.