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Legislative Programme and Budget Statement (Wales)

It is a genuine pleasure to follow the hon. Member for Cardiff North. I am sure that the whole Committee welcomes the remarks that he made about his predecessor, Julie Morgan. He has graciously done that on several occasions. It is also good to hear in this place from a one-nation Conservative—from Wales, as well. I will be brief, because of the time constraints following several interventions and long speeches by Front Benchers, but like the hon. Member for Dwyfor Meirionnydd, I want to start by welcoming—genuinely—some of the measures in the Queen’s Speech, particularly the energy and green investment Bill. There is consensus among all the parties in the House of Commons on the desirability of a green investment bank. I want that to succeed, and I will support it. There is currently a debate in the Chamber—we cannot be in two places at once—on energy efficiency, which will form the core of that Bill. Again, how can we be against energy efficiency measures? Such policies have been developed by the National Assembly, and in Wales we will benefit from what we can achieve together here and in the National Assembly. I also agree with the hon. Gentleman on the Equitable Life payments scheme Bill, which I hope is taken forward. In the previous Parliament, the Conservatives—I joined them on occasions—said that they would rapidly implement the ombudsman’s recommendations on compensation. There was to have been a quick resolution after the general election, whichever party won, but I hope that the Bill will now be pushed through. I also welcome some of the remarks the Chancellor made in the Budget statement about helping business outside south-east England. I am not sure how that will work or how companies will benefit from the national insurance measures, but I think that companies might benefit, as they might from a further reduction in corporation tax. Corporation tax was reduced in the previous Parliament, and we need more reductions in the future. I have put this point to the Chief Secretary, but the change to the fuel rebate is a sensible idea, on which I have campaigned for several years. It is unfair that one company sells petrol at considerably dearer prices in rural areas of the United Kingdom. I am concerned about the regressive nature of the Budget, however. The 2.5 percentage points increase in VAT will wipe out any possible rebate on fuel, which will hurt rural areas very badly. There is no doubt that the Budget is regressive. The Government say that it is tough and fair. Well, they are half right—it is tough, but it will not be fair. I will not go over the comments made by my right hon. Friend the shadow Secretary of State, who referred to articles in The Observe r. Now that many organisations and experts have had time to examine the Red Book and the Budget measures, it is clear that the poorer will be worse off because of the Budget’s regressive nature. Some families will be six times worse off than the richest, because increasing income tax allowances benefits everybody, but the poorest in society form the highest proportion of those who buy goods, so the VAT increase will clobber them. On debt reduction, the Chancellor is misleading the country when he says that this is the worst debt in peace time. It is not. Historically, we can learn from Neville Chamberlain’s Budget in the 1930s, when debt was 177% of GDP and the interest on that debt was 40%. If we look at the current Red Book, the debt in 2010-11 was 69.1% of GDP—I know that that is high, but it is not as high as in many countries, and certainly not as high as it was in the 1930s—and the interest on that debt is 6.3% of public expenditure. We need to put that into its proper context, and we have to learn from the ’30s, which we—the previous Government—did. The fiscal, global, international, economic crisis of the 1930s saw mass unemployment. We have seen high rises in unemployment, but they have been nowhere on the scale seen in the 1930s because of the fiscal stimulus that the Labour Government introduced. That created the extra burden of debt, but the fiscal stimulus can, I believe, help us to grow out of recession, in addition to raising taxation and making difficult choices and cuts. That triple act is the fairest way of reducing the debt. I still believe that raising national insurance is fairer than raising value added tax. In fact, the Conservatives have kept part of that increase in national insurance, even though they said that they were against it.