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The Budget

The legacy of 13 years of Labour is that the wealth of Wales, until the banking crisis, grew year on year. There is no question about that. In every respect, the wealth of Wales grew, and poverty was reduced. That is the truth about the Labour Government’s record, at least before the banking crisis. One way that the Government could have eased the squeeze is by reversing January’s rise in VAT on road fuel, which is pushing up petrol prices. That would have helped everybody, especially people in rural parts of Wales. Even after the Budget reduced the cost of petrol by 1p, the VAT rise to 20% on petrol has added nearly 3p to the price of a litre, or £1.35 to the cost of filling up a 50-litre tank. That is a crippling burden to motorists in Wales, especially for those on low and middle incomes. [ Interruption. ] The Secretary of State shows breathtaking complacency—in a way that motorists in Wales bitterly resent—about the impact of the higher fuel prices, and especially, the VAT increase, which was a voluntary decision by the Government. It did not need to be applied. The dramatic rise in fuel prices is punitive and completely indiscriminate, hitting the poorest hardest, because fuel is an essential resource for day-to-day living, in Wales especially. The Budget policy on taxing oil investment was questioned yesterday by the Norwegian oil company, Statoil, which suspended work on new developments off Shetland that were worth £10 billion to the Welsh economy. That is an example of misplaced policies and an unwillingness to go for growth and encourage private sector investment. Better still, the Government could have done what Labour proposed, and repeat last year’s bank bonus tax and use the additional £2 billion raised to support jobs and growth in Wales. We proposed a £600 million youth unemployment fund to help 90,000 young people into work, £1.2 billion to fund the building of 25,000 affordable homes and 20,000 jobs in construction, and a £200 million boost for regional growth funds, all from the additional £2 billion that would have been raised had our tax on the banking bonuses have been maintained instead of cut by the Government. It would have resulted, on a Barnett consequential, of at least £100 million invested in Wales in those three key areas. Last December in the Welsh Grand Committee, I welcomed October’s fall in the unemployment rate in Wales, but noted warnings that the figures might give a false sense of security. Unfortunately, those warnings were only too prescient. Hundreds of thousands of public sector workers are facing redundancy, tens of thousands in Wales. Like HMS Cumberland, they are still on duty and doing sterling service, but counting down the days before being decommissioned by the Government. In Wales, it feels as though we have become the Cumberland sister ship, HMS Cymru, also dumped on the disposal list. The scale of the cuts and the Welsh dependence on public sector jobs is so great that nothing can stop the Welsh economy being hit hard. Neither Offa’s Dyke nor devolution can form an effective barrier against the onslaught of coalition Government cuts that is about to hit the economy in Wales, at the head of which is the Secretary of State.