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Volume 489: debated on Wednesday 11 March 2009

The Secretary of State was asked—


The manufacturing industry is, of course, very important to Wales. According to the latest available figures, the sector employs about 13.5 per cent. of the Welsh work force.

The manufacturing industry in the UK has taken a very hard hit in the recession, and that is perhaps even more true of Wales. Is the Secretary of State aware of the concerns of many in the manufacturing work force in Wales who work for foreign companies that there may be plans to offshore employment? Examples of such companies include Toyota in north Wales and Corus in south Wales; Corus has a plant in the Netherlands. What discussion has he had with other Ministers, and with the Welsh Assembly, to ensure that that does not happen?

The hon. Lady makes a valid point. I have of course had discussions with my right hon. Friend the Business Secretary, and with the First Minister and Deputy First Minister of Wales. I have also discussed the issue of Corus with the chief executive of Corus. The point that the hon. Lady makes about foreign-owned companies in Wales is well taken, but I have no reason to believe that that will be a disadvantage to us in Wales in the months to come. In my constituency, for example, thousands of people work for car component manufacturers that are American-owned, and so far, so good. Obviously, they are feeling the pinch, like all manufacturing companies, and particularly those in the automotive industry, but I very much take her point on board.

My right hon. Friend and his colleagues in Government should be congratulated on the work that they are doing to get information to small and medium-sized businesses about the various schemes that are there to help. However, the Treasury Committee has been taking evidence in Northern Ireland, Scotland and the north of England, and one of the messages that we are getting back from some businesses is that they are not aware of all the schemes. May I urge my right hon. Friend to contact his right hon. Friends in the Cabinet to ensure that all the information and all the schemes are made available direct to small and medium-sized businesses, so that they can approach the banks, and not wait for the banks to approach them?

Yes. My hon. Friend is of course a distinguished member of the Treasury Committee, and he makes a valid point. The issue of information is very important. The “Real help now” information is available on all Government websites, and on the websites of the devolved Administrations, including the Welsh Assembly Government, but more work is necessary, particularly locally. Most local authorities in Wales are now organising economic summits in their areas. There was one in my area on Friday, for example, and I know that there is to be a summit in the constituency of my hon. Friend the Under-Secretary of State for Wales. Information is best disseminated at the most local level, but I very much take the points that my hon. Friend the Member for Carmarthen, West and South Pembrokeshire (Nick Ainger) makes.

Only yesterday, I received notice that the Newtown factory branch of Trelleborg Sealing Solutions is to cut about 56 jobs, following similar examples at Stadco and Floform. What plans does the Secretary of State have to make sure that the manufacturing skills gap does not widen in Montgomeryshire, and is there potential to divert money specifically into the manufacturing base in mid-Wales, so that we can replace the jobs that we are losing with green jobs in the green economy, which provides both manufacturing opportunities and sustainable economic activity for the longer term?

Yes, and that is certainly a priority of the United Kingdom Government, and of the Welsh Assembly Government, too. It is important that the hon. Gentleman and other Members who represent Welsh constituencies are aware of the various schemes available to businesses in Wales, particularly the ProAct scheme. It is unique to Wales and is very effective. Some 75 applications have now been processed, and 66 of them are from the automotive industry. Ten have been accepted. That represents nearly 6,000 workers, so it is a very real scheme, and it means that real money goes to help businesses such as the one that the hon. Gentleman described. I take the point that he makes about the green industry; that is a priority for both Governments.

Will my right hon. Friend take no lessons from Conservative Members on the impact of the global credit crunch on manufacturing in Wales? Their policies in the 1980s and ’90s decimated manufacturing in Wales, and they show every sign of wanting to repeat those policies. I hope that my right hon. Friend will stand up against them.

I certainly agree that, during the recessions back in the time of Mrs. Thatcher’s Government, the situation was very different. It is most important to understand that we cannot simply sit back and do nothing. The Labour Government here, and a Labour-led coalition in Cardiff, are actually being positive about the help that we can give businesses in Wales. That is something that we did not see before, and I fear that we are not seeing that from the Conservative Opposition now.

The Secretary of State will know that Toyota announced today that it is putting its factory on Deeside on short-time working and its staff on reduced pay. He has already mentioned the importance of the automotive industry to the Welsh economy. Given that importance, does he know precisely when the automotive assistance programme, which was announced with so much fanfare in January, will be implemented? Is it another case not of real help now, but of jam tomorrow?

No; the hon. Gentleman is aware that some of the schemes are to operate at different times. For example, in April at least six schemes are due to go live, including help for the automotive industry. There are other schemes that have already started. I cited to the hon. Member for Montgomeryshire (Lembit Öpik) the excellent ProAct scheme that works in Wales. The schemes are staggered in time scale, but they are about real help for people. The hon. Member for Clwyd, West (Mr. Jones) is right that the delivery of such schemes must be a main priority of Government, whether here in London or in Cardiff. Help is available, and it is up to the industry to apply for that help.

Small Business Support

Businesses in Wales are receiving a high level of support from Governments at both ends of the M4. Small and medium-sized businesses in particular are the lifeblood of the Welsh economy and they make up, as the hon. Gentleman knows, some 98 per cent. of Welsh companies.

With reference to one of those schemes, the enterprise finance guarantee scheme, does the Secretary of State share the concerns of many small businesses across Wales that many of the high street banks operating the scheme are demanding crippling personal guarantees of up to 100 per cent. against homes and assets, even though the Government are guaranteeing 75 per cent.? Whose guarantee is it—that of the banks or of the small businesses of Wales?

Obviously, the guarantees are to the banks in order to ensure that they make effective lending possible, but the hon. Gentleman is right that whether the policy is filtering down to the local level—to the bank managers that we used to have in the old days—is another story. It is important for small businesses that lending starts again. It is also important to understand that banks still have to make commercial decisions. One of the reasons for the mess that we are in at the moment is that banks made the wrong decisions about risk or there was a lack of acknowledgement of risk. There are businesses in Wales that are viable and good and that deserve help. It is up to our banks, together with the help that Government in London and Cardiff give, to make sure that that lending occurs.

Small businesses will be greatly helped if they can recruit people with the skills that they need. At Oakdale comprehensive school I saw for myself last week that young people are being prepared well for the workplace and given good IT skills. What initiatives exist to ensure that we have strong school-business links, so that when we come out of the economic downturn Welsh companies are certain that they will have a strong and skilled work force from whom to recruit?

That is the point, of course. We cannot forget about training and education for the future, for when we come out of the downturn. The initiative at Oakdale is a very good one. I will certainly commend it to the First Minister when I next meet him. It is important that we have a properly trained work force, and our colleges and schools in Wales play a hugely important role in that respect.

Does the Secretary of State not realise that there is a huge disconnect between the rhetoric and the words used at his Dispatch Box and at the business summit public relations exercises that are being conducted throughout Wales, and the reality on the ground, particularly in areas such as Pembrokeshire and west Wales, where small businesses are seeing precious little additional new assistance at this time of recession? Is the Secretary of State aware of the enormous disillusion in the small business community with the promises being made by Ministers and with how little is being delivered?

There is time for rhetoric and there is time for people to pull together to help those who are out of work in Wales. I have not the slightest doubt that the economic summits that we have held—there is one to be held in a few weeks in Swansea—have done a remarkably good job in bringing together from business, industry, the trade union movement and elsewhere all the expertise that we can gather in Wales. It is true to say that it will take time for some of those schemes to start working, but some have already started working. The figures that I have just given the House with regard to ProAct are a good example of that. At least we are trying. I fear that the hon. Gentleman’s party has no ideas at all about how to get us out of the recession. It is much better for small businesses, industry and commerce in Wales to know that both Governments are trying to help them, as opposed to his party, which has said absolutely nothing.

We have heard a lot today about the difficulties and economic challenges that face small businesses. However, the Secretary of State was kind enough to come to my constituency recently and he visited a very successful SME—Tomos Watkin’s at the Hurns Brewing Company. It has been bucking the trend. I am sure that the Secretary of State will join me in congratulating the company on its wonderful successes.

I certainly do. Swansea is a great example of a city with thriving small and medium-sized enterprises as the very backbone of its economy. I visited a number of them with my hon. Friend, and I can certainly commend the excellent beers that Tomos Watkin’s provides.

I do not recognise the problems of small businesses in Wales to which the hon. Member for Preseli Pembrokeshire (Mr. Crabb) referred. The Secretary of State has rightly referred to the £48 million ProAct scheme; there is also the £35 million ReAct scheme to retrain and assist people facing redundancy. Furthermore, there is the £20 million apprenticeship scheme for reskilling young people and the extra business rates relief, which now assists approximately 55,000 small businesses in Wales. Is it not heartening to hear of David Rosser of the CBI going out of his way to say well done to the Deputy First Minister and his team in reacting urgently and properly to assist small businesses in Wales?

I am happy to say well done to the Deputy First Minister and the First Minister in Wales for the work that the Assembly Government have done. The reality is that individual people and businesses have been helped by those schemes. For example, there is Her Majesty’s Revenue and Customs Time to Pay scheme, under which taxation is deferred. Some 2,600 firms in Wales benefit from that; £38 million has been deferred so that they can. There are other schemes as well. The point is that unless the Government act to help businesses, families and individuals, nobody else will.

Many small businesses in my constituency and throughout Wales rely on visitors and tourism. Does the Secretary of State agree that the product that is Wales needs extra support and help to promote its image at this difficult time? Furthermore, we should take advantage of the relatively low value of the pound sterling against the dollar and the euro. Will he raise those issues with Ministers? Next time he comes to Ynys Môn, will he meet tourist associations and operators to see first hand the problems that they face?

Of course I will. There is no finer part of the United Kingdom to visit than Wales, and my hon. Friend’s constituency is a great example. I am going there in a couple of weeks’ time, and I assure him that he and I will look at the advantages that Ynys Môn gives the world.

In these dire economic circumstances, the Welsh Assembly Government and the Westminster Government are increasing—I repeat, increasing—business rates by nearly 5 per cent. next year. What message does that send to small businesses that are struggling to survive in Wales, and what is the Secretary of State doing to stop this madness?

There are ways and means by which firms in Wales can go to the local authorities and the Welsh Assembly Government and receive direct help, under the scheme that the Assembly Government have put forward. In addition, there is help on empty properties. I understand, however, that small firms have difficulties with this issue; that is why I referred to the HMRC Time to Pay scheme, of which many firms have taken advantage.

The Secretary of State has revealed today that 10 businesses have been helped under the ProAct scheme and that help for 75 is under consideration. Frankly, that is just scratching the surface. The Secretary of State’s figures are wrong; the Treasury has said today that 3,590 businesses in Wales have agreed terms to defer payments, a further 120 have been turned down and 405 are still in negotiations. That means that more than 4,000 businesses are facing trouble. Given that sort of volume, does the Secretary of State really consider that the schemes put in place by the Welsh Assembly Government and his Government have the capacity to cope with the large number of firms that are in trouble, are closing or are laying off staff?

Yes, I think that the schemes collectively will do that. Does the hon. Lady realise that we are talking about hundreds of billions of pounds, which have been put into the banking system to prevent it from collapsing and to ensure that banks lend again? Those schemes will start at the beginning of the financial year. She should consider the importance of the schemes I have referred to, such as ProAct, ReAct and other schemes in Wales. They are meaningful schemes that are working. I agree that more work needs to be done to ensure that people are aware of them, but they are still better than the policies her party has put forward.

The Secretary of State is right to say that more work needs to be done, because the managing director of the leading business advice organisation in the country, Venture Wales, has said that since the Welsh Assembly Government took over the Welsh Development Agency, help for small firms has deteriorated. He says that decision making is “slow”, that morale is “low” and that millions of pounds are “being wasted”. If that is the view of an expert on the systems of help for businesses in Wales, what is the Secretary of State going to do about it?

That is not the message I am getting. The CBI in Wales, the Federation of Small Businesses and individual businesses in my constituency are giving me the message that real help has come from the Welsh Assembly Government to the business sector. To take one example, the finance Wales initiative—our own Wales bank to help small businesses—has invested £17 million this financial year. That is 25 per cent. more than last year, and it is real help going to real businesses in Wales.

Welsh Language Certificates

3. What recent discussions he has had with ministerial colleagues on the provision of birth, marriage and death certificates in the Welsh language. (261326)

My right hon. Friend the Secretary of State and I have regular discussions with ministerial colleagues on a range of issues affecting Wales, including the Welsh language. Wales Office officials have discussed the provision of Welsh language certificates with colleagues as part of work on recent and current legislation.

I thank the Under-Secretary for that answer. He may be aware of the Bill published by our former colleague, Gareth Thomas, the former Labour MP for Clwyd, West on this subject some years ago. Does the Under-Secretary agree that circumstances have not changed? There is a demand for Welsh language certificates. Will he strive to make parliamentary time available for a Bill on this matter, should one be presented?

I can tell the hon. Gentleman that the Government remain firmly committed to producing Welsh language certificates, and the General Register Office is exploring the best way to do that. I am happy to take forward discussions with the Home Office to find the best solution, but it is not a simple matter. It is not a question of introducing a Bill; we have to explore the best possible way. I reiterate that we are firmly committed to pursuing that path.

Internet Crime Prevention

My right hon. Friend the Secretary of State has regular discussions with the First Minister on a range of issues affecting Wales. The UK and Welsh Assembly Governments are working closely with law enforcement bodies, industry and financial institutions to combat crimes committed over the internet.

I ask for an assurance that my right hon. Friend the Secretary of State and the First Minister will give continued support to e-Crime Wales, which, along with the Yorkshire e-business centre, provides the best example of how to tackle online crime. Does my hon. Friend the Under-Secretary agree that digital inclusion requires Wales specifically and the UK generally to be made the safest place to do business online, whether that business is personal or commercial?

My right hon. Friend makes a good point. The digital inclusion agenda must include the measures he talks about. He referred to e-Crime Wales, and it is holding a series of business breakfasts around Wales in February and March this year, to keep businesses up to date with the latest threats, and to tell them what steps they can take to minimise the risks of the damaging effects of e-crime. Moreover, e-Crime Wales has produced a number of extremely useful fact sheets on its website for business and individuals. All of that clearly shows that we are firmly committed to developing this agenda for the safety of everyone.

Does the Minister agree that there is little prospect of doing anything meaningful about internet crime when Welsh police forces are facing such drastic cuts to their budgets that they have to reduce the numbers of front-line police officers in many parts of the Principality?

The fact of the matter is, of course, that there is no reduction in front-line policing. Of course there are efficiency measures taking shape, and bureaucracy is being reduced, but we are seeing better front-line policing throughout the length and breadth of Wales. That is very significant and far different from what the Opposition would do if they ever had power, for goodness’ sake.

Government Funding

5. What recent discussions he has had with the First Minister on the mechanisms for allocation of central Government funding to Wales. (261328)

I am grateful to the Secretary of State for his response, but in Wales £8,577 per person is spent on public expenditure. In my constituency it is only £6,936. My constituents pay the same taxes as those in Wales. Is it fair that each man, woman and child in Wellingborough is £1,641 a year worse off?

I do not know the rate of deprivation in Wellingborough, but large parts of Wales are seriously deprived because of the run-down of traditional industries. The Barnett formula, which deals with central funding for Wales, Scotland and Northern Ireland, was based on the needs of those different parts of our United Kingdom. That is the reason why that difference is in place.

Will my right hon. Friend assure me that any discussions that he has about central funding and the mechanism used do not undervalue the role of defence expenditure in projects such as the defence technical academy in my constituency at St. Athan? Will he join me in welcoming the news that the joint director for technical training in the military is going to move to St. Athan in April, in anticipation of the construction of the new college?

Of course I will, and I congratulate my hon. Friend on his tenacity in dealing with this issue. Billions of pounds of public spending will come to his constituency and the surrounding constituencies, and I know that he has played a very significant role in ensuring that that is the case.

Central funding for policing in Wales has left south Wales with a shortfall of £10 million since 2005 and with an estimated shortfall of £7.7 million over the next three years. I have already written to the Home Secretary about that and have not yet had a reply. Will the Secretary of State take the matter up with the Home Office, to tackle that unfair and dangerous funding gap?

The hon. Lady will be pleased to know that I met the Home Secretary last week on that very issue, and further discussions are ongoing.

The Assembly Finance Committee this week, and the Labour party in Scotland through its submission to the Calman commission, have made the case for borrowing powers to be given to the devolved Administrations. Does the Secretary of State see some merit in that proposal?

I cannot see an enormous amount of merit in it at this stage, because of course if there is borrowing, money has to be found from somewhere to pay off the borrowing. However, I know that further discussions are being held on the matter. [Interruption.]

Order. Before I call the next question, I should say that it is unfair to hon. Members who are here for Welsh questions that there is so much private conversation.

Unemployment Support

6. What recent discussions he has had with the First Minister on assistance for those who have lost their jobs in the current economic downturn. (261329)

My right hon. Friend the Secretary of State has regular discussions with the First Minister about assistance for those who have lost their jobs in Wales, not least at the all-Wales economic summits that he attends. I would also point out that I have recently visited Llanelli to talk with local businesses, as my hon. Friend well knows.

My hon. Friend will know that balancing the books in Wales depends on a £9 billion subsidy from the rest of the UK. How could the help that he has described be provided if an independent Wales had to depend entirely on Welsh tax revenue?

My hon. Friend makes a very valid point. It is extremely important in these difficult economic times that we all pull together in the UK, not pull apart. I find it strange, as she does, that Plaid Cymru is demanding £3 billion from the UK Government at the same time that it is calling for independence.

I call David Taylor. No, I apologise, the hon. Member for The Wrekin (Mark Pritchard) did stand up.

Business Support

7. What discussions he has had with ministerial colleagues and the Welsh Assembly Government on schemes to assist businesses in Wales during the economic downturn. (261330)

I am delighted to have given the Secretary of State more time to think about his answer. He knows that Shimizu, a fine Japanese company, has factories in Welshpool and in Hortonwood in my constituency. The difference is that, on the Welsh side of the border, it receives taxpayer subsidies for wages and training. That is good news; we want people in jobs in Wales, but what about the people of Shropshire and my constituents, who would like a similar subsidy from the regional development agency?

As the hon. Gentleman knows, one great benefit of devolution is that we can have several schemes to help businesses in Wales that might not be available in England. However, there are also effective schemes across the border in England, such as Train to Gain, the help that the Department for Business, Enterprise and Regulatory Reform gives small and medium-sized enterprises, and the Department for Work and Pensions schemes. There are plenty of schemes—it is important that the hon. Gentleman makes his constituents aware of them.

Barnett Formula

8. What recent assessment he has made of the effectiveness of the mechanisms of the Barnett formula in allocating funding to Wales; and if he will make a statement. (261331)

The Barnett formula has been used for almost 30 years, and my hon. Friend has been asking the same question for the past 10 of them. I understand that the Treasury has no plans to review the funding arrangements.

More than 10 million people in the English midlands have a similar socio-economic and demographic profile to that of the people of Wales. They look over Offa’s dyke with some envy at the public expenditure that is possible through the Barnett formula. Will my right hon. Friend see me to ascertain how we in the English midlands can get such support? Is he willing for us to have honorary status in Wales as Powys, East?

I am happy for my hon. Friend to have honorary status in Wales. However, he knows that the well trusted formula has helped Wales, Scotland and Northern Ireland for more than 30 years. I understand that the midlands, too, can benefit from other sources.