Diolch Llywydd. Thank you Presiding Officer. I would like to begin by saying what a pleasure it is to be here today in the National Assembly for Wales at my first debate as Secretary of State.
I am Welsh, born and bred, and as someone with proud Welsh roots it is a great honour to have been appointed Welsh Secretary, and to be the first woman in this office. The coalition government knows the value of this great nation to the United Kingdom. And as you all know, in his first week in the job, the Prime Minister became the first serving Prime Minister to visit the Senedd.
It is a privilege to be able to report to you on the Queen’s Speech, and I look forward to hearing contributions from many assembly members this afternoon so that their views can be taken into account as we implement the legislative programme.
Before I talk about the programme in detail, I would, on this, my first appearance in the Senedd, first like to pay tribute to the brave Welsh men and women serving in our armed forces across the world, and especially in Afghanistan. I am delighted to be here in Cardiff later this month to celebrate their commitment at Armed Forces Day, which I understand the First Minister will also be attending. We owe a great debt of gratitude to our service personnel and their families and we must never forget that. I would also like to offer my congratulations to the First Minister, Carwyn Jones, on his recent appointment as a Privy Councillor - a fitting recognition of his contribution to the Assembly.
The new architecture of government
Politics at Westminster has entered a new era. We have made a fresh start. We have a new kind of government leading a new type of politics, where the national interest trumps party interest and where mature attitudes of co-operation and compromise are signs of strength not weakness.
Now, the changed architecture of government means the opportunity for a renewed relationship between Westminster and Cardiff, with four political parties in Wales involved in government. Coalition government is of course a well established feature of the Welsh political landscape, so there is much we in Westminster can learn from Welsh experiences here in the Assembly.
During his visit here last month, the Prime Minister made it clear that this government’s relationship with the Welsh Assembly government should be built on the firm foundation of mutual respect:
- ‘respect’ for devolution, recognising that the people of Wales can make different choices whilst benefitting from being part of a strong, unified family of nations within the United Kingdom;
- ‘respect’ for the people of Wales deciding their own destiny, committing to hold a referendum on additional powers for the National Assembly for Wales; and
- ‘respect’ for the National Assembly and the Welsh Assembly government to hold different views from those of the coalition government, but in doing so still helping foster positive and healthy engagement between Westminster and Cardiff, not the pessimism and confrontation some would prefer.
I look forward to playing my part in this new agenda of co-operation and optimism, and hope all Members of this Chamber will do the same. I believe people want to see constructive politics rather than destructive politics.
The Legislative programme
The coalition government’s First Legislative Programme, as announced by Her Majesty last month, builds on our programme for government, and is based on the key principles of freedom, fairness and responsibility. It sets out a wide-ranging programme of twenty new Bills; a programme that will significantly benefit the people of Wales whilst taking decisive action to put Britain’s economy back on a firm footing by reducing the deficit and restoring economic growth.
The programme is strategic and efficient. The modest number of Bills ensures that Parliament can scrutinise the legislation fully, without being over-burdened. This is not legislating for the sake of it.
The coalition government has made a good start in implementing the programme. We have introduced three Bills so far. The Identity Documents Bill had its second reading in the House of Commons last week, and will restore freedoms and civil liberties by abolishing identity cards and repealing unnecessary laws. That is good news for Wales, and indeed for the whole of the United Kingdom. The two other Bills introduced so far deal with academies and local government restructuring, and do not impact directly on Wales.
But as the programme of legislation proceeds, let me assure you all here today that devolution is an important ingredient in the coalition government’s policy making. We respect devolution. Each department of government must take account of devolution in implementing government policy. So my door is always open to any Assembly Member who wishes to discuss the coalition government’s programme, and how we shall deliver it in Wales. And in my Office, we have a small but determined department working within Whitehall on Wales’s behalf.
The legislative programme is of course in its early stages, and we have much work to do. Many Bills in the programme have implications for Wales, and my Office is working together with other Whitehall Departments, and wants to work with the Welsh Assembly government, to ensure that Welsh interests are fully taken into account as the legislation is developed.
Constitutional reform is a major pillar of the programme. Our political system is broken, and this government will not shirk from its responsibility to restore public trust in our democracy. The Deputy Prime Minister has laid out the overarching principle of the reforms: rebalancing the relationship between the citizen and the state. Handing power back so that people have far more control over the state than they do now.
That means radical reform of our political institutions so that people’s trust in our democracy is revived:
- introducing fixed term Parliaments of five years
- holding a referendum on the Alternative Vote system for the House of Commons
- creating fewer Parliamentary constituencies of more equal size
- giving constituents the right to recall their Members of Parliament when they are guilty of serious wrongdoing
- proposing reform of the House of Lords, so that its Members will be wholly or mainly elected on the basis of proportional representation
These changes will make our political system more transparent and accountable, and will benefit people across the whole of the United Kingdom. We are thinking carefully about the effects of these changes in Wales and, as we move forward, I will work to ensure that the proposals do not have a negative impact on the National Assembly.
In the context of this wider political reform the coalition government is also committed to working constructively and co-operatively with the devolved institutions and to a referendum on additional powers for the National Assembly.
Let me make our position clear. A referendum is a priority - for the coalition government, and for me as Secretary of State. I know that Members of this Assembly share my eagerness to hold the referendum: that was evident from the resolution passed in this Chamber in February. But the referendum must be carried out properly. We must ask an understandable question, and ensure the people of Wales have good information in order that they can make an informed decision. The preparation work needs to be thorough to minimise the risk of legal challenge.
Following my appointment, the preparation work for the referendum began in earnest. In consultation with the First Minister, I have been working to identify a date when the referendum can be held without compromising the integrity of the process. We need to ensure the Electoral Commission has the time it has determined it needs to test the referendum question. It is only right that full and proper consideration is given to the question, and that sufficient time is built into the process to ensure proper preparation for the poll.
I am now of the opinion that a referendum should be held, all things being equal, in the first quarter of 2011, subject to the approval of Parliament. That ensures we do the job properly. No cutting corners, but rather working co-operatively to afford the people of Wales a clear choice, made through well informed judgement. This is a major constitutional proposal; we owe people in Wales nothing less than to follow the procedures laid down in the legislation.
Cutting the Deficit to Secure the Recovery
The other key pillar of the programme is of course the economy. The coalition government has made reducing the fiscal deficit our top priority. Starting to reduce the deficit this year is essential to ensure our economic recovery, and is the first step to restoring confidence in the UK economy.
The need to take decisive action to reduce the deficit is a necessary consequence of the previous government’s reckless economic management. We have, in the words of the outgoing Chief Secretary, ‘run out of money’. Last year our budget deficit was the largest it has ever been in our peacetime history and, according to the IMF, is the largest budget deficit in the G20. Everybody knows what happens when you ignore the bills coming in and don’t pay them. The problem just gets worse. The previous government “maxed out” on the country’s credit card. I am sorry to say, that is why we must act decisively, so that we come through these tough times as fast as possible without jeopardising the recovery.
Only last week the Prime Minister spelt out that the deficit is worse than we thought, and that unless action is taken we would be paying around £70 billion a year in interest on Britain’s national debt by 2015. A responsible government cannot let this happen; the coalition government will ensure it does not.
That is why last month the Chancellor announced the first £6 billion of the savings we must make, barely a fortnight after the coalition government took office.
Following the announcement, I read unfounded reports in the press suggesting that Wales was being “hit the hardest” in the savings we will have to find. Nothing can be further from the truth. In fact, the percentage cut to the Wales Departmental Expenditure Limit - or DEL - is below the average percentage cut in the DEL for the United Kingdom as a whole.
But Wales must play its part, and it is of course for the Welsh Assembly government to decide where, and when, to make the savings. I welcome the comments made in this Chamber by the Assembly government’s budget minister on 25 May, that the Welsh Assembly government “will be responsible partners in contributing to the reduction of the deficit over coming years.”
At the same time the savings were announced, we also announced a further £24 million for Wales, which reflects the Barnett consequentials of recycled savings, used by the government on targeted measures such as social housing, further education, apprenticeships and business rates.
I spoke earlier of this government respecting the different choices that Wales can make, and we have followed through on our promise to allow the Assembly government the flexibility to defer all or part of the savings until next year, if they wish to.
But what is clear is that we cannot afford to continue increasing public debt at the rate of £3 billion each week - that’s half of the Welsh health and social services budget for the entire year, and over seven times the annual budgets for the four Welsh police forces put together.
The crippling public debts which threat our financial stability and, if not addressed, will derail our economic recovery. Public borrowing is, after all, only a deferred form of taxation, and it would be irresponsible of us to continue to accumulate vast debts that would have to be paid off by our children and our grandchildren for decades to come. That would be a form of intergenerational theft.
Cutting the deficit, whilst a priority, is not the only way that the coalition government will drive forward the recovery. We will also create a simpler and fairer tax and benefits system.
The UK recession has left over 120,000 people unemployed and nearly 430,000 economically inactive in Wales. The previous government’s programmes clearly aren’t working, which is why we are scrapping all of the existing programmes and introducing a new, single welfare to work programme to help all unemployed people get back to work. gov##
The existing system trapped on benefits the very people it is supposed to help - for life in far too many cases - and that has got to change.
It is wrong that someone can actually be worse off by taking a job compared to being on benefits; instead, we will reward those who go out to work by making work pay.
Similarly, those looking for an easy ride without looking for work can expect to see their benefits curtailed.
However the coalition government is under no illusion how damaging unemployment is for the country, and the real hardship it brings to families throughout Wales. That is why I want to work together with the Welsh Assembly government to help people and families affected by job losses.
Support for business
The coalition government is also fully committed to supporting sustainable growth and promoting enterprise.
By tackling the deficit early we will be able to reverse the National Insurance increases that would have increased the tax burdens on businesses, particularly the small and medium sized enterprises that are the backbone of the Welsh economy.
We will also reform the corporate tax structure to simplify reliefs and allowances so that we can create the most competitive corporate tax regime in the G20.
Access for finance is important for businesses and we recognise that the flow of credit to businesses is vital - the banking system should serve business, not the other way around. That is why we are considering both a major loan guarantee scheme and the use of net lending targets for the nationalised banks, so that viable businesses have that access to the credit they need to drive their future growth
We are committed to securing the recovery by improving the business environment for the private sector so they can provide strong and sustainable growth.
But we can only do this by working together. Westminster and Cardiff must work co-operatively to lead Wales in the recovery. It is essential that we engage to ensure our policies deliver for the people of Wales and, when there are differences in approach, we ensure they support our common endeavour.
The government wants to work with the Assembly government to deliver its programme for government in Wales. On welfare reform, for example, you have important responsibilities in areas such as further and higher education, training and skills and social care which will prove crucial in ensuring successful reform of the system.
We are already putting this principle into practice. During his visit here last month, the Prime Minister repeated his offer to come to Assembly to answer Members’ questions, an offer that has been warmly welcomed by the Presiding Officier. Early next month, I am meeting the Welsh Assembly government cabinet. I am also also looking forward to meeting Gerry Holtham to discuss the Holtham Commission’s final report and, following its publication, the Chief Secretary to the Treasury will be meeting him to discuss its findings.
One of the changes we have made also indicates the way in which we wish to approach devolved priorities. The Joint Ministerial Committee met earlier this month at a successful meeting chaired by the Prime Minister, and has now agreed to meet regularly to consider matters of common mutual interest.
This is solid proof of the government’s commitment to work in collaboration with the devolved institutions, and to integrate devolution into our policy making.
The legislative programme put forward by our new government is the first step towards putting right the appalling legacy which the last government left us. The cavalier approach to taxpayers’ money is no more. From now on, the UK will get the exact opposite: spending public money wisely, and saving it wherever possible - not profligacy and ever increasing debt. Bottom-up change, with more personal, civic and corporate responsibility; not top-down control and big government. Power back in the hands of the people; not power for politicians.
That is good news for Britain. And it is good news for Wales.
I welcome the spirit of collaboration and co-operation between Westminster and Cardiff which has permeated my first weeks as Welsh Secretary. However, we face a real challenge in restoring our economy.
The difficult choices we must make to reduce public spending and rebalance taxes will be underpinned by the values of compassion, reasonableness and concern for the most disadvantaged. I am sure all of us here today share those values. And I hope we will continue to work together to build a confident and more prosperous Wales.
I commend the Queen’s Speech today, and in thanking you for the opportunity to address you, I also wish this assembly well. I look forward to hearing your contributions and suggestions on how we can improve the governance of the country.