I beg to move that the matter of the government’s Comprehensive Spending Review and its implications for Wales be referred to the Welsh Grand Committee for its consideration.
Mr Caton, may I begin by welcoming you to the chair of this Welsh Grand Committee and say what a pleasure it is to serve under your Chairmanship. I would also like to thank my Hon Friend, the Economic Secretary to the Treasury for taking time to address our Committee and for delivering an assessment of the challenges we face and the impacts of the Comprehensive Spending Review.
After having the advantage of questioning a Treasury minister directly I intend to keep my remarks brief to allow maximum time for members to participate in this debate.
As we have just heard, the Spending Review set out how the coalition government intend to carry out Britain’s unavoidable deficit reduction plan.
The spending review settlement for the Welsh Assembly government was determined by the Barnett formula in the usual way. In fact it was determined in exactly the same way as under the last government and using the same formula the Rt Hon Member for Neath has said “served Wales well”.
However, because of the decisions we took to protect spending on health and schools in England, Wales’ overall spending will be reduced by much less than the average for non protected departments.
It represents a 7.5 per cent reduction in the Welsh Assembly government resource budget, which is an average cut of less than 2 per cent each year - less than the 3 per cent year on year revenue reductions that the Welsh Assembly government have previously said they were planning for.
This is a fair settlement by any definition but of course we don not dictate how these monies are spent, it is now for the Welsh Assembly government to decide how to manage their finances reductions reflecting their own policies and priorities, which they did last month when they published their draft budget.
Devolution means the Welsh Assembly government makes its own choices. In England the coalition government has decided that total spending on the NHS will increase in real terms in each year of this Parliament.
The Welsh Assembly government however have chosen to freeze NHS spend in cash terms which means a real terms decline of 7.6%.
Because of decisions taken by the Labour and Plaid Cymru assembly government, Wales is now the only part of the United Kingdom where health spending will not be protected
The UK government has undertaken to increase the schools budget every year of the spending review in real terms. In Wales education will be cut by 7% in real terms over the next three years.
These are of course devolved matters and for WAG to decide. But I hope that WAG’s decisions on where to allocate funding will not see standards of health care and education fall behind in Wales.
I also note that the budget on economy and transport will also be cut by 21% over the next three years. I hope that, despite this, the Welsh Assembly government will remain committed to implementing their economic renewal programme and encouraging investment, promoting Wales as a place to do business, developing the skills base and encouraging innovation.
The tough circumstances we face meant that we have had to take a hard look at some of the spending decisions that were planned.
It is a government ministers responsibility to ensure that all government commitments are both affordable and achievable. While any decisions of this nature are difficult, this government has the courage to make sure that money is spent where it offers the best value for the public purse.
This was the case with St Athan. We examined closely the plans for the St Athan Defence Training Centre. This will not be going ahead in the form proposed by the last government as it became clear that the contractor could not deliver the project in an affordable and commercially robust way within the time given.
Let me assure you, though, that this is not the end for St Athan.
It remains an attractive location for potential future training provision and I am committed to working closely with the Secretary of State for Defence, on the case for a training base to be located there.
In the current economic climate we also took the view that the Severn barrage - again proposed by the last government but yet another unfunded proposal - could not go ahead. It would have been irresponsible to do so given the economic and environmental implications.
My colleague the Secretary of State for Transport believes that Wales has other viable, more cost effective low carbon options including a significant expansion in wind power, which represent a better deal for industry and consumers.
However, I am delighted that Wylfa, on Anglesey, has been included on a shortlist of eight sites across the UK where new nuclear power stations could be constructed. And that its operational life has been extended for another two years.
After the loss of Anglesey Aluminium under Labour’s watch, this is finally some welcome news for the economies of Anglesey and North Wales - and good news for workers at Wylfa.
We are also proceeding with other contracts, though, that will deliver real, affordable benefits for Wales.
The A400M, the Strategic Tanker Aircraft and the £500 million SCOUT combat vehicles will form vital parts of the British Army’s future capabilities and their development is a further vote of confidence in the work at Airbus in Flintshire and General Dynamics in Gwent.
We are also improving rail infrastructure in the Cardiff to Barry corridor and improving the M4-M5 interchange between here and Cardiff.
Improved rail infrastructure and lower journey times are vital components for delivering a successful economic recovery in Wales, and I remain fully supportive of rail electrification. Electric trains offer lower carbon emissions than their diesel equivalents, are cheaper to buy, operate and maintain, allow journey time reductions and offer a more comfortable ride for passengers.
As a first step, we will electrify the Great Western Main Line from London to Didcot by 2016. For services beyond this, and into Wales, we now need to work with the Welsh Assembly government to produce a joined up business case. My department is holding meetings on this matter, on an almost daily basis, with the Department for Transport, the Welsh Assembly government and key stakeholders.
It is not enough to electrify the mainline into Wales, for Wales to fully benefit from electrification we need to work with the Welsh Assembly government to ensure joined up improvements to commuter lines beyond Cardiff.
On a UK level, the latest growth figures fly in the face of most predictions and are a vindication of the decisions we took to cut £6.2 billion of spending this year and the measures we announced in the Budget in June.
The economy grew in the last quarter at its fastest 3rd quarter rate for a decade, underpinning confidence in our economy and in this government’s economic policies so that we can look positively to the future.
The Office of Budget Responsibility forecast shows that Britain’s economic recovery is on track, and the government is on course to balance the books.
The economy is growing. More jobs are being created. The deficit is falling.
The tough decisions taken by this government have taken Britain out of the financial danger zone. The Office of Budget Responsibilities forecasts show that we are dealing decisively with the nation’s debts, and showing the world that Britain can live within its means.
If we listened to Labour, our debt would be almost £100 billion higher by the end of the Parliament and we would be paying £4 billion more in debt interest alone by the time of the next election.
Faced with the worst economic inheritance in modern history, we have made the tough choices and have taken our country back from the brink of bankruptcy.
We have secured a fair settlement for Wales, and now we must work together with the Welsh Assembly government, to build a stronger more prosperous Wales.