Welsh Grand Committee

Mr Peter Hain MP (Neath): Can I begin by welcoming the news that the Prince of Wales is soon to become a father-in-law and that the happy couple intend to live in North Wales where I know they will receive a warm welcome, not least by their new MP, my Hon friend Member for Ynys Mon.

She will have noticed the letter to the Prime Minister by three former Secretaries of State for Wales – my Rt Hon Friends the Member for Cardiff South and Penarth and for Torfaen, and myself. In it we argue that the state that the current occupants of the Wales Office are presiding over a period when relations between our countries, and their now separate administrations, are at rock-bottom. We express our concern to the Prime Minister that your administration appears ignorant of, or indifferent to the needs of Wales.

Her speech today showed a curious combination of Welsh wizardry, Irish folk lore and Greek mythology. She has been telling tall stories about the British economy and Labour’s record in office. The government keeps pointing its finger at Ireland and Greece and muttering, there but for the grace of God – and of course the genius of George Osborne – goes the UK. When the truth is that Britain’s position is as different from Ireland and Greece as chalk is from cheese. The much lower yields on UK government bonds since the credit crunch bear eloquent testimony to that.

Ministers love repeating their mantra about pulling Britain back from the brink of bankruptcy. It’s a nice line, but not true. If it ever had been true, the yields on UK government bonds would have been sky high because of the risk of default. In fact they have been remarkably low ever since the global financial crisis erupted.

Ministers claim that the economic crisis was caused by the Labour government, through reckless spending and excessive borrowing. But that’s not a claim they can back up. Nor is the coalition’s claim that there is no alternative to the path they have embarked upon.

It’s time to tackle these myths head-on. Let’s start by looking at the picture before the global financial crisis hit.

First debt. In 2007 IMF figures show that British government debt as a proportion of GDP was below that of France, Germany, the USA, Japan and even Switzerland. In 2013 it is still forecast to be below that of France, the USA and Japan. (Source: IMF Fiscal Monitor November 2010). There was no “decade of debt”. That is a Tory myth. In fact Labour had been paying down debt. Public sector net debt fell from 42 per cent of GDP in 1996-97 to 36 per cent in 2006-07. That 6 per cent reduction is worth some £90 billion today. By bringing down government debt we effectively saved the taxpayer about £3 billion in annual interest payments. We did indeed fix the roof when the sun was shining.

Second, government spending. Coalition ministers like to pretend that Labour was the last of the big spenders. But in 2007 UK government spending as a proportion of GDP was lower than that in France, Germany, the Netherlands, Norway and Sweden. Our non age-related social spending as a proportion of GDP was lower than the European Union average. Our education spending was almost identical to the OECD average of 5.7 per cent. Our NHS spending the following year 2008 was 7.2 per cent of GDP compared to 8.7 per cent in Germany and 8.1 per cent in France. So much for ‘overspending’.

The previous government did not behave like a pools winner and go “spend and spend and spend”. If we had done, the Tories would never have accepted our spending plans. But they did. Until November 2008 they undertook to abide by Labour’s public spending plans up to 2010.(as Dennis Kavanagh and Philip Cowley confirm in their account of ‘The British General Election of 2010′ page 75). Sometimes they demanded we spend more while the Liberal Democrats demanded we spend more all the time.

Third, annual government borrowing. Britain was not a particularly big borrower before the global financial crisis. In relation to GDP government borrowing in 2007-08 was far lower than in the Tories’ last year in office 1996-97, when Ken Clarke was at the Treasury: 2.4 per cent compared to the 3.4 per cent we inherited from the Tories. And Labour’s borrowing helped to pay for a much higher level of public investment, four times as high in fact.

Before the global credit crunch Labour borrowed mainly to invest, whereas in their last year in office the Tories borrowed mainly to meet their weekly wages and benefits bills. In 1996-97 eighty per cent of what the Tory government borrowed went to pay the running costs of public services, not to finance new schools and hospitals or to develop Britain’s road and rail networks.

That was then. But what about now? Did we lose control of spending and borrowing in response to the credit crunch? The short answer is: certainly not. What we did do was boost public spending to offset the collapse in private spending as firms and households cut back on business investment and consumer spending.

This extra public spending, coupled with the loss of tax revenue – as output, profits and employment fell – led to much higher government borrowing. It is that extra borrowing – that much maligned deficit – which has kept the economy afloat in the face of the worst downturn since the 1930s. Without it the financial crisis could have led to a financial collapse and recession could have turned into depression. The IMF has acknowledged that the worldwide increase in government borrowing since the 2008 credit crunch staved off an economic catastrophe. It certainly did in Britain.

The crisis did not originate in the public sector. It stemmed from irresponsible lending by financial institutions right across the globe. When their loans began to go bad they realised that, by slicing and dicing mortgage backed securities and playing a massive game of financial jiggery pokery, they had made it impossible to say with confidence who was solvent, who was insolvent and who was simply short of liquidity. Their reaction was to conserve cash, refuse to lend even overnight, and thereby threaten a seizure in the world financial system. When banks stop lending, firms and consumers stop spending, throwing jobs into jeopardy everywhere.

It’s a fair question to ask where were the regulatory bodies while all this was going on. But it’s not fair to claim that the crisis was due to reckless spending by governments and excessive public borrowing, certainly not in the UK under Labour.

Since the financial crisis UK government spending as a share of GDP has risen by over 5 per cent. Much of that extra spending was automatic as firms cut back and unemployment rose. Some of it, under 2 per cent of GDP, was discretionary and temporary, in the form of the 2009 fiscal stimulus when the economy was at its weakest. Some of it was public sector capital investment programmes brought forward from future years. We raised net public investment from £27 billion in 2006-07 to £49 billion in 2009-10, higher than in any year over the past four decades. And some of it was the direct cost of government support for the UK financial sector, about £90 billion up to June of this year on recapitalising Britain’s banks (Source: IMF Fiscal Monitor November 2010). (That £90 billion bailing out the banks dwarfs the UK’s annual contribution towards the European Union budget of under £5 billion, by the way). This is how Labour stopped a slide into slump and how we promoted recovery from recession.

Borrowing was certainly not ‘out of control’. The Office for Budget Responsibility reckoned that borrowing last year 2009-10 would come out over £10 billion lower than we had forecast and £8 billion lower in the present year. Unemployment has stayed lower than many forecasters expected and the economy had started to grow again by the end of last year. Recovery was fragile but real, in the run-up to the general election.

There is no doubt that government borrowing must be brought down and public sector debt reduced as a proportion of GDP. Unless we do so future governments may be unable to fight any future economic shocks of the kind we are still recovering from. Labour had planned to halve the public sector annual deficit by 2013-14 which is in accord with the June 2010 G20 Toronto Declaration. The Office for Budget Responsibility has confirmed that under Labour’s plans, borrowing would have been more than halved by 2013.

But the coalition has adopted a far riskier strategy. It plans to cut the UK fiscal deficit by much more than required by the Toronto accord. The UK fiscal tightening planned for next year 2011 is twice as fast as that planned by the USA and four times as fast as Germany and Japan. Why the rush? IMF figures show that the UK’s gross financing needs as a proportion of GDP this year and next are below those of Japan, the USA, France, Canada and many others. The alarm bells are not ringing, so why risk derailing recovery by squeezing the economy at the very moment it is beginning to grow again?

IMF figures also show that the UK plans to make in the next three years about two thirds of the fiscal adjustment required in the coming ten years for the UK to be on target to reduce public sector debt to 60 per cent of GDP by 2030. Again, why the rush?

The coalition’s plans could seriously undercut growth. The IMF estimates that the cost of frontloading the squeeze on the UK fiscal deficit is a 0.3 per cent reduction in our growth rate next year. (Source: Transcript of a Conference Call on the 2010 Article IV Consultations with the UK, 9 November 2010). That cut in the growth rate may be seen by the coalition as valuable insurance against the risk of a costly loss of confidence in Britain’s public finances. But in the absence of any sign of such weakening confidence, this all smacks of giving in to your worst imaginings.

What is real is that the OECD has slashed its forecast for UK growth next year from 2.5 per cent to only 1.7 per cent. The latest CBI industrial trends survey suggests that manufacturing expectations have collapsed. Office for National Statistics retail sales figures show that households are reining back on spending. October saw a welcome fall in the unemployment rate in Wales, but the Institute of Directors has warned that such figures may give a false sense of security. They expect the economy and the UK labour market to weaken in 2011.

There is a difference between a squeeze and a straightjacket. Plenty of experts, not just the Institute for Fiscal Studies, are warning that the Chancellor may have gone too far, that his constraints on expansion are too tight, and that he may need to ease the fiscal squeeze. In short that he may need a Plan B. The latest figures for GDP growth show a fall back from the second quarter’s result. The danger is that economic recovery may lose momentum. The Chancellor’s measures are damaging what might be called the economy’s ‘bounce back ability’.

All this means that growth could stall in the new year, and slower growth means fewer jobs. Bank of England projections already point to a substantial amount of slack remaining in the economy in three years time. This week’s Office for Budget Responsibility report still expects hundreds of thousands of public sector jobs to be lost as a consequence of the spending cuts. They will be more than matched by private sector job losses, as Pricewaterhouse Cooper has already forecast. Some 60,000 of those job losses will be in Wales. The Chartered Institute of Personnel and Development reckon that Britain could lose over 1.6 million jobs across the economy by 2015-16. Over one million women are now unemployed and the number of people working part-time because they could not find full-time work reached a record 1.15 million in October, up by 67,000.

For hundreds of thousands of public sector workers the front line has become the firing line. While City bankers pocket huge bonuses, all public sector workers can look forward to is a P45 instead of a pay packet.

This Government’s actions have hit Wales harder than anywhere else. The CSR was a reckless gamble. Families in Wales, workers in Wales and businesses in Wales are worried stiff about their future.

Nothing can disguise the savage cuts inflicted on the Welsh budget, on top of closing the Passport Office, cutting the St Athan Defence Training College, abandoning the Severn Barrage and kicking rail electrification to Swansea into the long grass.

And while the Chancellor was still on his feet delivering the CSR, part of it was already being judicially reviewed. There are all sorts of issues with the S4C Authority, but we support S4C in seeking a judicial review of the Government’s decision on its future.

The Government have handled the whole issue very badly – showing arrogance and contempt for Wales: no prior consultation at all with the Welsh Assembly Government or with S4C themselves. Where was the Secretary of State in all this?

Small business in Wales, particularly those in the creative industries, are understandably very anxious about what this decision means for them.

Cuts on benefit levels and eligibility will be introduced under the radar – a vindictive and pernicious attack on Wales’s most vulnerable communities.

Because Wales is more reliant on public sector jobs, these savage cuts will damage Wales more than any other part of Britain.

There are already far fewer vacancies than there are unemployed people looking for work. For every job vacancy, five are unemployed. The situation will get worse as the cuts hit home. With ministers once again telling the unemployed to get on their bikes and search for a job, Britain should do well in the 2012 Olympic cycling events. The unemployed know that, like the Tour de France, the pursuit pack may be crowded but at the end of the race there is still only one yellow jersey. Unless the economy recovers from recession and growth picks up speed, their search for a job will remain a pointless quest.

Ministers say “we’re all in this together”. They conjure up an image of the British economy as if it were the Titanic, holed below the waterline by an iceberg of government borrowing that Labour had carelessly parked dead ahead of the ship of state.

What we are witnessing today, both in Whitehall and in the City, is the Ismay response. While the Titanic’s captain and crew tried to put women and children first, Bruce Ismay, the boss of the White Star Line, was quick to pinch a place in a lifeboat. Women and children appear to be expendable items in this government’s peculiar priorities for public spending, with child tax credit, child benefit, maternity grant and baby bonds amongst the first to be sacrificed.

The Government also has students in its sights. We already know that the £30 per week educational maintenance allowances for 16-19 year olds at school, in sixth form colleges or FE colleges are going – except in Wales where to their great credit Labour Ministers are keeping it. Average student debt in Wales is already over £6400 per year. Across Britain students starting at university this year are forecast to finish their studies with an average debt hanging round their necks of £25,000, before any increase in fees arising from the Browne Review. This is nearly three times today’s average household debt excluding mortgages in the UK. In October (9 October 2010) the Telegraph reported fears that under the Tory Lib Dem policies the cost of a three year degree and its associated living expenses could reach £80,000

Thankfully, in Wales the Labour led Assembly Government yesterday announced that Welsh domiciled students will not have to pay extra fees. The cost will be met by the Assembly Government. There will be variable progressive rates of interest charged depending on income; that is a fair way to fund higher education. This Government could learn a thing or two from Labour Welsh Assembly Ministers.

The Prime Minister made a pre-election promise there would be ‘no cuts’ to the NHS. And when the coalition was formed they pledged to ring-fence health spending.

However, a House of Commons Library research report on 1st November confirmed:

“Including the (social care) funding is critical to the description of the settlement as a ‘real terms increase’; without it, funding for the NHS falls by £500 million -0.54% in real terms.”

And despite massive cuts to the Welsh budget, the Tories in the Welsh Assembly have the audacity to suggest that ring-fencing the health budget in Wales is affordable! On Tuesday, 2nd November during First Ministers Questions, Nick Bourne the Welsh Tory leader, talked about how the UK Government would “safeguard the NHS budget” in England and demanded that we do the same here in Wales.

To pay for this, the Tories in Wales have said “of course” they would be happy to cut the schools budget by over 20%. This would create chaos in the education system. Schools would shut overnight.

This is an unrealistic, irresponsible and unaffordable spending commitment by the Tories in Wales. The Secretary of State should condemn it. The government says we are all in this together. But some are being gripped tighter than others by the Chancellor’s python policy. Families in Wales are feeling the pinch more than most since Welsh household incomes are over ten per cent below the UK average. Tens of thousands of working Welsh families on low to middle incomes face a triple whammy. What they gain from a higher income tax allowance they more than lose through cuts in tax credits, cuts in childcare support and cuts in benefit entitlements. Their pay is being overtaken by rises in the cost of living. They are the squeezed middle and they are hurting. Many of them are struggling to make ends meet. Small wonder that the latest figures show a sharp slowdown in household spending.

I noticed that the Prime Minister wants to build a Happiness Index to keep our spirits up during the tough times that lie ahead. Devotees of the songs of Ken Dodd may remember that his string of hits began with “Happiness” but it was followed by “Tears” and ended with “Brokenhearted”. A fitting epitaph, I fear, for this Government’s disastrous, savage public spending cuts.

Parliamentary Voting Systems & Constituency Boundaries

After 36 excellent speeches, this debate has revealed serious objections, from all parts of the House, to the constituency changes proposed in the Bill. Indeed, as the right hon. Member for Belfast North (Mr Dodds) and my hon. Friend the Member for Great Grimsby (Austin Mitchell) pointed out, almost nobody, on either side of the House, spoke fully in favour of the Bill, with the exception of the Deputy Prime Minister. The hon. Members for Broxbourne (Mr Walker), for Aldridge-Brownhills (Mr Shepherd) and for Christchurch (Mr Chope) all made impassioned speeches about the dangers of diminishing the numbers of Back Benchers compared with the Executive and about the balance of power in this House. The right hon. Member for Haltemprice and Howden (Mr Davis) made a telling point: that abolishing public inquiries will actually trigger a much greater spate of judicial actions based on objections to the new constituencies from local electors.

My hon. Friends the Members for Glasgow North West (John Robertson) and for Rutherglen and Hamilton West (Tom Greatrex), and the hon. Members for Camborne and Redruth (George Eustice) and for Na h-Eileanan an Iar (Mr MacNeil) all pointed out the serious problem of staging the referendum on the alternative vote on the same day as national elections in Scotland and Wales. My hon. Friend the Member for Caerphilly (Mr David) pointed out the astonishing reality that the Deputy Prime Minister and the Government failed to consult the Governments of Northern Ireland, Scotland and Wales on the decision simply to impose the referendum on the same day as their elections-and by the way, also on the same day as elections for local councils of different electorates.

My hon. Friend the Member for Nottingham North (Mr Allen), the distinguished Chairman of the Select Committee on Political and Constitutional Reform, made the point that not only has there been no consultation across the country or with the elected Governments of Northern Ireland, Scotland and Wales, but there has been no consultation with this House. There has been no pre-legislative scrutiny or any recognition of the need to build constitutional reform Bills by consensus-a point also made powerfully by the right hon. Member for Belfast North and my right hon. Friend the Member for Torfaen (Paul Murphy). With his Northern Ireland experience, my right hon. Friend made the point about the importance of taking forward constitutional change on the basis of consensus rather than simply imposing change, as this Bill is doing.

The Deputy Prime Minister-the leader of the Liberal Democrats-has brought forward a Bill changing constituencies in a way that is fair only to the Conservative party. Some Liberal Democrat leader he is. The proposal is grossly unfair to Labour and especially and blatantly unfair to Wales, which will lose fully a quarter of its representation. It is also grotesquely unfair to local communities, imposing on them new constituencies from Whitehall and depriving them of their traditional rights to be fully involved in a process that is at the very heart of our system of parliamentary democracy.

Having swallowed a Budget that is unfair to the poor and pensioners and, quite astonishingly, most unfair to the poorest parts of Britain, including the north-east of England and Wales, now the Government are also destroying the fairness at the heart of our parliamentary democracy. They trumpet the case for equalisation of constituencies as though it were a novel concept, but equalisation has been the all-party principle behind our constituency system for generations. We are all signed up to it, but the boundary commissions have applied it in a flexible way over the generations, and in a way that is independent and takes proper account of local views, community identity, rurality and sparsity. In other words, the boundary commissions have operated the equalisation principle by consensus, in a way that is fair, practical and sensible. The Government have abandoned that consensus, in a way that is unfair, impractical and arrogant.

Mr Jeremy Browne (Taunton Deane) (LD): I have 84,000 constituents. How many does the right hon. Gentleman have?

Mr Hain: I have just under 60,000, although my constituency is different. I would be happy to see more constituents in my constituency if this Bill were proceeding on a fair basis, with public inquiries and taking local consultation into account. The only exception to the equalisation principle, allowing some flexibility, is in the protection given to four geographically large seats in Scotland, three of them Liberal-held. As my hon. Friend the Member for Aberdeen North (Mr Doran) pointed out, we can conclude in respect of Ross, Skye and Lochaber only that this preferential treatment was the price paid to keep its Member, the former leader of the Liberal Democrats, from defecting to the Labour party.

Obviously, in the Government’s definition of equalisation, some seats are more equal than others, as my hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann) said. Wales, because of its own special characteristics, has always had special consideration by this Parliament and by the Boundary Commission for Wales, with cross-party support over the generations. For that reason, Parliament first decided in 1947 that there should be no fewer than 35 Welsh seats. Since then, rises in and shifts between the population over the past 60 years have led the Boundary Commission to increase the number of seats by a further five to 40. As a note from the Commons Library of 28 July 2010 confirms in paragraph 3.1, during the passage of the Boundary Commissions Bill in 1992, the then Home Secretary, the right hon. and learned Member for Rushcliffe (Mr Clarke) rejected the argument that over-representation of Wales should be tackled, referring to it as a long-standing constitutional arrangement-a point eloquently explained by my hon. Friend the Member for Caerphilly.

This Bill, however, will impose on Wales the most savage cut of all-a fact that the hon. Member for Cardiff North (Jonathan Evans) actually celebrated. Wales will lose three times the proportion of MPs as the average for the rest of the United Kingdom-a reduction of a full quarter from 40 to 30. As my right hon. Friend the Member for Torfaen said, how can that possibly be justified? Wales is long used to the Tories treating it unfairly and punitively, yet now the Liberal Democrats are doing the very same thing. I hope that the Deputy Prime Minister and the Minister replying will have listened to the arguments of the hon. Member for Ceredigion (Mr Williams), who asked for the changes in Wales to be delayed at least until after the referendum, given that successive arguments are being made within the Welsh Conservative party.

In the vast rural areas of mid and west Wales, the four constituencies-none Labour-held-including Brecon and Radnorshire, Montgomeryshire and Ceredigion, cover hundreds of square miles, yet under the Bill those four large seats will become two monster ones, each thousands of square miles in size. Until this Bill, every Parliament and every boundary commission has accepted an elementary verity about the Welsh valleys. In former coal mining constituencies, it is impossible to visit the next valley by the shortest route, because that happens to be over the top of a mountain. The only way to do so is by travelling either down to the bottom of the valley or up to the top of it and right around to the next one.

The Bill will produce a monumental list of other anomalies. The hon. Member for Isle of Wight (Mr Turner) is absolutely right to be incandescent about the carve-up of his island constituency, but let me say this to the rest of the House. Just wait until every Member in every area realises what will be done to their own constituencies based not on natural communities, not on natural towns or parts of cities, but on an arithmetical diktat imposed by the Deputy Prime Minister and the Government on the boundary commissions. [Interruption.] Government Members shake their heads, but I predict that they will all find that when it comes to their own constituencies, there will be rebellions in their local areas against this diktat from the centre on an arithmetical basis.

What we are seeing and what people find most offensive about the Bill is the way in which it sweeps away local democracy, as the hon. Member for Foyle (Mark Durkan) said. For generations, constituency boundaries have been reviewed and adjusted by local agreements, not by central imposition. Local people have had the opportunity to object if community identities were threatened or unsuitable mergers with nearby towns or villagers were proposed. Formal hearings would hear representations, and a final decision would be agreed, if not always by total consensus then at least with broad support. Last time, the process necessarily took fully seven years in England.

The Bill has unilaterally dumped that process for a rigid two-year deadline in a straightforward fix, abolishing the right to trigger public inquiries and destroying a bipartisan, independent system of drawing up boundaries, which has been the envy of countries elsewhere in the world. So much for big society localism. The Prime Minister tells us that the big society is about “empowering local communities”-a favourite phrase of the Deputy Prime Minister. As the hon. Member for Aldridge-Brownhills (Mr Shepherd) has said, however, the Bill destroys the essence of the British parliamentary democratic system, by imposing from the centre rather than developing from a pattern of constituencies. It rides roughshod over and breaks up local communities, as my hon. Friend the Member for Slough (Fiona Mactaggart) said. It proposes an arbitrary and partisan reduction by 50, to 600 seats, because that would hurt Labour most. A steeper reduction would have abolished too many Conservative seats.

Most outrageously, the Government have said that they intend to redraw the boundaries based on the December 2010 register, when they know that the current register is missing more than 3.5 million eligible voters, predominantly the young, poor and black and minority ethnic social groups. As my hon. Friend the Member for Vale of Clwyd (Chris Ruane), a champion of this point, tellingly argued, the problem of under-representation is greatest in urban areas, student towns and coastal areas of high social deprivation. As my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) said, London will be especially badly hit.

The Liberal Democrat leader has allowed himself to be sandbagged by his Tory partners in his otherwise laudable attempt to introduce a fairer electoral system, risking a once-in-a-generation opportunity for electoral reform. Instead of introducing a separate Bill on the alternative vote referendum, which would have been supported by the Labour party in a vote through Parliament, in line with our manifesto commitment, the Government have spatchcocked it together with the most blatant gerrymander of parliamentary constituency boundaries since the days of rotten boroughs.

As our amendment argues, the Government should decouple the proposals into two separate Bills: one on the alternative vote referendum and one on constituencies. In the constituency one, they should ensure that the original, fairer, more transparent and consensual boundary review system is restored, and that new boundaries are not applied in such a dogmatic, rigid and politically discriminatory fashion. They should ensure that Wales is treated fairly and not punitively, and statutory automatic registration from other public databases must be included in the legislation. That way, we might get two better reform Bills, based on consensus; we might even get the alternative vote, which I have supported for decades.

The Government should stop trying to rig democracy and ride roughshod over local community views, and they should withdraw this Bill now.

Constituency Stitch Up

Peter Hain: The Liberal Democrat Leader, the Deputy Prime Minister, tells everyone his Party is the protector of ‘fairness’ in this coalition government.

Yet this Bill is fair only to the Conservatives. It is grossly unfair to Labour and even a bit unfair to the Liberal Democrats who will lose seats! Some Party Leader, he is! It is especially – and blatantly – unfair to Wales which will lose fully a quarter of its representation, mostly Labour but some Liberal and Nationalist too. It is grossly unfair to local communities by imposing on them new constituencies from Whitehall and depriving them of their traditional rights to be fully involved in a process that is at the very heart of our Parliamentary democracy

Having swallowed a Budget that is unfair to the poor, unfair to pensioners, and, quite astonishingly, most unfair to the poorest parts of Britain, the North East of England and Wales, now the Government is destroying fairness in our parliamentary democracy.

They trumpet the case for ‘equalisation’ like it’s a novel concept. But equalisation has been the all-party principle behind our constituency system for generations. We are all signed up to it. But the Boundary Commission has applied it in a flexible way that it is independent, takes proper account of local views, of community identity, of rurality and of sparsity. In other words the Boundary Commission has operated by consensus: fair, practical and sensible. The Government has abandoned consensus with its unfair, impractical and arrogant proposals.

Even the Government agrees that in practice the equalisation principle must be flexible – hence the protection given to a likely four geographically large seats in Scotland, three of them Liberal held.

We can only assume that, in the case of Ross, Skye and Locherba, this preferential treatment was the price paid to keep its Member, the former Leader of the Liberal Democrats, from defecting to Labour. And if Inverness, Nairn, Badenoch & Strathspey ends up being protected, the Government’s motive will be transparent: having lost one Chief Secretary, the Government are so determined not to lose another they are legislating against it.

Obviously in the Government’s definition of equalisation, some seats are more equal than others.

Wales, because of its own special characteristics, has always had special consideration by this Parliament and by the Boundary Commission, with cross-party support. For these reasons, Parliament first decided in 1947 that, there should be no fewer than 35 Welsh seats. Since then, rises in and shifts in population over the last sixty years have led the Boundary Commission to increase the number of seats by a further five to the current 40.

As a note from the Commons Library on 28th July 2010 confirms (para 3.1)during the passage of the Boundary Commissions Bill in 1992, the then Home Secretary, the R thon member for Rushcliffe, rejected the argument that the over-representation of Wales should be tackled, referring to it as a long standing constitutional arrangement. Yet this Bill will impose on Wales the most savage of all. Wales will lose three times the proportion of MPs as the average for the UK: a reduction of fully a quarter, from 40 to 30 MPs. How can that possibly be justified? Wales is long used to Tories treating it unfairly and punitively, now we have the Liberal Democrats doing the very same.

In Mid and West Wales, vast rural areas, the four constituencies (none Labour held) – Brecon and Radnor, Montgomeryshire, Ceredigion – cover hundreds of square miles. Yet under this Bill these four large seats will become two monster ones, thousands of square miles in size.

Until now every Parliament and every Boundary Commission has understood, and accepted, an elementary verity about the Welsh Valleys. In former coal mining constituencies it is impossible to visit the next Valley by the shortest route because that is over the top of the mountain; the only way to do so is by travelling either to the top or bottom of the Valley and go right around to the next one.

The Bill will produce a monumental list of anomalies. And the Honourable Member for the Isle of Wight is absolutely right to be incandescent about the carve up of his island constituency. Just wait until everyone realises what will happen to their own constituencies.

But what most people will find most offensive is the way the Bill sweeps away local democracy. For generations constituency boundaries have been reviewed and adjusted by local agreement not by central dictat. Local people have had the opportunity to object if community identities were threatened or unsuitable mergers with nearby towns or villages proposed.

Formal hearings would hear representations and a final decision agreed, if not always by total consensus then at least with broad support – a process which last time necessarily took fully seven years in England.

But the Bill has unilaterally dumped this for a rigid two years deadline in a straightforward fix, abolishing the right to trigger public inquiries and destroying a bi-partisan, independent system of drawing boundaries which has been the envy of countries across the world. So much for ‘big society’ localism. The Prime Minister tells us the Big Society is about empowering local communities. This Bill is doing very reverse of that. It rides roughshod over local communities. It’s clear now: the Big Society is just a Big Con.

Where Prime Minister spoke so eloquently in favour the current 650 seat Commons at the 2003 Oxfordshire Boundary Inquiry, the Bill proposes an arbitrary and partisan reduction by 50 to 600 seats because it would hurt Labour the most. A steeper reduction would have abolished too many Tory seats. Indeed, before the election, the Liberal Democrats wanted to abolish 150 MPs, most of them Conservative!

Most outrageous the Government has said they intend to redraw the boundaries based on the December 2010 register when they know the current registeris missing over 3.5 million eligible voters, predominantly the young, poor and black and minority ethnic social groups. The problem of under-registration is greatest in urban areas, student towns and coastal areas of high social deprivation. If all those eligible to vote could do so, London would have fully eight more seats, now it will get five fewer. And the problems in future reviews will be worse when the Government have rushed through individual registration without any safeguards.

The Liberal Democrat Leader has allowed himself to be sandbagged by his Tory senior partners in his otherwise laudable attempt to introduce a fairer electoral system, risking losing a once-in-a-generation opportunity for electoral reform.

Instead of introducing a separate Bill on the Alternative Vote referendum which would have been supported by Labour in a vote through Parliament in line with our manifesto commitment, the Government has spatchcocked it together with the most blatant gerrymander of parliamentary constituency boundaries since the days of the rotten boroughs.

The Government should decouple the proposals into two separate Bills, one on the AV referendum, one on constituencies. And in the latter they should ensure that the original, fairer, more transparent and consensual boundary review system is restored, that new boundaries are not applied in such a dogmatic, rigid and politically discriminatory fashion. They should ensure that Wales is treated fairly and not punitively. And automatic registration from other public data bases must be included.

That way we might get two decent, democratic reform Bills based on consensus. That way we might get the Alternative Vote which I have supported for decades.

So we say to the Government: stop trying to rig democracy. Stop trying to ride roughshod over local community views and withdraw this Bill now.

In the Committee Stage of the Bill I urge the Government bring in amendments which address these seriously undemocratic features of their new Boundary Commission remit:

The power put into the hands of unelected officials – deciding whether or not to listen to what citizens say about their own proposals

The disadvantage placed on any objectors by the need to put forward alternative proposals for much wider areas (for instance the whole of Wales) without any knowledge of what others may be putting forward.

The loss of independent scrutiny with the removal of Assistant Commissioners – independent lawyers who chaired public inquiries and wrote reports on the arguments put and their own conclusions.

If the Government dogmatically refuses to restore public inquiries, they should at least consider a two stage consultation process allowing citizens to comment on each other’s proposals – and restore a role for an independent Assistant Commissioner in producing a published report summarising and drawing conclusions from the representations.

In practice, under the bill as it stands, it will be very difficult to get any alternative proposal accepted – because of knock-on effects across a much wider area and because it will always be said that adopting a radically different set of proposals would be unfair to those who commented on the original proposals.

Welsh Grand Committee

For the last 13 years the people of Wales have had to put up with the ignominy of four Secretaries of State who were MPs from Wales – yes MPs from Wales – in the Wales Office – can you credit it? What a relief that Gwydyr House has now been restored to its former Tory glory, continuing the long line of Conservative MPs representing English constituencies which goes back to 1987.

Some might say not so much a new Secretary of State for Wales as new Secretary of State for Chesham and Amersham.

And this despite her Conservative Welsh back benchers who are bristling with talent. Never has the Welsh Grand Committee witnessed a more brilliant bunch of Tory boyos.

And why, in contrast to Scotland is there no Liberal Democrat Minister in the Wales Office? Despite such a talented a threesome: Cardiff Central’s young Mum to be, Ceredigion’s scourge of Plaid Cymru and Hon member for Brecon & Radnorshire who looks absolutely ecstatic at being coalition with Tories.

Even more so since on BBC Wales last Tuesday he proclaimed the VAT rise the best thing since sliced bread having denounced it on BBC Wales two days previously as “a very regressive tax that falls most heavily on the poorest in society” which he could not possibly support. A new Liberal Democrat dictum: two days is a very, very long time in politics. In fact after Brecon & Radnorshire has now done a double volte face because he popped up on Monday alongside Ceredigion with a motion condemning VAT again.

And then there was the excruciating sight of Welsh Liberal leader Kirsty Williams meeting her new coalition partner Rt Hon Lady on the steps of the Senedd. She was like a bride who suddenly discovers to her horror the wrong person waiting for her with the ring. But all guests there, photographers snapping away, presents stacked up, the Vicar expectant. So what does she do? Goes through with the wedding ceremony smiling rigidly like the bride of Frankenstein. Her performance is a vintage hit on You Tube – I recommend it as a cure for coalition insomnia.

As for the Queens Speech, it’s clear that they want to pack the Lords and fix the Commons. She has the dubious distinction of being the first Secretary of State ever – the first Secretary of State ever – to advocate a reduced voice for Wales in Parliament, so increasing the voice of her Buckinghamshire constituents relative to our Welsh constituents.

Drawing up new boundaries which take no account of Wales’ population sparsity, or the geographic remoteness of communities in rural and Valley communities. Slashing the number of elected Welsh MPs from 40 to 30 and riding roughshod over criteria by which Parliament first ensured in 1949 that Wales never had fewer than 35 MPs.

Subsequent independent Boundary Commissions gradually increased this to 40 seats. She is spearheading a deliberate, calculated attack on Wales’ influence in Parliament. Outrageous behaviour for a Secretary of State whose main job should be to stand up for Wales not to attack our citizens’ democratic rights.

In fact, yet again, the Tories are turning Wales into the great ignored nation because, as the First Minister Carwyn Jones has said, there is no longer a strong voice for Wales around the Cabinet table. Scotland has got a generous reform of the Barnett Formula through legislation on the Calman Commission reforms and on top of this the Fossil Fuel Levy. But nothing whatsoever from her Government for Wales: not a mention of the Holtham Commission reforms. She could not even persuade her new Tory Liberal Cabinet colleagues to honour the agreement I negotiated with the Treasury to protect Wales. Instead of taking forward the Holtham proposals, she has broken that pre-election promise and dumped them in the long grass. A weak Secretary of State doing what Tories always do best of all: weakening Wales.

And only yesterday she had to make a humiliating climb down on the Housing LCO. She and her Minister blocked it in the pre-election wash-up negotiations but Carwyn Jones has now forced her to take it through. And a good thing too for the homeless and thousands in Wales in desperate need of affordable housing.

On the budget, the government says the richest will bear the brunt. That is simply not true. Many on low and modest incomes will feel the pain much more.

The real scandal of the budget is that the poorest will be hit the worst. I expect nothing less from Tories. But Liberal Democrats should hang their heads in shame. The Party of Lloyd George, who first established the state pension in 1909, and William Beveridge who in 1942 paved the way for the welfare state, has abandoned all it stood for.

The Observer reported a study by leading economists that finds poorest families in Wales will lose 21.7 per cent of household income. That’s over a fifth of their income. Even worse, they are being hit fully six times harder than richest. This was the first such study to take account of impact, not just of tax and benefit changes, but of savage cuts in public spending.

Not only will pensioners pay more in VAT, they were shamefully excluded from the much vaunted £1000 rise in the basic tax threshold. A double tax attack on Welsh pensioners.

Increasing VAT to 20% will affect everyone, most of all pensioners and those in poverty. As the Financial Times has said, areas like Wales that rely most on the public sector will be hit hardest by the deep cuts announced to public spending.

Worse still, these big cuts are based upon a big lie: that the public finances are so terrible, the cuts must be faster and deeper than Labour’s very tough deficit reduction plan which would have halved borrowing within four years. The prime Minister and Chancellor have been deliberately scaring the public, with the Liberal Deputy PM and Business secretary joining in.

But, as their own Office for Budget Responsibility said two weeks ago, the situation they inherited is actually better than was forecast as recently as Labour’s Budget in March!

Borrowing is £9 billion lower this year and £22 billion lower over the coming four years. Growth is higher and unemployment is lower. Business bankruptcies and home repossessions are half the rate of the 1980s and 1990s Tory recessions. All because of Labour’s government action and investment to support jobs, businesses and struggling home owners which has left Britain much better placed than America or the rest of Europe to recover from the worst global recession for eighty years.

These brutal cuts are ideological, not economic. The new ConDem Government is not cutting savagely because it needs to, it is cutting savagely because it wants to.

One thing has certainly changed since Labour left office: the Eurozone countries – especially Greece, and now Spain and Portugal – are today in real difficulty. Without Labour’s progressive influence, fiscal conservatism is now dominant in Europe, with huge cuts in public investment and jobs on the way. As President Obama has warned, this endangers the world recovery. It also means a downturn in the very European market where the vast majority of our trade takes place.

So this is precisely the moment not to cut public spending savagely, because it will put at risk the still fragile British recovery. Cutting deeper and faster repeats the mistakes of the 1930s, 1980s and 1990s Tory Governments.

We are coming out of the recession but our economy and the economies of many countries around the world have not fully recovered. The recovery is fragile and could easily be derailed.

Only governments can step into the breach during such difficult times.

Cut off that support and the risk is palpable.

The private sector isn’t yet robust enough to replace government investment. Nor is it getting anything like the support delivered by Labour.

John Maynard Keynes – a signed up Liberal – will be turning in his grave, not just at this damaging folly, but at the manner in which the Liberal Democrats have breathtakingly somersaulted, trading tens of thousands of jobs that will be lost in Wales (hundreds of thousands across Britain) for their own jobs in Government.

The Deputy Prime Minister, Welsh Liberal Democrat leader Kirsty Williams, and even the once-saintly Business Secretary, are now arguing the precise opposite of what they did in the election campaign just a few weeks ago. Big cuts based upon a big lie – a real tragedy for Wales.

Because there are two big challenges facing Wales: first how to secure jobs and growth. Second how to get borrowing down in a way that is fair to everyone.

The first budget from the new government has failed the fairness test, going back to the same old right wing Tory agenda:

attacking pensioners;
hitting people on low incomes;
causing unemployment to rocket;
making our hardest working families pay the price.

The only difference is this time it’s defended to the hilt by the Liberal Democrats.

What we have from the Con Dem government is a strategy for cuts.

But where was the strategy for jobs and growth, the lifeblood of this country?

Growth is essential to secure a future for ourselves and for our children.

Without growth Wales will be condemned to years of decline.

After record levels of employment and prosperity, falling unemployment and falling numbers of incapacity benefit claimants under Labour, Wales will be returned to its traditional Tory place: bumping along the bottom, with higher unemployment, lower incomes, poorer prospects.

That is not where Wales needs to be. That’s no future for my three Welsh born grandchildren. Nor is it any future for the 240,000 Welsh men and women on Disability living allowance now facing brutal cuts.

And now the Tories with the help of the Liberals plan to punish hundreds of thousands on incapacity and other benefits. We had a benefits regime that was tough but fair. They are pledged to one that is punitive and unfair.

Wales has been through a difficult time as has every other country in the world.

But the Government is repeating the mistakes of the past when cuts were made without any regard to the consequences.

We have no argument with over the need to reduce our borrowing.

That is why Labour set out a plan to halve the deficit over four years, cutting borrowing by £70 billion – a huge reduction involving very difficult decisions and cuts.

What we were not prepared to do – and they obviously are – was top this up with a further £32 billion of spending cuts and a further £8 billion of tax rises over and above Labour’s plans.

The Tories, using the LibDems for cover, have made the wrong choice. They are gambling with the recovery and it won’t be bankers, or the many millionaires in this Cabinet, who suffer. It will be the people of Wales who pay the price.

The Tories, using the LibDems for cover, accept that unemployment is a price worth paying.

Listen to their new independent Office for Budget Responsibility. It predicts that as a result of the budget employment will be down by 100,000 with lower growth this year and next. The scandalous abolition of the Future Jobs Fund means the 11000 unemployed Welsh young people who have already benefited, and a further 6,000 who were due to benefit, will be back on the dole.

The former Monetary Policy Committee member David Blanchflower predicts 250k extra young on dole next year following FJF cuts and other Budget measures. That suggests up to 20,000 Welsh 18 to 24 year olds condemned as young people in Wales were in the Tory 1980s and 1990s to generational joblessness.

Many tens of thousands of Welsh jobs will be lost in both the public and private sectors, 50,000 being one estimate. That could well prove an underestimate according to a treasury assessment that 1.3 million jobs will be lost across Britain as a result of the Budget over next five years.

To reduce government borrowing, Labour chose to raise national insurance contributions rather than increase VAT. Now we have both.

Only weeks ago the Tories said the NI rise was a ‘jobs tax’. Last week we found that they are increasing the tax on employees.

And they have put up VAT to 20%.

Only weeks ago David Cameron said it was a tax rise we wouldn’t see.

And the Liberal Democrats condemned the prospect as a dire draconian tax bombshell.

Now they will try to force it onto the statute book, a fundamental breach of trust with voters.

This is the third time in a row that a new Tory administration has raised VAT despite denying any plans to do so – Thatcher in 1979, Major in 1991 and Prime Minister in 2010. What a hat trick.

And while pensioners were exempt from NI they are not exempt from VAT.

They say we are all in this together. But many people on low and middle incomes will see their earnings cut.

Child benefit frozen for the next three years for over 7 million families; tax credits reduced for families earning just over £15,000 and scrapped for families earning just over £30,000 in two years time. The Rt Hon Lady may remember specifically denying to me this would happen on our election TV debates. Yet another broken promise and one she also specifically denied on those same TV debates: hundreds of Welsh police and community police support officers are for the chop.

Yes there was a boost to child tax credit. But this was more than offset by housing benefit cuts, scrapping of maternity and pregnancy grants, along with other benefits targeted to support children.

And the Con Dem government has also launched a full-scale war on public sector pensions.

Now of course reform was needed – indeed Labour introduced radical reforms: postponing the retirement age and increasing public employee pension contributions, closing old schemes and starting new ones. All changes negotiated with the trade unions. But the orchestrated Tory Lib Dem assault on public pensions heralds a race to the bottom which will leave a huge burden on future taxpayers coping with pensioner poverty.

For every high earning public service pensioner who provokes headlines in the Tory media there are thousands and thousands on low pensions.

For example the average pension for female NHS worker is £5000; the median rate is even lower: half women NHS workers are on a pension of less than £3500.

For companies there is a reduction in headline tax. But allowances which make all the difference to investment and future jobs growth have been cut.

We shouldn’t be surprised. Just two weeks ago the new government scrapped our plans to extend a loan to Sheffield Forgemasters, and the promise of high quality jobs.

And Tories and LibDems should not insult our intelligence by trotting out the line that they can renege on their election promises because the books were worse than they thought. That is also simply not true.

The Tories and Liberals are constantly scaremongering, comparing us with other countries like Greece. That is ridiculous. We are a large developed economy. No-one believes our positions are anything like comparable.

The truth of the matter is that the Tories, with LibDem help, have done what Tories always do: cut, cut and cut again until public services for all give way to private profits for the few. This budget is a Lib Dem summer sell out. It turns the Lib Dem orange book into a Tory blueprint.

Where Britain needed a budget to give the green light to growth, instead it switched all the signals to stop.

Instead of driving the economy forward the budget has engaged reverse thrust.

Because there is no room left for interest rate cuts, this budget increases the danger of a double dip recession.

A double dip recession that could take Wales back to the dark misery of the 1980s and 1990s, when whole generations of young and old condemned to suffer.

It’s an outrage and I warn the Rt Hon lady: the people of Wales will not take this lying down. We will fight back.

Dissolution of Parliament Motion

The Secretary of State for Wales (Mr. Peter Hain): I thank the hon. Member for Moray (Angus Robertson) for praising the Prime Minister—we can do much more of that in the debate. I also thank the leader of Plaid Cymru for his earlier welcome of my reinstatement as Secretary of State—I am grateful. I apologise to him and the House for having to rush off after I have spoken to get my seals of office. I have to stand the hon. Gentleman up for the Queen.

I shall respond to the hon. Member for Moray shortly and urge hon. Members to reject the motion, which calls for a dissolution of Parliament. However, first, I want to ask why the motion is not in the name of the Leader of the Opposition. He calls for an immediate general election every time he gets out of bed and every time he goes on television. He has said virtually nothing for the past few weeks, except to demand an early election. So why does not he table the motion instead of trooping dutifully behind the nationalists? Is he just playing to the media gallery, as usual, because he knows that the House of Commons will not back him? Is it a case of bravery before the cameras, cowardice before Parliament?

Madam Deputy Speaker: Order. Perhaps the right hon. Gentleman will reconsider and withdraw that remark.

Mr. Hain: I happily do so—it was said in jest.

The leader of the Conservative party is allowing the nationalists to do his work for him.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): Perhaps the Leader of the Opposition has followed the example of the Prime Minister. We have a debate in which the Prime Minister could have explained why he does not want an election, yet he has not bothered to turn up. He has sent a Minister who is not available for the whole debate. When we have a three-hour debate in the Chamber, the least the Government can do is find a Minister who can be here for it.

Mr. Hain: Where is the leader of the Liberal Democrats? Where is the leader of the Conservative party? I see that the leader of the SNP has dutifully travelled down to do the Tories’ work for them, as he so often does. Plaid Cymru and the SNP are the Tories’ little helpers. In 1979, the SNP voted to destroy a Labour Government and usher in 18 years of miserable Tory rule. In the European elections, voting Plaid Cymru allowed the Tories to top the poll in Wales—albeit on a pitiful vote of just over 6 per cent. of the electorate. Voting SNP will allow the Tories to get in at Westminster.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy) (PC): Not that it matters a great deal—although the right hon. Gentleman has apologised once to the House, a few seconds ago—but just to be accurate, he said that Plaid Cymru voted to bring down the Labour Government. We did not.

Mr. Hain: Actually, I did not say that at all. I said that the SNP voted with the Tories to bring down the Government in 1979. However, let me remind the hon. Gentleman and the House that we remember well that Plaid Cymru came to the rescue of the besieged Conservative Government under John Major, by doing a grubby deal in 1993.

Mr. Simon Burns (West Chelmsford) (Con): Talking about grubby deals, does the right hon. Gentleman remember that in 1979 the Labour Government did a grubby deal with Plaid Cymru to secure their votes and to try to cling to office?

Mr. Hain: Actually, it was an honourable deal, concerning quarrymen in north Wales as I recall. We were happy to do what we did, which was in their interests.

Pete Wishart (Perth and North Perthshire) (SNP): Will the Secretary of State give way?

Mr. Hain: In a moment. The SNP—the hon. Gentleman’s party—has a history of seeking to inflict a Tory Government on Scotland. It did that in 1979 and it is trying to do it again now. The SNP’s real agenda is not about an election; it is about wanting to get a Tory Government in Britain to undermine Scotland’s link with the rest of Britain. The SNP would love to have a Tory Government in Westminster, inflicting mass unemployment, education cuts and hospital closures in Scotland again, so that it could try to ride a wave of revulsion towards independence for Scotland.

Pete Wishart: I agree with the Secretary of State: the last thing that Scotland needs is a Conservative Government. We remember all too well the scorched earth policies and being the testing ground for the poll tax, but does he not agree that the reason that we will get a Conservative Government in Scotland is the failure and futility of his Labour Government?

Mr. Hain: Is the hon. Gentleman saying, then, that he prefers a Labour Government? [ Interruption. ] That is very interesting. So, as far as he is concerned, he does not mind a Conservative Government in Westminster.

Several hon. Members rose —

Mr. Hain: Let me make some progress. We now have the hon. Gentleman on the record as being indifferent to a Tory Government, and the people of Scotland will note that. People who back the nationalists get the Tories on their coat tails, just as the Tories are on the nationalists’ coat tails in voting for today’s motion. That is what the nationalists are: tartan Tories in Scotland and daffodil Tories in Westminster.

Hywel Williams (Caernarfon) (PC) rose—

Mr. Hain: I give way to a daffodil Tory in Westminster.

Hywel Williams: I thank the Secretary of State for giving way, but we need to respect history. We had Tory Governments throughout the ’80s and ’90s not because of the actions of the nationalist parties, but because the Labour party lost the election—and then lost and lost and lost. That is the Labour party’s responsibility, not ours.

Mr. Hain: I have a lot of respect for the hon. Gentleman, but it was his nationalist colleagues in Scotland who helped to bring down the Labour Government, which paved the way for a Tory Government.

Mr. Jim McGovern (Dundee, West) (Lab): I agree with the Secretary of State’s comments about what happened in 1979. The people of Scotland have good memories and they will never forgive the separatists of the SNP for what happened in 1979, which was an unmitigated disaster for the people of Scotland. I am sure that the Secretary of State will remember that, following 1979, the SNP—the separatists—were dubbed the tartan Tories by the people of Scotland. Is he also aware that, given that the official Opposition are totally devoid of any policies at the moment, the people of Scotland currently dub the separatists of the SNP the political wing of the Conservative and Unionist party?

Mr. Hain: My hon. Friend puts the case very eloquently, and I have to agree with him. Here are the tartan Tories, at it again today, siding with the Conservatives to achieve their objectives. People who back the nationalists get the Tories on their coat tails.

Adam Price (Carmarthen, East and Dinefwr) (PC): How can the Secretary of State have the gall to accuse our parties of being Tories when on virtually every major issue of the past 12 years—whether the Iraq war or the privatisation of Royal Mail—our parties have been to the left of his?

Mr. Hain: What about the minimum wage— [ Interruption. ]

Madam Deputy Speaker: Order. Members have a right to be heard.

Mr. Hain: What about the statutory minimum wage? I do not remember massive support for that from the nationalists. To dissolve Parliament now would be to walk away from the necessity for the reform that voters are demanding, as the hon. Member for Moray rightly said, and that we are delivering in the form set out by the Prime Minister earlier today. I heard the hon. Gentleman waxing lyrical—and being very persuasive—about the need for democratic reform. Virtually every one of the proposals that he advocated was enunciated from this Dispatch Box by the Prime Minister a few hours ago. To dissolve Parliament now would be to turn our backs on the British people in their time of economic need and insecurity. Neither of the two great challenges that we face—the political challenge and the economic challenge—would be solved by an election. Playing with parliamentary motions might be a priority for Opposition parties. Cleaning up politics and getting the country back to work is Labour’s priority.

Mr. Richard Shepherd (Aldridge-Brownhills) (Con): Does the Secretary of State not believe that a Labour victory in a general election would clearly reinforce the strength and competence of the Government to address the issues that confront this nation? Is that not a case for holding an election now?

Mr. Hain: When the time comes to call an election, we will indeed get a renewed mandate to take the country forward and to meet the challenges of the future. That will be the choice that is put before the British people at that point. They would not forgive us, however, for abandoning the job of implementing parliamentary reform and economic recovery now. They want the Government to sort things out; they want us to do it quickly, and then, and only then, to call a general election. There will be one soon enough—within a year—and only then will it be right to go to the country and ask who should take us forward to the future, once we have addressed the pressing concerns of today.

Stewart Hosie (Dundee, East) (SNP): The Secretary of State says that these things need to be done quickly, and I entirely agree with him. So why, after 12 years, have we still not got a fully elected House of Lords and a proper democratic system for this Chamber? This is expediency on the part of the Government; they are not taking decisive action. Their argument is facile beyond belief.

Mr. Hain: The reason that we have not been able to get our reform through the House of Lords is that the House of Lords blocked it. Labour has only about 30 per cent. of the votes in the House of Lords, and the Conservative party—despite now advocating a policy of an elected second Chamber—cannot deliver its own peers in the House of Lords in such a vote. Sooner rather than later, however, we will put that question to the House of Lords, and we will hope to carry the House with us in getting full reform for a democratic second Chamber.

Meanwhile, there is a lot to do. Of course the European elections were terrible for the Labour party. But, far more significantly, they were an alarm call for all the parties, and for parliamentary democracy itself. For every party, a low turnout at elections is the clearest sign that the British people are not engaged with the political process. That is our fault, not theirs. We seem obsessed with procedure and tribal party politics—as we can see this afternoon—and now the public also think that MPs are all in it for our own ends.

If this motion were carried and Parliament were dissolved, all that the poll would amount to would be another referendum on MPs’ expenses. The low turnout and the rising support for fringe and extreme parties show us one thing: that people used their vote last Thursday to protest, not on the finer points of European policy, but on the story of the day—indeed, the story of every single one of the past 30 days: MPs’ expenses.

Mr. Donohoe: I thank the Secretary of State for giving way on a point on which the hon. Member for Moray (Angus Robertson) would not give way. I want to ask my right hon. Friend a simple question. Does he honestly believe that, if the motion were successful and there were to be a general election in the coming weeks, the question of Members’ expenses would go away? Would it not stay with us for the following four years as well? Would not The Daily Telegraph and all the other newspapers revisit the issue and find some other reason to print the same story?

Mr. Hain: I could not agree more, which is why we need to lance the boil now, and why we need this Parliament, on a cross-party basis, to sort this out here and now. Then, within a year, we can have an election to decide who should take the country forward—not how we should reform parliamentary expenses, because that will have been done, but who should take us forward to meet the big challenges of the global economic crisis, of climate change and all the other issues before us.

Lembit Öpik: Does the right hon. Gentleman agree that what has effectively happened, in summary, is that the general public and the media have become obsessed with the process of politics rather than the outcomes that we are meant to create, part of which is our own fault? The people of Montgomeryshire are less interested in process than in getting out of this recession, so if we are not to have an election, will he explain how he envisages the Government responding in the months ahead to the need of the citizens of Montgomeryshire and across the country for outcomes to make their lives better, their jobs more secure and to reduce the sort of social tensions that led to the reaction we saw in the European elections last week?

Mr. Hain: I could not agree more with the hon. Gentleman that the media are far too obsessed, almost to the exclusion of all else, with process. It is process, process, process rather than substance, substance, substance. That is why we will carry on with delivering our policies to get the housing market going again, to build more social housing, to tackle the lack of confidence in business and to ensure that business is supported so that we can recover from this economic crisis brought about by the global financial collapse and move the country forward. Then there will be a choice—a very clear choice—at the next general election.

We do not need a referendum on expenses because we have just had one. We were all given a real kicking by the voters and we understand the message: “Clean up, shape up, get on with the business of Government and come back to us when the problem is fixed”. Where the Opposition parties posture, we deliver. We are determined to take the necessary action, not to walk away.

Just imagine what might happen to the economy if Parliament were dissolved and we had an election. In the middle of probably the worst financial crisis the world has faced in living memory, Britain would face weeks and weeks of instability and uncertainty—just when there are reports of rising consumer confidence, just when business surveys show the pace of decline is slowing, just when mortgage approvals have risen for the third month in a row and just when the poison infecting our banks has been stemmed. Why, just at this critical moment when the global economy is still volatile, do the nationalists want to trigger instability in the markets and in the British economy?

Let us imagine for a moment pursuing this nationalist-Tory alternative. We dissolve Parliament, then spend the next three weeks fighting each other rather than the global crisis, and the nationalists do not have a clue what to do about it. The hon. Member for Carmarthen, East and Dinefwr (Adam Price), who rather fancies himself as an economist, praised Iceland as an inspirational model. No sooner had he done so than its economy imploded, while his other small country model, Ireland, has sadly had its own serious difficulties, yet Plaid lauded both Iceland and Ireland as an arc of prosperity.

As for the Tories, the real reason they want an election now is that they cannot go on for ever dodging the questions. They have no policies at all except for multi-billion pound cuts in public investment.

Several hon. Members rose —

Mr. Hain: I will give way in a few moments.

It is good to see that the right hon. Member for Richmond, Yorks (Mr. Hague) has found time from his millionaire speaking and consultancy contracts to be with us today. He has a vivacious Welsh wife, but sadly she has not managed to educate him politically. He opposed the minimum wage, which has benefited millions of workers throughout Britain. He opposed the social chapter, referring to

“minimum wages, social chapters and all the other job-destroying nonsense”.—[ Official Report, 20 January 1997; Vol. 288, c. 606.]

He said that the National Assembly for Wales would be

“nothing more than a talking shop and a terrible waste of money”.

Does he still hold those views? Should he not now apologise to the shadow Welsh Secretary for landing her right in it?

When the right hon. Gentleman was Secretary of State for Wales, at least he learned the national anthem—indeed, his rehearsing it led to him marrying his private secretary—but he blocked billions of pounds of objective 1 and convergence funding for Wales, which a Labour Government subsequently delivered. He is now part of an Opposition who want to implement billion-pound cuts that would decimate those very European programmes right across Wales.

Adam Price: The Secretary of State’s speech is another good argument for an early dissolution. He is obviously out of practice. If Plaid Cymru has nothing to contribute in terms of the economic crisis, why did his party agree to form a coalition with us, and why is the leader of my party, the Minister for the Economy and Transport, coming up with the ProAct wage subsidy scheme, which the Secretary of State has himself praised and described as an innovative scheme that should be copied here?

Mr. Hain: If we are talking politics and government in Cardiff Bay as opposed to politics and government in the House of Commons, why did the hon. Gentleman’s party chase after the Conservatives in the desperate search for a coalition before Labour helped it out and got it into government?

On the “Today” programme this morning, the hon. Member for South Cambridgeshire (Mr. Lansley), the shadow Secretary of State for Health, let slip that

“that does mean over three years after 2011 a 10 per cent. reduction in the departmental expenditure limits for other departments. It is a very tough spending requirement.”

Yes, the demand from the Tories is very tough. A 10 per cent. cut would be an utter disaster for housing policing, business support, defence and many other public services. A 10 per cent. cut would amount to cuts of £50 billion across the United Kingdom, £600 million in Wales, and £1.2 billion in Scotland.

The Tory mask is slipping. The Tories want people to vote soon, before the truth is out. They have no positive solutions to the financial crisis, just opportunist spin on the economy today followed by savage cuts to public services tomorrow—cuts made almost with relish, gleefully. The Tories would use the financial crisis as an excuse to do what they have always wanted to do: cut, cut and cut again.

Stewart Hosie: The Secretary of State is absolutely right: making savage cuts in the teeth of a recession is the wrong thing to do. He will therefore criticise his own Chancellor and the Treasury for the £500 million worth of cuts that will be heading Scotland’s way next year in the teeth of a recession.

Mr. Hain: Is this not curious? The Scottish Government have never had more money than they have now. Their budget, like that of the Welsh Assembly Government, has more than doubled since we came to power in 1997.

What is the real nationalist agenda? Why would the nationalists dissolve this Parliament today? It would not just be for the purpose of an immediate election; they would dissolve this Parliament for ever. [Hon. Members: “Hear, hear!” There we are. They are cheering the idea. If they were frank, they would admit that they would break up the United Kingdom, cutting off Wales and Scotland from the main markets, population centres, wealth and international influence of the United Kingdom.

Mr. Alex Salmond (Banff and Buchan) (SNP): He is talking sense at last.

Mr. Hain: That is the sense that the people of Scotland will reject: cutting Scotland’s links with the United Kingdom, just as Plaid Cymru would cut Wales off from the great benefits of sheltering under the umbrella of the United Kingdom and making us all stronger together.

Mr. Salmond: Given that the Secretary of State’s colleagues in the Labour party in Scotland have been deploying these arguments for years—and, I am sure, deployed them in the European election campaign—to what does he attribute the judgment of the people of Scotland in increasing the SNP vote by 10 per cent. in mid-term, and last week’s resounding endorsement of the SNP Government in Scotland?

Mr. Hain: The right hon. Gentleman speaks of a resounding endorsement, but I believe that the SNP received less than a third of the vote on a tiny turnout. Labour voters, for reasons that I have explained, stayed at home in their hundreds of thousands.

Mrs. Madeleine Moon (Bridgend) (Lab): Does my right hon. Friend agree that people listening to this debate will be appalled by the petty discussions about which party’s votes have increased by what percentage? What concerns the people of this country, and certainly the people of Wales— [Interruption.]

Madam Deputy Speaker: Order.

Mrs. Moon: Thank you, Madam Deputy Speaker.

What concerns the people of Wales and the people of this country is the memory of being told to get on their bikes and find work—of “hunt the job”. They remember money being sent from Wales to Westminster when it could have been invested in Wales. They remember schools falling apart, and education waiting lists. That is what people want us to discuss here, not whether another party has increased its voting share by 1 per cent. Nobody cares about that; they care about their lives.

Mr. Hain: My hon. Friend makes that point extremely persuasively, and it reminds me that when the right hon. Member for Richmond, Yorks was Secretary of State for Wales he endorsed the policy of his predecessor, the right hon. Member for Wokingham (Mr. Redwood), in sending money back from Wales to the Treasury, which we then had to reverse by more than doubling the budget for Wales since we came to power. If the nationalists were successful in wrenching Wales and Scotland from the rest of the United Kingdom, that would leave Wales with a £9 billion deficit in public finances, and the figure for Scotland would be about £10 billion.

The SNP Administration at Holyrood are propped up by the Tories. Tory votes in the Scottish Parliament supported the SNP’s budget of cuts, and the quid pro quo is that the SNP in Westminster does the Tories’ bidding. People in Scotland whose communities still bear the scars of Thatcherism did not thank the SNP in 1979, and they will not do so now.

Let me make this plain: the Tories and the nationalists would turn their backs on the British people and walk away together. They would dissolve this Parliament because they hope it would suit their short-term political ends. Only Labour will stay the course to do the hard work, to reform, and to give real help to the British people. They can dissolve if they want to; this Government are not for dissolving. We are standing firm, and I urge the House to reject the motion.