I do not accept that at all. Certainly, the main driver of the Tata job reductions was, as I mentioned, the reduction in demand, particularly in the European market. Someone running a business clearly looks for ways to reduce costs. There are two drivers for a business—the revenue that it gets and the costs that it pays. Revenues are going down because demand is down due to the global environment, but if expenditure is going up due to excessive costs, that will also form part of the choice over how many job cuts are made. In the business mix, energy prices have an impact, and if they did not, Tata would not be talking to me about them. It is clearly also talking about the wider marketplace and the structure of the market.
I should say that a great deal of great work is going on in Tata. With Swansea university, it is developing multi-layered steel—six layers of different steel—that produces its own electricity and heat when clad on a building. It reduces carbon footprints and may become a global game changer. In addition, Tata are investing £185 million in a second blast furnace—increasing capacity production from 4 million tonnes to 4.7 million tonnes a year—alongside the Margam pit, which has particularly good coal for the production of coke for steel production. There is a strong future for Tata, but we have to get the right balance to protect our environment, while protecting competitiveness for the steel industry in Britain, and south Wales in particular.
We have had long discussions about to what extent we should cut expenditure, as opposed to grow revenue, to get the British economy back on track. The Minister will know that the International Monetary Fund suggested that for every 1% cut in expenditure, growth would go down by 0.5%. More recently, it suggested that for every 1% cut, growth goes down by 1.7%, so expenditure cuts do not seem to be as good an idea as they used to. Our focus should be on revenue. A business person who runs a small business in Uplands, in Swansea, came to me recently and said, “I have a business, and if it makes a loss, the last thing that I am going to do is sack all my workers and sell my tools. I have to tighten my costs and focus on selling more.” That is what the Select Committee report should be about—increasing the productive capacity and commercial success of Wales in the global marketplace.
Other changes are being made that impact on consumer demand and the opportunities for people to get jobs, help themselves and help their local economy. I should say in passing, as I did in the main Chamber yesterday, that some changes to the welfare system that are designed to reduce the costs of the welfare state are likely to do the opposite, by preventing people from accessing work. I am thinking particularly of under 25-year-olds having their housing benefit cut, because 45% of such people have children. I know of a woman who has been made redundant and a man who worked for nine years—from the age of 15—but was made redundant six months ago; they have two children and could face homelessness. If they are homeless and of no fixed abode, they will not be able to apply for jobs. That does not make sense.
Under the other housing benefit change—the empty bedroom tax—a couple with two children and, therefore, three bedrooms will be suddenly charged £7.50 a week for each empty room if one child goes to university and the other has a job or goes to live with their boyfriend or girlfriend. They might say to their son or daughter, “It’s going to cost me this money, so you don’t really want to go to college, do you?” That is wrong; some people simply will not be able to pay.
People have come to me with disposable incomes of about £20 a week, after utility bills and so on. I am particularly thinking of a man with medical problems, who told me, “I use my spare room for painting. If I have to pay the £7.50 for it, I will end up with £12.50. A council tax benefit cut of 20%, will mean another £5. I will be down to £8 a week for my food, clothing and leisure.” That does not make any economic or social sense. That person will end up homeless.
I have been a local authority leader, and local authorities historically built two and three-bedroom houses for families. There is a shortage of one-bedroom properties. Everyone is supposed to go into such properties, but there are not enough, so they have to pay to go to the private sector, which costs more. It does not add up on a simple balance sheet, and it does not add up in terms of access to jobs and providing an environment for people to work in, and we want people to work. If people are not available to work for inward investors, because we have under-occupation and empty houses on the one hand and homelessness on the other due to the housing benefit changes, the system will not make sense.
We have also seen cuts to the working families tax credit. If a small company in Wales can afford to pay someone £12,000, or whatever, and that person can only afford to work for £15,000, it makes sense for the Government to provide the £3,000 difference, because we get someone a job in a growing business. People who work part-time will lose nearly £4,000, with the move from 18 to 16 hours. People will not have jobs and we will not have growing businesses, so there will be problems. We therefore need to think about the architecture of the welfare state in relation to boosting jobs and job access.
On banks and finance, there is a problem in Wales. I do not know whether the Chair of the Welsh Affairs Committee will agree, but we have discussed the possibility of doing a report on access to finance for small business. Since I last spoke to him about that, more and more businesses, some of them quite big, have told me that they have the bookings and can do the work, but they need the money and the banks are letting them down. Of course, that is not an issue only for Wales, but the proportion of small businesses is higher there than in England.
Wales has great opportunities for tourism. If we get the branding right, it is a great place to visit, particularly for environmental health or historical trips. Many mature people, particularly from north America, do not want to get skin cancer from lying on beaches, but speak English and want fine food, so there are lots of opportunities to build up the Welsh brand and encourage inward investment.
That naturally leads me to the Dylan Thomas centenary in 2014. He was from Swansea, of course, and there is now a great opportunity to market the Dylan Thomas festival, which runs from 27 October, his birthday, to 9 November, which was the day of his death. Not
enough is known about that festival—it is not like the Hay and Edinburgh festivals—but there is an opportunity next year to gear that up for the following year and to internationalise it. The Swansea bay beer festival might be moved into that week; of course, Dylan Thomas had a few drinks and enjoyed himself, as well as writing fine literature and poetry. We should celebrate that, and during that week we want Swansea to be the place to be. We need to learn from the Hay festival and others, and I am already involved in trying to make international links, perhaps without getting people from Bollywood to go. We want that to be the place to be, as a great celebration for the whole of Wales, as well as for the Swansea bay city region.
In conclusion—[Hon. Members: “Shame!”] I know, but it had to happen. A bright future is possible if emerging markets work together. We can use our insights, as team UK and team Wales, to build a more exciting, productive, richer and fairer future for Wales. The UK Government need to think again about several issues, and I have already mentioned enabling people to work, providing easy access to markets, inward investment and encouraging success. It is important that the Welsh Government work in partnership on that and take forward their own successful initiatives, so that there is mutual learning and respect in the interests of having a strong economy for all our people.