We need both the broad range of incentives which are available and also selective assistance, particularly in the form of equity participation for larger projects in development areas. We need to know whether resources are being transferred in regional policy from REP, which is in effect a regional devaluation, into more selective financial assistance. We need to know how much is being channelled and for what specific purposes it will be used.
One other aspect which has not been stressed so far in debate which has tended to centre naturally on the issue of wage inflation and its relationship with public expenditure as a policy to contain wage inflation is a real discussion of the impact of these cuts on the social wage. The Chancellor has always avoided discussing these issues in detail. His right hon. Friend the former Secretary of State for Social Services, the Member for Blackburn (Mrs. Castle), talking about the social wage last year, said that the most important part of the standard of living of most people depended on the great complex of services we call public expenditure. She said that they were not only the key to the quality of life but the key to equality. She said that the great advances had come from better education, health services, housing, care of the old, the disabled and the handicapped.
As we know, the social wage as a percentage of total public expenditure is now up to 60 per cent. In one of his Budget speeches, the Chancellor said that the social wage had been increasing much faster than ordinary wages and prices, but what he failed to take into account was the fact that the social wage is paid mainly for the benefit of the greater part of the population which does not receive a working wage or a salary. Wage earners are already outnumbered by the totals of dependent children, the elderly, the sick, mothers rearing children, the later school leavers, the unemployed and so on.
We must have from the Treasury Bench tonight an analysis not only of the potential effect on international creditors—on the IMF—but of its effect in terms of the level of the social wage on families. We have already seen, in the Government's failure to implement their programme of social policy—particularly their income maintenance programme—that we are facing a real reduction not only in take-home pay but in the relative position of the social wage and the overall services provided through out public expenditure.
My specific concern, naturally, is with the £12 million reduction in the budget of the Secretary of State for Wales—a reduction in money spent on roads, on the health and social services, on education and on local authority services. I am concerned about the effect of these cuts not only on the statutory services themselves but on the back-up services and the replacement services which so often have to be provided by voluntary bodies.
Any further cuts in statutory social services, any erosion in the social wage through the statutory provision, places additional huge financial burdens on organisations whose voluntary work props up the inadequacy of Government policies. Whenever there are public expenditure cuts by statutory authorities, both central and local government, an additional burden is placed on the resources of voluntary bodies.
I am particularly concerned here with those voluntary bodies involved with one-parent families, with the homeless and with housing needs—I am thinking particularly of groups that I know well in Cardiff—which operate replacement services for those which are not provided by the local authority, and which will have to face an additional 2 per cent. on the payroll of all their staff. This is added to the cuts in expenditure on social policy and will provide an additional burden on the voluntary sector. The Government should consider whether it is not appropriate to have a policy of exemption, or perhaps a lower level of any payroll taxation that they impose on those persons who are employed by voluntary organisations which are making up for the deficiency of the statutory provision of the Government themselves.
I shall concentrate the time left to me on an area of expenditure which is causing severe problems in Wales—housing. About 48 per cent., or nearly half, of our houses are pre-1918 as compared with just over 30 per cent. in England. Not only is the housing older in Wales but it follows that the condition of our housing is far worse.
Surveys conducted in 1968 and 1973 indicate that one house in six is unfit. The number of unfit dwellings in Wales increased from 92,000 in 1968 to 147,500 in 1973. Of the unfit dwellings 65,000 were in the central and eastern valleys of Wales and 33,000 in the remainder of industrial South Wales.
We face a major housing crisis, yet, the reaction of the Welsh Office is to reduce public expenditure on housing in real terms. For 10 years we have declared that there should be a planned programme for housing to deal with the housing crisis. The view of the Plaid Cymru research group is that over 25,000 houses a year should be cleared or improved to deal with that crisis. That is the need if we are to overcome the problem. It represents a target of nine per 1,000 population. The present level of achievement is six per 1,000 population, which compares badly with other countries. Our record is far below that of Switzerland, Japan, Finland, Australia, Holland, Iceland, Sweden, Spain, France, Norway, Germany, Denmark, Canada, Greece, and even Ireland.
The reaction of successive Governments—and here the Conservative Government have much to answer for—has been to fail to face the mounting housing crisis which becomes worse each year. Because of the age and poor conditions of housing in Wales, the number of unfit dwellings can be expected to increase at a rate of about 10,000 a year for the next 20 years. That means that at least 16,000 houses need to be improved or replaced each year. Not only do we need a programme of massive rebuilding but one of improvement. It is in that context that we look at the cuts.
According to the White Paper housing is to receive £20 million less in real terms in 1979–80 than in 1975–76. But last year the Secretary of State for Wales boasted of a 20 per cent. increase in spending on housing in Wales. That was a freak and we shall not see that level of house building maintained. The 17,000 houses that were built last year will fall far below the level of the Conservative Government's achievement in the early 1970s.
The Secretary of State said of housing in Wales in an oral answer on 26th July that he had been able to obtain an additional £20 million to £30 million for house building in Wales out of the Contingency Fund. That figure represents only a partial restoration of the cuts introduced by the earlier White Paper. In real terms the Government are far short of a realistic target if we are to bring the housing stock of Wales up to the British average, which is no marvellous objective. We need an additional £80 million a year and not just the £20 million. which is merely a partial restoration of an earlier cut.
We should not only look at the need for an increased public sector house building programme but at improving the rôle of local authorities in providing loans. I criticise the Government for the way in which they have passed the buck to building societies in that respect. Local authorities are of particular importance in Wales where a high proportion of houses are old and where people are relatively lower paid. The level of personal wealth per capita in Wales is only 72 per cent. of that of the United Kingdom and there is therefore a particular need for local authority loans.
Building societies in Wales and the rest of the United Kingdom have failed to provide the borrowing that is required. The importance of local authority funds to potential house buyers in Wales is shown by the fact that in 1974, when there were no ceilings, just over 5,000 advances were made by local authorities in Wales compared with about 23,000 by building societies. It is therefore clear that local authority advances play a vital part in housing policy.
I am anxious lest the decisions to cut back on local authority lending pre-empt what is supposed to be an inter-departmental review of housing finance. In that respect the one hand does not know what the other is doing. The Treasury cuts back on local authority lending at the same time as another Department looks at housing finance. That is intolerable.
I seek an assurance that any decisions on reductions in local authority mortgages will not pre-empt the housing review, which I hope will start to switch resources from the upper end of the market to where they are needed—for the improvement of housing stock in areas such as Wales. I stress that if the Government are not prepared to restore the level of housing expenditure in Wales and are not prepared to restore local authority loans, they will be resisted from all sides.
After our debate on the Aircraft and Shipbuilding Industries Bill, no debate would be complete without a question from the South Wales Echo. In its edition of 28th July we read that the leader of Labour group on Merthyr Borough Council, the Rev. Bill Morgan, said:
Housing is not an area where cuts should be made—what about defence?
Labour councillors have attacked the circular from the Welsh Office. Labour councillors on other authorities in Wales, such as the Cynon Valley Borough Council and the Rhymney Valley, support the lead taken by Plaid Cymru councillors in resisting the cuts, and particularly what is described as "Government by telephone". Late on Friday afternoons the Welsh Office rings up chief executives and says "Stop your council house building programme for anything which has not been finally approved." That kind of government by telephone call and circular, that restriction on local authorities' freedom of action to decide their own priorities in their own areas, is being resisted by Labour councillors.
This final round of cuts—in my view it must be the final round—is the end of the road for Labourism in Wales. The cuts will not be tolerated by the Labour movement in South Wales. In the late 1960s it was conned into tolerating Wilsonism, into tolerating the cuts in public expenditure made then and the policies of unemployment of that Labour Government. The Labour and trade union movement in South Wales will not tolerate the present round and the implementation by a Labour Government of Tory policies.
The people of Wales will increasingly turn to the only radical alternative on the Left in Wales. We shall see my party in control not only of Merthyr District Council and the Rhymney Valley District Council but of Mid-Glamorgan County Council next May.