Which brings us to the final item today. If I could ask Members to leave the Chamber quietly and quickly.

I call on Mike Hedges to present the short debate. Mike Hedges.

Thank you, Presiding Officer. I've given a minute to Dawn Bowden in this debate. This is about in-work poverty. The state of the Welsh economy, poverty and low pay are all interrelated.

A successful Welsh economy should drive up wages and reduce poverty. Too many of the people living in Wales are employed on 'flexible'—which I call 'exploitative'—contracts, with no guarantee of weekly income based on variable hours and the Government-set minimum wage. Whilst much of the recent debate has been on zero-hours contracts, unfortunately this is not the only 'flexible' employment practice used by employers. Other flexible employment practices include short guaranteed hours, split shifts, annualised hours and using agency staff. As well as the traditional short-term and temporary contracts, there has been a growth in the number of these new employment practices.

Increasing numbers of companies are taking on staff on zero-hours contracts, where people agree to be available for work as and when required, but have no guaranteed hours or times of work. Zero-hours contracts provide employers with a pool of people who are on call, and that puts all the financial risk on the employee whose income is not guaranteed. This is an example of the old 'waiting outside the docks to be called', except now you wait at home for a text message.

A variation on zero-hours contracts is where there is a guarantee of as little as one hour a day, and when people arrive at work they then discover how long the shift is going to be. Starting at 8 a.m., you may finish at 9.00 a.m. or have to work until late in the evening, possible 9.00 p.m., depending on the workload and the number of people who are available that day. This is a highly disruptive work pattern because you are unable to make plans for any part of the day until the day itself, and also wages vary from week to week. One concern is that if zero-hours contracts get banned, this will be their replacement, and far too many people—they go in, they start work, and then they discover when they're going to be going home. But if you're looking after children or you've got caring responsibilities for parents or other people, it makes life incredibly difficult when you've got no guarantee of hours. When I came in this morning, I knew I was going to leave here about 7.30 p.m., and when I come in tomorrow I know I'm going to leave here at about 1.30 p.m. Too many people, they come into work and they've got no idea when they're going to be going home. It just completely disrupts their lives. 

Joyce Watson took the Chair.

Both zero hours and short weekly or daily guaranteed hours mean that there is no certainty of income on a weekly or monthly basis. This leads to severe financial problems when few or no hours are worked in any weeks. And the one thing is: never be ill, because when you're ill you go back to either your minimum one hour or zero hours, and the food bank is the only hope of food.

Using staff employed via an agency means that most employment responsibilities are then with the agency. After 12 weeks in the same role working for the same employer, agency workers are entitled to the same employment and working conditions as permanent staff. Crucially, however, agency workers are not entitled to benefits such as occupational sick pay, redundancy pay and health insurance, the right to claim for unfair dismissal, and minimum notice of redundancy where they are working. This means that agency staff are much easier to dismiss than directly employed staff because they are employed by the agency, not the company they are working at. And also, the 12 weeks are very important, because after 11 weeks if you move them on and then they come back a fortnight later, the 12 weeks that you have to work for those rights start again at day one. 

The renaming of the minimum wage as the living wage has obviously caused some confusion, as there was already a national living wage calculated by the Living Wage Foundation. Almost 6 million workers in the UK are currently paid less than the living wage as defined by the Living Wage Foundation. I believe that the case for everyone to be paid at least the real living wage, as defined by the Living Wage Foundation, is really an overwhelming argument. I don't believe that it makes sense that the Government enforces a minimum wage that is not considered enough to live on, and renaming it the living wage can only lead to confusion with the real living wage, which is why I believe the living wage, as defined by the Living Wage Foundation, is desperately needed for everybody. This is not about having exotic lifestyles; it just means you can live.

One of the biggest problems facing us in Wales today is in-work poverty, which is something the living wage would help address, and one of the Westminster Government’s biggest problems is paying in-work benefits, which, again, paying a living wage would help address. I believe that the Government has a moral duty to ensure a decent standard of living for all.

We also know that we're doing very well on the number of people unemployed, but if you have somebody working 40 hours who's then replaced by two people on 15 hours and one person on 10 hours, you've actually increased the number of people employed by two, which is good on unemployment, but instead of having one relatively well-paid worker, you've got three very low-paid workers, and that affects not just the people, it affects the benefits they're getting, and it also affects the tax take for the Government in Westminster.

There are also benefits for employers, the Living Wage Foundation report says. A living wage employer ensures that all employees are paid at least the living wage; this includes individuals who work on a regular basis at your premises for a contractor or subcontractor, such as cleaners or security staff. Living wage employers report improved morale, lower turnover of staff, reduced absenteeism, increased productivity and improved customer service.

Our ambition for Wales must be to create a high-wage and high-skilled economy, and becoming a living wage country would be one further step along that road. 'We cannot afford it and it will cost jobs' has been the argument used against all progressive change, from the abolition of slavery to the minimum wage. 'No, we can't afford it, it'll bring bankruptcy.' I remember when we were fighting for the minimum wage, one of the great successes of Tony Blair and the Labour Government in 1997, people said, 'Oh, we'll have to make people redundant; we'll have to cut staff', as if employing people was a philanthropic gesture that employers did, and that they would stop doing it because they'd have to pay more. What you actually found was that more people got into employment because you had more money in the local economy, and it pushed up demand.

We won the battle over the minimum wage; the loss of jobs didn't occur. It may have reduced sales of top-of-the-range cars, but it put money in people’s pockets and really helped local economies. If we pay people who are relatively poor more money, they spend it locally. If you pay people who are very rich more money, they tend to spend it in other places. Really, we do need to become a living wage country, but we need more than that. I believe that being a living wage country would make Wales a fairer country, and this is a policy that all of us living in Wales could be proud and one that we as socialists, on our side, should be campaigning for.

Actions that the Welsh Government can take, and I've asked for this before and I'll ask for it again, and I'll keep asking for it: ensure all public sector workers employed by bodies directly funded by the Welsh Government are paid the real living wage; make paying the real living wage a pre-condition for contracting with public sector bodies funded via the Welsh Government, either directly or indirectly; make paying the real living wage a pre-condition of grants and loans to private companies; banning exploitative contracts by Welsh Government-funded bodies and their contractors and subcontractors; making financial support for companies, both grants and loans, dependent on non-exploitative contracts.

This only gets us so far, but it gets us a long way—. We should not be helping and supporting poverty pay. We should not be helping and supporting exploitation. 

What we need, however, is more higher paid employment. The Welsh economy is significantly weak. I've told the Welsh Government many times that we are very low on high-paid sectors and when we have the reports coming in on where we are weak, it says things like 'ICT', and it says things like 'banking and insurance', and it says things about professional services—the real, top-of-the-range, high-paid areas.

So, what do we need to do in Wales? I believe that we need to work more closely with the universities: Aarhus, for example, and the business park model, and Manheim has a centre for innovation and entrepreneurship. We know they work in those cities. There's no reason they can't work here. It's easy to say, 'Oh, Cambridge is very successful; it's got a science park.' Swansea, Cardiff and Cambridge? No. But could we be the same as Manheim and Aarhus? There's no reason why we couldn't. Manheim is the second city within its Länder and Aarhus is the second city in Denmark—not dissimilar to Swansea.

Whilst the term 'technium' has become synonymous with failure, the initial idea of using it in Swansea to provide facilities for start-up companies spinning out of the university was a good one, but labelling all advanced factories as techniums was doomed to failure.

There are some simple and quick actions that could be carried out to improve the Welsh economy: provide larger loans through the commercial bank to medium-sized companies. We don't grow companies from medium to large. In fact, the only company I can think of that has done it in recent years is Admiral. We really need to push companies up from medium to large, because far too many medium-sized companies, unfortunately, sell out.

We could provide loans against overseas assets and let Government contracts of such size that medium-sized Welsh companies can bid. We need to make it easier for microcompanies to expand. What we need to do is grow in key economic sectors. Why is Dundee a major producer of computer games? That's another city—I've tried to pick cities that are not the great cities of the world, but cities that we in Wales have cities very similar to.

Computer games can be produced anywhere in the world. Abertay found political and financial backing to establish a new department, offering the world's first computer games degree in 1997. There are now a clutch of related degrees, including games design and production management, and an intriguing BSc course called 'ethical hacking'. Hundreds of games graduates are turned out by Abertay every year, including David Jones, founder of DMA Design. After Lemmings in 1991, it released the first edition of the controversial game Grand Theft Auto in 1997. It sold in the millions, and new versions continue to top the games ratings. Trained games makers are in demand in the games industry worldwide. A significant number of them stay on in the area, creating games and building new companies with teams they met while studying.

The creation of an Aarhus-type business park or Manheim’s centre for innovation and entrepreneurship, or Dundee developing industries in conjunction with the university—these are not difficult things; these are what we have to do if we are going to grow our economy. What we need are policies that work to support the growth of Welsh companies and establish new ones. We in Wales are no less skilled, entrepreneurial and capable than anywhere else in the world. What we have to do is ensure that we can turn these companies out in Wales, and let's get people paid good wages and that would really drive our economy up. Thank you.

Could I thank Mike Hedges for giving me one minute in this debate, and in that minute, I cannot cover all the reasons for poverty or to talk in detail about how we can alleviate it? But I wanted to mention two things that I think we need to recognise. Firstly, the invaluable role of the trade union movement in the fight against poverty. It was the very experience of poverty amongst working people that led to the formation of trade unions, and trade unions are still at the forefront of this work today and retain a critical role in helping fight the current scourge of in-work poverty. Secondly, we know the statistics regarding the work of food banks or the number of people hit by universal credit or the number of people on insecure zero-hours contracts, which Mike has already mentioned, but we need to recognise the importance of continuing to support the call for the Government to prioritise its anti-poverty agenda, because the people I meet in my constituency surgeries, nearly every week, demand that of us—people struggling with debt, people struggling with their energy bills, people unable to pay their private sector rent and not able to find a more suitable alternative, and the children I see in holiday activity schemes also being helped to get a meal that day to deal with holiday hunger. Unless we tackle poverty, we cannot address the lack of money in the local economy in areas of highest deprivation, and such areas will continue in a downward spiral and we must reverse that. Reversing that starts with Government prioritising, by poverty-proofing every aspect of its policy. It makes good economic sense to do so. 

I call on the Minister for Economy and Transport to reply to the debate—Ken Skates. 

Acting Deputy Presiding Officer, I'd like to thank Members for their contributions to this very important debate today, and I am pleased to have the chance to respond on behalf of the Welsh Government. I'm going to begin by setting out some of the very clear pressures on individuals and communities across the length and breadth of Wales, and the first pressure is very clear: nine years of austerity. I'm sorry to say that the financial policy of the UK Government over almost a decade has been to strip away many of the vital structures that have supported communities over several decades. Cuts to local authority budgets have meant the loss of local facilities, such as libraries, community buildings and public spaces, and it's resulted in the depletion of essential public services such as policing. This is simply not political rhetoric. The special rapporteur on extreme poverty and human rights reported recently on this following his visit to the UK. And his view is that

'Much of the glue that has held British society together since the Second World War has been deliberately removed and replaced with a harsh and uncaring ethos'.

He reported that

'A booming economy, high employment and a budget surplus have not reversed austerity, a policy pursued more as an ideological than an economic agenda.'

Let me put into context how different things might have been had this deeply damaging policy not been pursued. Our budgets would have grown by more than £4 billion between 2009 and 2019 had the economy and our budgets grown in line. Had our budgets followed the trend of growth in public expenditure since 1945, we would have had £6 billion of additional investment leveraged at our disposal in Wales. And I think it's inconceivable for any Member of this Chamber to suggest that, in this context, and with that level of cut to our budgets, austerity has not significantly contributed to poverty in Wales. 

Now, the second factor that has had a major impact on levels of poverty in Wales is the UK Government's programme of tax and welfare reforms. As a result of the reforms, it's predicted that there will be 50,000 more children living in poverty in Wales by the time they're fully rolled out. And I think it's outrageous that those who are most vulnerable in our communities are targeted in such a way by these damaging policies. What, then, can we do against this backdrop? Well, we know that we don't have the major levers needed to make a difference to the headline poverty figure. Of course, it's tax and the welfare system that influence this. However, in the absence of a change of direction by the UK Government, we continue to do all that we can to support the most vulnerable in our communities as they try to deal with the disproportionate impact of these destructive policies. The First Minister has, of course, included poverty as an additional priority area in the Welsh Government's budget planning process for 2021, and work is being taken forward by the Minister for Housing and Local Government to review Welsh Government funding programmes to ensure that they have maximum impact on the lives of children living in poverty. 

We have been crystal clear. A child's life chances should not be determined by the economic circumstances of their parents. We do not accept the inevitability of a life in poverty. Our objectives of the child poverty strategy focus as much on supporting parents to increase household income as they do on tackling the inequalities that poverty brings with it. We are taking action to reduce the number of children living in workless households, and to increase the skills of parents and young people. I think, also, it's vitally important to recognise that there are now 300,000 more people in work in Wales since 1999. And the proportion of working-age people with no qualifications has more than halved. Economic inactivity rates in Wales are now broadly comparable with the UK average for the first time ever. 

Mike Hedges made the point that he believes that too few high-value jobs are being created in the economy. I disagree with this assertion. I would say that, in the past, it was the case that, in many circumstances, low-value, poorly paid jobs were often created, but that was in direct and immediate response to the incredibly high levels of unemployment. Today, we are clearly—and we have articulated this through the economic action plan—focusing on raising the quality and value of employment in Wales, particularly through the skills system, with our focus on supporting skills training at level 3 and above. And we only need to look at some of those sectors that provide the highest levels of productivity and wages—financial and professional services, for example, with growth here in Cardiff and across Wales at an astonishing level compared to the rest of the UK. Aerospace is the most productive sector in the British economy, and here in Wales we have a disproportionately high number of people now in employment in that sector—more than 20,000 people in incredibly valued jobs.

Since devolution, the number of workless households in Wales has fallen from almost 0.25 million to 173,000. This represents a decline of 22.4 per cent, again outperforming UK performance. Alongside this, we are taking steps to create a strong economy and labour market that generate sustainable employment opportunities that are truly accessible to all, and this is fundamental to our approach to tackling poverty. Our economic action plan has been designed to support the delivery of a strong, resilient and dynamic economy, and it's a plan to grow the economy inclusively and to reduce inequality. It's driving inclusive growth by maximising our impact on the foundational economy and through a new model of regional place-based economic development that is better attuned to tackling economic disparities in different parts of Wales. And the plan seeks to increase the availability of good-quality jobs and to empower communities with the skills and economic infrastructure that can support better jobs closer to home. A cornerstone of the plan is the economic contract, which is driving fairer, more responsible business practices that have the potential to support inclusive opportunities for work and progression and, of course, to address the rise in insecure, unreliable work, and we will go on working in partnership with those incredibly important social partners, including the trade union movement that Dawn Bowden has spoken about.

We will continue to use all the levers available to us across Government to ensure that individuals, households and communities have the strength and the resilience needed to overcome these challenges. I'd like to thank both Members today for their contributions and reaffirm my commitment to working with them as we take forward this incredibly important work.

Thank you. And that ends proceedings for today and brings them to a close.

The meeting ended at 19:13.