§ Order for Second Reading read.4.52 pm
§ The Secretary of State for Wales (Mr. David Hunt)
I beg to move, That the Bill be now read a Second time.
The purpose of the Bill, in particular clause 1, is to increase the statutory financial limit for the Welsh Development Agency from the present level of £700 million to £950 million. The limit was last raised by the Welsh Development Agency Act 1988, and present forecasts suggest that the limit will be reached during 1992–93. Therefore, it is necessary to raise the limit now, so as not to inhibit the agency's contribution to the redevelopment of the Welsh economy.
Under section 18 of the Welsh Development Act 1975, a number of items count towards the financial limit. First, there are the agency's general external borrowings, mainly from the national loans fund. Secondly, there are agency and Treasury guarantees. Thirdly, there are overseas borrowings from, for example, the European Coal and Steel Community. The largest element, however, comprises the grant in aid, less administrative expenses, together with public dividend capital issues, both of which I make available annually to the agency.
It is customary when seeking parliamentary approval for increasing a financial limit to set a figure which will last for about five years. It is not customary to set it too high because this occasion gives us an opportunity to review the agency's activities and, in effect, have another debate on Welsh matters.
I see the hon. Member for Caernarfon (Mr. Wigley) in his seat. A group of English Members who were leaving the Chamber said to me, "You don't need a ruddy Welsh Assembly—you've turned this Parliament into a Welsh Parliament". This week, we have had a debate on the Cardiff Bay Barrage Bill, an announcement on the health service in Wales and now a debate on the WDA, and next Monday we have Welsh questions.
§ Mr. Dafydd Wigley (Caernarfon)
The Secretary of State has tempted me to my feet, and I apologise for my voice. Does he agree that, if this is to be seen as a Welsh Parliament, we can have votes on matters relating to Wales restricted to Welsh Members?
§ Mr. Hunt
I do not think that this has become a Welsh Parliament, but it is the mother of Parliaments. Hon. Gentlemen can intervene on any aspect of the agency's affairs, and I am happy to respond to any questions.
As I said, it is customary to cover a five-year period, so I propose that the limit should be £950 million. I should add, however, that this is a purely technical measure, with no implications for spending or policy decisions in future years. Such decisions will be taken in the normal way.
The agency's main aims are to further the economic development of Wales, to enhance the international competitiveness of Welsh business and to improve the environment of Wales. It pursues its objectives through a wide range of activities. They include the provision of modern factories and workshops, the promotion of inward 1094 investment and new technology, the provision of business advice and venture capital, land reclamation and, increasingly, urban renewal and environmental improvement. The goal is a dynamic, self-sustaining, private sector economy in Wales.
In recent years, we have seen the emergence of a new Wales—the transformation of our country. The process is not yet complete, but the changes have been profound and will be of lasting significance—certainly for Wales, but also more widely. As racently as 1979, Wales was dominated by declining nationalised industries. The inevitable closures saw unemployment rise from 67,000 in 1979 to 167,000 by 1986—more than doubling the rate of unemployment to 14 per cent. In parts of industrial Wales, people were faced with a stark legacy from their industrial past: high unemployment, a declining population, industrial dereliction and environmental pollution.
There has now been a dramatic improvement. Unemployment fell rapidly—it declined for 47 consecutive months—until the recent recessionary pressures in the United Kingdom economy took effect. Between 1985 and 1989, seasonally adjusted employment halved. The average rate of unemployment in Wales is now 9.2 per cent. I am pleased that unemployment in Wales fell again last month, but I remain to be convinced that we have moved into that trend again—I greatly hope so. There has been much growth in employment opportunities in the service sector as well as manufacturing.
§ Mr. Ieuan Wyn Jones
The Secretary of State is about to say that the WDA has been successful in attracting inward investment into the traditionally industrial parts of Wales, especially the south-east and north-east. I concur with that view. Will he confirm that it is the agency's remit to attract inward investment to areas that still have large pockets of unemployment, such as Holyhead and Fishguard, and that it is considering that matter carefully?
§ Mr. Hunt
Yes, I do so confirm. As the hon. Gentleman knows, my right hon. Friend the Minister of State kindly responded to a call that I received from a meeting in Anglesey, at which the hon. Gentleman was present, to appoint a supremo—someone to co-ordinate overall activity—to regenerate the economy of Anglesey. I am delighted to hear from my right hon. Friend that the WDA is spearheading a great deal of activity, and I am sure that he will wish to enlarge on those points later in the debate.
The index of output of manufacturing industries in Wales showed between 1985 and 1989 growth of over 30 per cent., compared with 15 per cent. for the United Kingdom as a whole. The numbers of firms in Wales in production industry, as shown by VAT registrations, rose by 64 per cent. in the same period, which is more than twice the United Kingdom average. The economy has diversified and is more flexible and robust, with tremendous potential for growth.
Those achievements represent a great tribute to the resilience and strength of the Welsh people. There is no doubt that Government policies in Wales and the work of Government Departments and agencies, such as the WDA, have played a crucial role, and continue to do so. Although I recognise the continuing difficulties, the Welsh economy is better placed than ever before to move forward to renewed growth.
I come to the contribution made by the WDA. It has been necessary to ensure that the agency is properly 1095 funded to do the job. Since we came to office in 1979, the total gross expenditure of the Welsh Development Agency, at today's prices, has just gone through the £1 billion barrier. Those resources have been used to tremendous effect. In the last year alone, for example, the agency's direct factory-building programme provided an additional 1.2 million sq. ft. of industrial and commercial floor space. When fully let, that will provide space for about 3,500 jobs.
§ Mr. Win Griffiths (Bridgend)
The Secretary of State speaks of the role of the WDA as a factory builder and, in that context, as a landlord. Will he ask the WDA to review its policy of selling off large tracts of its factories to major real estate agents rather than directly to the tenants? Is he aware that many tenants have been dissatisfied to find that the leases they held from the WDA have been sold to companies that have no connection with Wales and without them having been given the opportunity to buy them for themselves? Will he persuade the WDA to do otherwise?
§ Mr. Hunt
The WDA currently holds about 2,000 factories. Over 40,000 people are employed in them, so it is an important landlord, as the hon. Gentleman points out. In the last five years, the agency has conducted programme of sales. It would be wrong for me to restrict the market, because the agency has raised more than £80 million from factory sales to private sector investors and individual tenants, and has reinvested the proceeds in Wales.
§ Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)
It is all very well for the right hon. Gentleman to talk about a budget of perhaps £166 million, but in the coming three years the grant in aid from the Welsh Office will drop from £80 million to £60 million. The maintenance of the budget depends on two forecasts—a huge hike in factory rents being forced on many tenants and a large sale of factory space. If one or both of those fails to occur on the scale projected, may we be assured that the Government will make up the difference to maintain the overall budget of the WDA?
§ Mr. Hunt
The hon. Gentleman need only look at the record to see the facts. One must, of course, take into account current market conditions, and I have to be satisfied that the projections given to me by the WDA for sales are realistic. I am so satisfied. I am able to speak for next year, and I have made the position for next year absolutely clear. We have projected figures for the year after that, and the following year. I ask the hon. Gentleman to look at our record and to recognise that my predecessor and I have brought the budget of the WDA to a record level in real terms.
The right hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) must not forget that there are differing views on this issue on the Opposition Benches. Many hon. Members would like to see the WDA become less of a landlord and to sell on the open market much of its factory space.
§ Mr. Rowlands
Will the right hon. Gentleman answer my question? The whole budget is predicated on the forecast of the sale of factory space. That will involve the sale this year of 74,000 sq m of factory space. To maintain the budget, that will have to rise to 300,000 sq m in the next two years. Whatever the rights or wrongs of that, may we have an assurance that any shortfall in the WDA budget will be made good by the Welsh Office?
§ Mr. Hunt
In putting together the budget, I must be satisfied that what are, after all, indicative figures are realistic and reasonable estimates. I am satisfied that they are realistic for next year, so the hon. Gentleman's point does not arise—[Interruption.] Although he does not think that they are realistic estimates, I have satisfied myself that they are. The figures have been given to me by the WDA.
§ Mr. Rhodri Morgan (Cardiff, West)
The right hon. Gentleman must not mislead the House. He should be willing to admit that he tells the WDA what sort of target it must reach for reinvestment as a result of factory sales. We are referring to an idea that has come not from the agency, but from the Treasury and the Welsh Office.
§ Mr. Deputy Speaker (Mr. Harold Walker)
Order. I should tell the hon. Member for Cardiff, West (Mr. Morgan) that Mr. Speaker has often reminded the House that to accuse an hon. Member or a Minister of misleading the House is unparliamentary and should not happen. Perhaps he will withdraw the remark or qualify it.
§ Mr. Morgan
I am terribly sorry if I have offended the Secretary of State by using an unparliamentary expression. I am sure that there was no intention on his part to mislead the House. [HON. MEMBERS: "Withdraw."] Mr. Deputy Speaker, you did not ask me to withdraw but to rephrase what I said, in such a way that it does not offend parliamentary canons.
The problem remains the same. The Secretary of State is saying that the Welsh Development Agency has given him a set of facts, when I know it to be the other way round—that he has told the WDA to raise a set amount of money from these sales.
§ Mr. Hunt
I do not know what to say to that. I think I will ignore the whole thing. [Interruption.]Perhaps hon. Members will get a chance to refer to that issue later, when I can intervene, but I am anxious to deal with some key points without taking up too much time, because many other hon. Members wish to take part in the debate.
Welsh Development International—the WDA's inward investment arm, of which we can be justifiably proud—has, among its recent successes, helped Wales to secure huge investments by companies such as Toyota, Bosch, British Airways, Sony and Dow Corning. Those five projects alone promise investment of nearly £680 million in the Principality.
There are now well over 300 overseas manufacturing companies in Wales, including 150 from Europe, 140 from 1097 North America and over 40 from Japan. Last year, 142 projects were secured, and they are expected to generate £639 million worth of capital expenditure and create or safeguard nearly 16,000 jobs.
I reckon that to be a pretty marvellous achievement. Although some people say that I take the credit, on every possible occasion I make it clear where the credit belongs, and it belongs primarily to the work force of Wales. I am just one who uses the opportunity given to me, by the quality of the work force, to sell that asset of Wales, and I shall continue to do so. Indeed, without the Welsh work force, we would not have achieved those figures. We would not have those figures without the Welsh Development Agency, either. My predecessor set an excellent example in winning investment, and I hope that I am living up to his reputation. Indeed, I am proud to have some facts to announce.
§ Dr. Howells
I welcome those enormous achievements, and the WDA as well as the Welsh people can be proud of them. However, may I ask a simple question: how much did it cost to secure those projects?
§ Mr. Hunt
I shall let the hon. Gentleman have a detailed breakdown of the estimated cost of each project. I shall also place a copy in the Library. There are a number of component parts. For instance, we had tremendous co-operation in securing the investment with British Airways from the local authorities and from further and higher education colleges. That is extremely important. I shall try to assess the cost, but I believe that the projects have been extremely worth while, and a very good investment.
As I said, 142 projects were secured last year, which was an all-time record. The evidence of those achievements is to be seen throughout Wales, in the form of modern manufacturing and business premises. Every effort will continue to be made to attract internationally mobile projects and increase the quality of inward investment throughout Wales.
Against that all-time record of 142 projects, I was told just a few hours ago that already this year 165 projects have been secured, promising capital expenditure of £830 million and more than 15,500 new or safeguarded jobs. I pay tribute to all those concerned in helping us to secure that investment. That includes hon. Members on both sides of the House as well as the Welsh work force, the WDA, local authorities and all the other crucial members of our partnership, in particular—following recent announcements—the Development Board for Rural Wales.
I am also acutely aware that there is enormous development potential among Wales' indigenous companies. The agency's business services have a key role in supporting those companies and helping them to grow, where such support is not available from the private sector.
One of the most vital areas is in doing business in Europe. Wales is still essentially a small-firms economy: 1098 over 90 per cent. of all manufacturing plants in Wales employ fewer than 100 people. That is both a strength and a vulnerability—a strength because it represents potential for growth, and a vulnerability because small firms often lack the management and financial resources necessary to do business overseas, or on a European basis, yet increasingly that is exactly what is required—to meet the competition and take advantage of the opportunities of the single market.
I have therefore given a high priority to developing business links with other European regions, particularly the "four motors"—the regions of Baden-Wurttemberg, Catalonia, Lombardy and Rhone-Alpes. The WDA has an important role to play in developing those links, particularly in helping to foster joint ventures and other business co-operation between smaller firms in Wales and Europe.
Last year, the agency also hosted the "Europartenariat", which is Europe's forum for small businesses. It attracted 1,300 people from 600 different companies from 17 European countries.
§ Mr. Gareth Wardell (Gower)
I thank the Secretary of State and his inspector for the public inquiry that was held in my constituency near the empty site of the former Felindre tin plate works, which the WDA and British Steel have been trying to sell for some time. The decision prevents West Glamorgan county council from establishing a gipsy site adjacent to one of the most marketable sites in Britain. Even though I am sure that it is vital that those people are housed properly and appropriate sites are found for them, I am sure that the decision is correct and will enable the WDA and British Steel to market the site adjacent to the M4. Hopefully, the Welsh Office will be able to assist a new inward investor to use that site, which has been empty for so long——
§ Mr. Hunt
I do not wish to come between the hon. Gentleman and his Labour-controlled county council, but I thank him for his remarks. As he said, appropriate sites will have to be found.
We are determined to disseminate information as widely as possible. European information centres have now been opened in Mold and Cardiff to provide information on European Community legislation and policies, and on the legal requirements for tendering, grants, funding, training needs and so on. More than 100 companies a month use the service. It is most important for the future of Wales that we maintain that approach to Europe. As part of that, the WDA will open an office in Brussels in the near future.
On the agency's responsibilities for environmental matters, the Government have provided the WDA with the resources to commit some £220 million—at today's prices—to reclaiming derelict land in Wales. More than 9,500 acres of previously derelict land have been brought back into productive use in one of the largest and most sustained programmes of its kind in Europe.
As the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) will know, I was delighted to approve a scheme last year for work to begin on what I believe is western Europe's largest land reclamation scheme—the clearance of 900 acres of land at east Merthyr, which will provide new land for new industry, housing, and local 1099 amenities. In the 1990s, business success will depend on the ability to recruit and retain skilled employees. Those employees will be attracted to an area with a first-class environment for business, leisure and family life. That is our objective for Wales.
The WDA can be proud of the role that it has played to date in the remarkable transformation of the Welsh economy and industrial landscape. I pay tribute to the staff of the agency, past and present, for all their efforts, to the work of past and present chairmen and chief executives of the agency, and to my own predecessors as Secretary of State. However, many challenges still face us and it would be wrong to suppose that the task is complete, or that we can yet relax our efforts. We must therefore look to the future.
To meet the challenges, I am delighted to have the support, knowledge and expertise of the present board of the WDA and of its chairman. The chairman and the present team are continuing the record of outstanding achievement. To add a new dimension and considerable experience of the world of international business and commerce, I am delighted to take this opportunity to announce today a new appointment to the board, Dr. Pamela Kirby. Dr. Kirby will be the first woman board member of the Welsh Development Agency—[HON. MEMBERS: "Hear, hear."]. She has strong family connections with west Wales and is the managing director of one of the fastest growing pharmaceutical companies in the United Kingdom, Astra Pharmaceuticals. Her experience and knowledge of the world of international business and commerce will enable her to make an important contribution to the work of the WDA. I greatly welcome the way in which that appointment has been received by the House.
For the immediate future, hon. Members will be aware that I will next year be providing more money for the WDA. The agency's gross budget is to be increased by £13.5 million to more than £166 million, the highest ever in cash and real terms. The funding will allow the WDA to build on its success in attracting inward investment to Wales. The agency will now be able to continue with a major programme of factory building in those areas of Wales where private sector provision is presently inadequate. Increasingly, the agency will concentrate on the preparation of sites and infrastructure, and on encouraging private sector investment in Wales, particularly through joint ventures.
Under the "Welsh property venture", more than half a million square feet of business accommodation has been secured in the first year of operation. For every £1 that the agency invested, more than £4 of private sector investment was secured for Wales.
As the agency increases its focus on the revitalisation of rural and urban communities, I also intend that it should make an even greater contribution to environmental improvement and urban renewal. In urban districts, under the programme "urban development in Wales", the WDA is working closely with local authorities and the private sector. Such schemes are under way in Llanelli, Ebbw Vale, Holyhead, the Cynon valley, Rhyl and Milford Haven. Those schemes are helping to create the right environment for living and working.
The WDA will also continue to concentrate on its rural districts, which have particular problems. The agency's rural property programme is designed to improve the 1100 viability and vitality of rural areas and has already highlighted 15 key rural towns and communities for action.
Like every non-departmental public organisation, the WDA is subject to a financial management and policy review at least every five years, in accordance with Government guidelines. That is a thorough, root-and-branch review to test the need for its continuing role and the effectiveness of its operations. That review is currently in hand for the WDA, and I look forward to the study with great interest. It will inform and shape future programmes.
I greatly welcome the way in which a more positive partnership is evolving as those programmes develop. That relationship is often led by the WDA, and includes local authorities. I shall do everything I can to encourage that partnership approach, because I believe that it gives Wales a significant edge.
We must build on those successes. The agency can and will play a role as an instrument of the Government's industrial and economic policy in Wales, and do so with distinction. I urge the House to support the Bill so that the agency can continue its fine work and achieve the objectives that the Government have set.
§ Mr. Barry Jones (Alyn and Deeside)
The Secretary of State largely overlooked the recent job losses due to, for example, the closure of the Brymbo steelworks in Clwyd. There were also job losses at Austin Taylor in Gwynedd, Inmos in Gwent and AB Electronics in mid Glamorgan and the closure of Penallta colliery. It will put the debate in context if I say that unemployment in mid Glamorgan puts the county in the top 10 of the worst places in Great Britain, with nearly 25,000 people on the dole. There are more than 13,500 unemployed people in Clwyd county and more than 10,000 in the county of Gwynedd. In south Glamorgan, nearly 19,000 people are out of work.
Why has the Secretary of State no strategy and no plans to safeguard what remains of Wales's manufacturing base? Why has he been so laggardly in responding to the loss of apprenticeships? Why has he neglected the transport infrastructure? Why has he overlooked the decline of the construction industry? Where are the jobs to take the place of the thousands of coal jobs that have been lost? Where are the well-paid permanent jobs for those who have been displaced from the steel industry?
§ Dr. John Marek (Wrexham)
I apologise to my hon. Friend for butting in on him, but the position is even worse. He mentioned Brymbo. When jobs were lost there, Brymbo was making a profit, and had done so for the last 20 years of its existence until it was closed last year. Since then, the Welsh Office has not been able to do anything about it. The land is lying idle, the people who lost their jobs have not been able to obtain new ones, and it is a sorry mess. I hope that the increase in the borrowing limit will enable the WDA to do something for my constituents.
§ Mr. Jones
My hon. Friend has fought hard on the Brymbo issue, and was right to say that it is a sorry mess. It was a shabby episode; the locality was treated badly and its residents have yet to receive justice. I will support my hon. Friend in his efforts on behalf of the people of Brymbo.
I thought that the Secretary of State was a shade complacent. On 26 June 1975, on the Second Reading of 1101 the original legislation, the Welsh Development Agency Bill, the hon. Members for Cardiff, Central (Mr. Grist) and for Clwyd, North-West (Sir A. Meyer) voted against it, as did the Minister of State at the Welsh Office and Nicholas Edwards. The record shows that the Minister of State was in a fierce mood that day. He thundered: "This is socialism". The evidence shows that, even then, the bardic steamroller was inching forward through debates.
§ The Minister of State, Welsh Office (Sir Wyn Roberts)
With regard to what I said in 1975 about the original legislation to establish the Welsh Development Agency, is the hon. Gentleman not aware that the first action that the Government took when they came into office was to change the role of the WDA, which is now a very different agency from the one that it was? That accounts for its current great success.
§ Sir Anthony Meyer (Clwyd, North-West)
I am grateful to the hon. Gentleman for his typical courtesy. While he is on the subject of consistency, will he say where he stood on the issue of Britain's membership of the European Community during those years?
§ Mr. Jones
The hon. Gentleman is greatly respected and has contributed greatly to our debates over many years, and I shall be sorry to see him standing down at the general election. However, I think that his intervention might be just a little wide of the wide subject under discussion. It is his King Charles's head, and he shall have it; nobody can take it away from him.
I was about to say before I was so charmingly intervened upon—as only an old Etonian can—that today's debate can take place only because the last Labour Government created the Welsh Development Agency. It should be put on record that the Administration of Mr. Harold Wilson enacted the legislation that created the agency. It was far-sighted, practical, caring legislation. Mr. Wilson's objective, and that of his then Secretary of State for Wales, my right hon. and learned Friend the Member for Aberavon (Mr. Morris), was to give Wales a fresh start.
As Premier in a previous Administration, Mr. Wilson created the Department of State which is the Welsh Office. Mr. Wilson appointed the first Secretary of State for Wales, the great Mr. Jim Griffiths, the former Member for Llanelli. Mr. Wilson's Labour Government for the first time endowed the Welsh Office with the real economic and industrial power that it needed. That power was to be used for the people of Wales, and to make good its scarred and poisoned landscapes.
I shall mention the novels that relate to Wales: The Rape of the Fair Country, How Green Was My Valley and the play, "The Corn is Green". Those titles are famous, evocative and emotional. They may be inspiring as fictional chronicles of our unfolding social and economic history, but those who, in yesteryear, amassed fortunes from coal, iron, steel and slate rarely ploughed back the profits that sweat and blood had created. That is why we needed a Welsh Development Agency, and I stress that it was a Labour Government who gave it to Wales.
1102 The Bill restores the financial limit to the real value that it achieved after the last increase in 1988. When we had the previous debate on the Bill in January 1988, the economic situation was different. Unemployment was falling, the WDA factory vacancies were low and business optimism was high. But today the Welsh economy is in the depths of the second Conservative recession in 12 years. Unemployment is more than 40 per cent. higher than it was 12 months ago, output is down by 5.4 per cent. and bankruptcies are up 88 per cent. on last year with 1,317 bankruptcies and insolvencies in Wales in the first nine months of this year alone. That is a serious situation. The number of vacant agency factory units is up. Today in south and north Wales business men who have given a lifetime's service to job creation are now being ruined. Their businesses are going to the wall; they are being destroyed by the Government's policies.
I think that the Secretary of State will agree that the WDA has proved an outstanding success. I agree with the right hon. Gentleman that it has provided a platform for economic regeneration in Wales in partnership with our local authorities. I will celebrate with the right hon. Gentleman the location of Sharp and Toyota in my constituency, Bosch in south Glamorgan and the considerable extension of Sony in Bridgend, which I visited with my hon. Friend the Member for Bridgend (Mr. Griffiths). We went there first a matter of days before the Prime Minister and were given a fine reception in a fine industrial location.
New challenges are opening up for Wales. The single market after 1992 will make product market competition stiffer, particularly for peripheral regions of Europe such as Wales where many firms are ill equipped to meet the challenge ahead. The new product markets are increasingly competitive and—I emphasise—quality conscious. There is growing competition for inward investment from other parts of the United Kingdom, and particularly from eastern Europe. There is also a vital need for direction from the Welsh Office and a new partnership approach between Government and industry.
The Secretary of State mentioned inward investment. In the inward investment battles of the 1990s, Wales will not be able to compete with eastern Europe on labour costs. With or without the efforts of the right hon. Member for Worcester (Mr. Walker), eastern Europe will provide a range of inward investment opportunities that may be lost to Wales. Nor should we wish to compete in the new Europe on the basis of paying poverty wages to attract low skill and low technology employment. That is not the route to a stable and dynamic Welsh economy. Manufacturing processes and the competitive markets of Europe require total quality, flexibility and innovation. Such skills do not come from poverty pay; they require the efficient use of labour and, above all, quality training.
As British Airways proved, adequate skilled labour and training is a chief concern of the new generation of inward investors. On that we can agree. It is imperative that Welsh Development International communicates the skill requirements of likely inward investors to our training and enterprise councils and our colleges. That is clearly done by British Airways, but it must be common practice in the 1990s.
I am concerned that the proposals in the Further and Higher Education Bill may well reduce the ability to co-ordinate such responses to the needs of inward investors. I have had consultations with some local 1103 education authorities and some leading councillors in south Wales and that is what they tell me. The Welsh Office and the agency must take that on board.
The effect of the recession on our manufacturing industry has been pointed out in a recent report by my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands). I understand from him that the Hoover apprenticeship scheme trained some 24 apprentices a year in its heyday. This year, for the first time in 48 years, Hoover will not recruit one apprentice. In Clwyd in my constituency, British Aerospace at Broughton has virtually halted its apprentice scheme this autumn. This year it has taken on only 12 clerical apprentices; it usually takes on 70 or more trainee tradesmen, but that is not the case this autumn. British Aerospace in Clwyd, with more than 4,500 employees, is, arguably, the largest reservoir of skills in northern Britain, certainly in Wales, but we have there the virtual rundown of a necessary resource for Wales, which must make its way in the next century and prepare now for the competition to come.
The National Audit Office report raises a number of crucial questions not only about the agency but about the Welsh Office and regional selective assistance. Successive Conservative Welsh Office Ministers have placed great emphasis on estimates of future jobs for political as well as other reasons. Wales has done extraordinarily well in creating new jobs. But now we need to discover why there has been such a shortfall in jobs created compared with the projections. I hope that when the Minister replies he will attempt to answer that question. It must be addressed. What does the Secretary of State intend to do with regard to the National Audit Office's key recommendation that the WDA's monitoring techniques should be improved so that its programmes can be properly evaluated?
Reference has been made to innovation and technology. That is the seed corn for the high added value and high skill employment that Wales must foster in the 1990s. The WDA needs more support from the Welsh Office to increase the Welsh take-up of the United Kingdom and the Common Market funds for research, development, innovation and technology transfer. It is fair to say that so far Wales has fared poorly in attracting such funds. My hon. Friend the Member for Cardiff, West (Mr. Morgan) has made some observations on that matter.
We must also expand ventures such as the Imperial science park. That joint venture between Imperial college, London, the agency and Newport borough council must be applauded. It is a first-rate development which is good for Wales. It will become one of the leading research and development parks in the United Kingdom.
I have set out the Labour party's agenda for the agency and I have referred to the Welsh economy, but before I conclude I pose the question: what would a fourth Conservative term mean for Wales? [HON. MEMBERS: "Another recession."] My right hon. and hon. Friends are right. It would mean a third recession for the Welsh economy. The Conservatives have failed to address the key supply side issues, failed to deliver internationally competitive standards of education and training, and starved business of investment through high interest rates.
Another Conservative Administration would mean creeping privatisation for the Welsh Development Agency. If the Conservatives were to win again—I do not think that they will—the WDA could be broken up, on the lines of Scottish Enterprise. Alternatively, the agency's property revenue function, which represents a major source of its 1104 revenue, might be hived off. The House may remember that when a similar proposal was made by the agency's west Wales office, it led to the resignation of senior officials at that office.
The Conservatives' record is a bad record. When the general election takes place, Labour will be victorious. A Labour Government will create a successful, productive, and modern economy. Only a Labour victory will endow Wales with an economy capable of meeting the fierce competition of the next century.
§ Mr. Denzil Davies (Llanelli)
My hon. Friend the Member for Alyn and Deeside (Mr. Jones) rightly chastised the Government for their economic record. It is sad that, after 10 years of Conservative rule, Wales is the poorest economic region in Britain. That was not the case in 1979. Whatever Conservative Administrations have tried, they have been unable to improve relatively the wealth of the Welsh economy.
We welcome the Bill, because it is quite an achievement for the Welsh Development Agency to have survived the free market mania that held sway between 1979 and 1991 and the ideological zeal of the right hon. Member for Conwy (Sir W. Roberts), who vehemently opposed the WDA originally. That is a tribute also to my right hon. and learned Friend the Member for Aberavon (Mr. Morris), who helped to build that durable institution, as well as the Land Authority for Wales. Both survived the Thatcherite blitz of the 1980s.
The Secretary of state that the aim was to achieve a self-sustaining private sector. I hope not, because I cannot identify any in the modern industrial world. France does not have a self-sustaining private sector economy, and nor does Germany or Japan. the agency's purpose is to fill the gaps that the private sector cannot fill. That is why we need interventionism, and why it is good that the WDA has survived.
The agency will have to take a different tack in the 1990s in addressing itself and the Welsh Office to the problems that Wales and the Welsh economy will face in the 1990s—which will be different from those of the 1980s.
Two factors have affected, and will continue to affect, the Welsh economy. My hon. Friend the Member for Alyn and Deeside alluded to the collapse of the Soviet empire. We must acknowledge that the centre of gravity in Europe is moving further east. We have always been to the west of the centre of power—certainly so far as Brussels is concerned—but that will move further east. It is all very well for members of Plaid Cymru especially to salivate every time Baden-Wurttemberg is mentioned, but it could become a big element. Investment from that source may well go to east Germany, Czechoslovakia, and parts of the former Soviet bloc.
It is fashionable to condemn the old command economies of eastern Europe—but when the dust has settled, it may be realised that considerable basic engineering skills are available in east Germany and Czechoslovakia. I would like comparisions made of the number of qualified engineers in Czechoslovakia and Wales. I hope that Wales will come out of them quite well, but I have doubts.
Those skills can be found also in other parts of eastern Europe. We must not get carried away with the idea that the Soviet economy was unable to produce people trained 1105 in production. They will be employed in future, and some investment will go to those eastern states unless we are careful. The right hon. Member for Worcester (Mr. Walker) has already spotted that; having already made a foray into Baden-Wurttemberg, he is now to work for Baden-Wurttemberg in trying to move investment away from this island to eastern Europe.
This is not the occasion to debate the move towards European union, but if that is to occur, there is a great danger that Wales will become the South Dakota of the new union. If the United Kingdom is locked into currencies that it cannot change, and unable to control interest rates and to operate budget deficits, and if it cannot subsidise its industry, this country and others on the periphery—we will be more so in future—will suffer from the concentration in the centre.
§ Mr. Keith Raffan (Delyn)
Does the right hon. Gentleman agree that, if Britain does not sign up to European monetary union and is outside the inner currency circle, there will be pressure on many of the overseas companies that have located in Wales to relocate elsewhere in Europe—and that Wales would then lose many of the benefits achieved by the WDA over the past 10 years?
§ Mr. Davies
I did not intend to provoke the hon. Gentleman, but without massive transfers of resources from the centre to areas such as Wales, we will suffer from the move towards European union. I see no sign of them by way of an enhanced regional policy in Brussels. If there are such transfers, my fear is that they will go to southern European countries, which can make a case for them in terms of income per head, unemployment, and their domestic economies. Portugal, Spain, southern Italy and Greece could get money—but where would that leave Britain?
I doubt that the Germans would be prepared to use their public money to provide such transfers, which we must have if Wales is not to become the South Dakota or Oklahoma of the united states of Europe, the federal union, or whatever it is to be called.
We are all agreed that the WDA's inward investment arm has worked well, and that operation must be continued and nurtured. I am concerned, however—this is not meant as a criticism of the people who run the agency—that the agency is leaning too far towards property interests. It is natural for the WDA to have an involvement in property, because to some extent it grew out of the land reclamation units of the Welsh Office. It is natural also that the WDA should be concerned, as it is, with clearing derelict land and constructing new buildings on it.
My hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) gave the public expenditure figures. The Government's hope is that, by selling off property and generating property income, they can be relieved of putting grant-in-aid money into the WDA. However, the 1980s are over, and the 1990s will not be about property debt, and using property development to increase land values. Ski slopes, marinas, and golf clubs are all very nice—but they will not attract the kind of investment needed in the 1990s.
1106 To do that, Wales must create new skills. Whatever may be the value of the pound or ecu, if Wales cannot offer the necessary engineering skills, it will not attract inward investment. Wales is falling down on skills. It does not have the engineering, technological and scientific skills that it should to attract investment. Ministers know that very well.
Our education system is no longer geared to produce the engineering, technological and scientific elite that we need. It is geared to produce the semi-skilled and, indeed, unskilled work force who are required in many large sectors of the economy, especially the service sector. Most jobs in the service sector are unskilled, and a specialised education system is not needed to produce them.
We cannot produce the elite engineering skills possessed by Japan, Germany and, to an extent, France. To produce such skills, we need a system that is still concerned with diligence, discipline and attention to detail. The Japanese have done so well not because of management skills but because their engineers are so good. Engineering demands diligence, scientific skills and attention to detail.
I pay tribute to the West Wales training and enterprise council, which appreciates the need to create manufacturing skills. It is, however, having to do its work against a background of 10 years in which nothing was done, and despite the collapse of much of our industry. If an area contains only service industries, where can people be trained to become engineers and technologists? They can only hope to be employed by McDonalds, B and Q or Great Mills. The TECs do what they can, but they have not the hinterland or the infrastructure that would enable them to carry out their job properly.
Perhaps the WDA should now consider itself the arm of the Welsh economy that tries to produce and use money to create an elite in science, technology and engineering, and thus benefit the Welsh economy. I do not know whether that can be done, however. At one time, the California and Massachusetts institutes of technology were the great institutions or the world, but, for all I know, the great institutions of production and engineering may now be in Japan. Why cannot the WDA involve itself more with schools in Wales? Why cannot it find the youngsters of both sexes who have an aptitude for engineering and science, and use Government money to encourage them—perhaps even send them to Japan to be trained? We cannot train them here.
We need an interventionist agency. We may criticise the French ecoles for being elitist and superior, but they have been remarkably successful in creating a technical and scientific work force, quite apart from administrators and civil servants. It will take time, but perhaps the WDA will be able to create the skills without which we cannot develop the Welsh economy, regardless of our political views.
Those are the challenges for the 1990s, rather than building or property ventures or even the clearing of land. If we have no skilled work force, the investment will not come, whatever currency union we may belong to.
§ Mr. Gwilym Jones (Cardiff, North)
As my right hon. Friend the Secretary of State pointed out, this debate follows a month in which the unemployment figures fell in Wales. That is no small achievement, and it deserves to be 1107 noted: both the headline rate and the seasonally adjusted figures fell. I wish that I could say that the hon. Member for Alyn and Deeside (Mr. Jones) had acknowledged the fall, but, as always, he tried to paint a completely different picture. The hon. Gentleman is a perpetual merchant of doom and gloom: if he had the chance he would always talk down the Welsh economy, rather than acknowledging positive developments.
In the 1983 Parliament, the hon. Gentleman could be relied on to table the same question about unemployment for every Welsh Question Time. That tailed off remarkably in the three years of the current Parliament, in which unemployment fell month after month. The hon. Gentleman became rudderless then, and he may be in danger of becoming so again; we all hope, in our heart of hearts, that unemployment will fall and he will have nothing left to ask questions about.
§ Dr. Kim Howells
I know that the hon. Gentleman is not habitually flippant about such matters; I know that he cares about them. Will he acknowledge, however, that Wales contains some employment black spots? They can be found in the north-west, the middle and, indeed, the south. It is a travesty to treat the subject with anything other than the seriousness that it deserves.
§ Mr. Jones
I hasten to reassure the hon. Gentleman that I have no wish to treat the subject with flippancy. I know that in the parts of south Wales that he and I represent, and in other parts of Wales, it is not always easy to attract potential investors. I suggest, however, that the Government and the WDA would be even more successful in helping Wales if Opposition Members concentrated on the positive aspects of what is being done, rather than adopting the attitude of doom and gloom that they so often display.
I welcome the opportunity to review the WDA's work. It has already been pointed out that, when the agency was set up in 1975, its establishment was opposed by my party. The hon. Member for Alyn and Deeside's party was then in government. The WDA was a rather different animal then—a very imprecise and wishy-washy animal. It was responsible for industrial development, promotion and publicity, the provision of industrial sites and premises, industrial infrastructure and environmental improvement. That is quite a wishy-washy list.
As my right hon. Friend the Minister reminded us, virtually the first action that was taken after the 1979 election was the reshaping of the agency into a meaningful body—one that has been successful in Wales. It now has much more precise and targeted objectives: the provision, letting and management of sites and premises for industry, land reclamation and the promotion of Wales as a location for industrial development
Is it not amazing that the promotion of Wales as a location for industrial development was originaly tucked away alongside publicity? It was originaly a very underrated feature. That alone may justify my party's opposition in 1975, and our subsequent reshaping of the agency.
Do not Opposition Members remember the fiasco of the advance factories? The right hon. and learned Member for Aberavon (Mr. Morris)—and probably the hon. Member for Alyn and Deeside—would scuttle around Wales, opening one advance factory after another. It 1108 became a joke among the people of Wales: yet another empty shed would have its ribbon cut by the right hon. and learned Gentleman. That was the standard of the WDA before my right hon. Friend reshaped it into the successful animal that it is now.
The present Government have made the agency much more specific and appropriate. It should never be forgotten that only the present Government have provided it with sufficient funding. As my right hon. Friend was able to announce, its budget has been doubled in real terms, to £160 million. The WDA is now a success of which we can all be proud, as hon. Members on both sides of the House have acknowledged. The right hon. Member for Llanelli (Mr. Davies) stressed its success in attracting inward investment. Since the inward investment arm was formed in 1983, approximately 85,000 jobs have been created or secured. We should all praise the agency highly for that.
I recall attending in the summer recess the most pleasing opening of the Robert Bosch factory outside Cardiff. I should give credit to my right hon. Friend the Minister of State because he has devoted much energy to developing links with the motor areas of Baden-Württemberg, where Robert Bosch came from, and with Catalonia. He has signed a remarkable treaty in Catalan and Welsh, and we look forward to further developments between Wales and Catalonia.
My right hon. Friend the Secretary of State announced that this year the WDA has achieved another record in attracting 165 projects worth £830 million and 15,000 jobs. Again, that is a most creditable figure. I emphasise what my right hon. Friend said—that attracting inward investment is a team job involving Ministers, the Welsh Development Agency, county and district councils and, in my part of south Wales, Cardiff and Vale enterprise. In addition—sometimes it does not get thanked enough—Cardiff chamber of commerce and industry plays a major part in supporting missions abroad and looking after potential investors who come to Wales.
Inward investment has been a real success in Wales. The policy of the Trades Union Congress to Japanese investment is particularly regrettable. It described it as an alien culture.
§ Mr. Alun Michael (Cardiff, South and Penarth)
The hon. Gentleman paid tribute of the work of the Cardiff chamber of commerce and industry, which received considerable grant moneys from local authorities for the work that it undertook with other bodies. Will he be a little more even-handed rather than appearing to be churlish in criticising organisations and ignoring the contribution of local authorities?
§ Mr. Jones
That shows that the hon. Gentleman was not listening. If he had paid closer attention, he would have heard me refer to the team that usually comprised the Welsh Office, the WDA and local councils. I also mentioned the significant contribution of the Cardiff chamber of commerce and industry. I do not depart from what I said.
I was dealing with the worrying stance of the TUC in condemning Japanese investment as an alien culture. Especially worrying—I did not notice any comment from the hon. Member for Alyn and Deeside, but perhaps the hon. Member for Cardiff, South and Penarth (Mr. Michael) will deal with this—is Labour Members failing to condemn the TUC's attitude to Japanese inward 1109 investment. Wales has been most successful in attracting Japanese investment and is therefore most vulnerable to a Labour-TUC campaign against such investment. That would only encourage existing investment to relocate elsewhere and potential investment to say that Japanese investment is not welcome in Wales.
§ Dr. Dafydd Elis Thomas (Meirionnydd Nant Conwy)
I have no authority to speak on behalf of Wales TUC, but from my knowledge of its activities I can say that that is not its policy. It has worked hard to ensure suitable trades union agreements to facilitate Japanese investment in Wales.
§ Mr. Jones
I look forward to the Wales TUC distancing itself from the TUC, otherwise it will feel that it is being betrayed by the TUC's hostile approach. Japanese companies in Wales and those who care about the Welsh economy must be curious about why Opposition Members have not condemned the TUC's policy.
§ Mr. Michael
We should all agree on the need to encourage inward investment and indigenous industry and adopt a bipartisan approach. Labour Members agree with the hon. Member for Meirionnyd Nant Conwy (Dr. Thomas) that Wales TUC has adopted such an approach. There has been a partnership between the different agencies of national and local government. In view of the importance of the debate and of the WDA, I invite the hon. Gentleman to be less churlish and not turn it into a party-political ping-pong match. It is too important for that.
§ Mr. Jones
The hon. Gentleman always dodges the issue. Perhaps I should give way again so that he can condemn the TUC's policy of hostility to Japanese companies and for describing them as an alien culture. We know that that is the TUC's position. Common sense tells us that the only likely result is that Japanese investment will be frightened away and not made welcome. Shall I give way to the hon. Gentleman so that he can condemn the TUC?
§ Mr. Michael
The hon. Gentleman might as well give way so that we can get a little common sense into the debate. We are discussing the WDA. If he knows anything about the work to secure inward investment in Wales, including Japanese investment, he should know of the close partnership, to which tribute has been paid by successive Secretaries of State, between Wales TUC and unions. It is a diversion for the hon. Gentleman to go down this course. Although it is not for me to call him to order, I suggest that he returns to the subject of the Welsh Development Agency.
§ Mr. Jones
I suppose that I should apologise. I have been wasting the time of the House by allowing the hon. Gentleman to intervene. He continues to evade the point. He will not condemn the TUC. He is saying, as a Labour Front-Bench spokesman, that he does not care about Japanese inward investment. By not condemning the hostility to Japanese investment, on behalf of his party he is saying that he does not want Wales to have the opportunity of exporting to Japan. Instead, he would prefer investment to be made elsewhere and for Japan to export to Wales.
1110 Wales can develop far more profitable opportunities from its successful partnership with Japan. About three years ago, a parliamentary mission to Japan met the head of Yuasa Batteries. His opening remarks were, "How can we apply the Thatcher miracle here in Japan?" the Japanese recognise that they can gain from us in the same way as we can gain from them. But we shall not gain from the hostility of the TUC or from Labour's failure to condemn that attitude.
Another inappropriate development has been the unfortunate way in which the chairman of the WDA has been drawn into political debate. Early-day motions have been tabled by an hon. Gentleman who is not in his place to explain what he means which make some unwarranted or not obviously justified allegations against the chairman. The most substantiated charge against him is that, in the middle of a busy business trip to the other side of the world, he might have had a 24-hour stop-over en route from Australia to the west coast of America. That is a most ridiculous charge. It is like criticising the hon. Member for Cardiff, West (Mr. Morgan) for stopping for a cup of coffee at Membury or Leedelamere services as he drives home to Cardiff on the M4 tonight. That the chairman should have a break and stop at a normal refuelling point for 24 hours—all air services from Australia stop at one or two locations—scarcely appears to warrant a wholly unjustified early-day motion. Again, I wait to see what Opposition Front-Bench Members say about that slur. Anyone who has been on parliamentary missions abroad will know that they are not junkets. Their itineraries—or those of the missions on which I have been—have been exhaustive. There was very little free time left to any of the participants. The people who work so hard for Wales inevitably need a break at the weekend to recharge their batteries so that the hard work done until Saturday morning can be restarted on Monday morning.
I am sorry that the hon. Member for Cardiff, West (Mr. Morgan) is not here. I regard the early-day motion as the cheapest of cheap shots. I imagine that he does not have great support from his colleagues. In considering the signatories of the two early-day motions, one finds that of the first six only one signature on each motion is that of a Welsh Member of Parliament. The hon. Gentleman has had to rely for support on English Members of Parliament, and we can see those who signed this wholly unwarranted and unjustified slur against the chairman of the Welsh Development Agency and against the agency itself. I wish that the hon. Gentleman were here to hear what I say. He is doing nothing other than contributing to the "selling Wales short" campaign.
I have met the chairman of the WDA a few times and I know of no justification for such an attack. He appears to have very much the right approach, which is to go out and get business for Wales. Who can be surprised that changes are being made to such an agency? It is a body which must constantly move on, change and become more efficient and more expert. It is natural that a new chairman of the WDA would change the style of the agency's operations. From what I can see, he seems to be making the right changes and the WDA is making progress.
I hope that the useless and ridiculous early-day motions, which should never have appeared on the Order Paper, can be put behind us and that we can pretend that they do not exist. In general, the WDA and all those who work for it are doing a good job, and we want to see them do even better.
§ Mr. Richard Livsey (Brecon and Radnor)
I welcome the Bill to increase the investment limit of the Welsh Development Agency from £700 million to £950 million. The WDA's record is very good and I do not think that any hon. Member will dispute that.
I do not wish to be churlish, but I am a little concerned about the comparison between the ability of the WDA to spend £950 million and the £16 million approximately that is allocated to the Development Board for Rural Wales. Since the WDA also has a remit to operate in rural areas, it is clear that some of the money allocated to it will find its way into the rural areas of north, south and west Wales. However, there has been a lack of recognition so far in the debate of the crisis in the countryside, in farming and in the rural areas. I am greatly concerned that many sons—even single sons—of farming families are now leaving the industry. That has happened to the chairman of the Brecon and Radnor National Farmers Union, who was a member of the same young farmers club as I was. His son is unable to continue on the family farm, which is sad.
I think that we all accept that there must be an interventionist role in the WDA and the DBRW for channelling public funds into a mixed economy, so more attention should be paid to the very low incomes now to be found in farming. They are now at their lowest since the second world war.
One problem confronting agriculture and agricultural products is the power of the supermarket chains in the marketplace. They now control more than 50 per cent. of food retail marketing. Indeed, one would have thought that it should not be necessary for them to ask to open on Sundays in order to ply their trade. I should have thought that they were doing very nicely anyway. However, that leaves the agricultural industry, and farmers in particular, in a very weak bargaining position. I should have thought that the WDA and the DBRW could in future pay more attention to aspects of co-operating marketing. Earlier this week I visited the Royal Welsh showground and I was pleased to hear the Chairman of the DBRW, Mr. Glyn Davies, announce investment in a new food hall on the Royal Welsh agricultural show site. This is an excellent initiative and should be the forerunner of more initiatives to market more Welsh food products.
§ Sir Wyn Roberts
The hon. Gentleman is well aware of the financial backing that the Development Board for Rural Wales is giving to food promotion which will be our main arm in selling Welsh food products at home and abroad.
§ Mr. Livsey
I am certainly aware of that fact and I welcome such initiatives which, I think, are long overdue. I am glad to see that some are in the pipeline. I am concerned about the present inability of farmers to co-operate effectively in marketing their food products. I hope that such initiatives will assist that process.
I am especially concerned about the lack of EC abattoirs in rural Wales, whether in the WDA's area or in that of the DBRW. I think that I am right in saying that there is now a fourth abattoir in Llanidloes which—I acknowledge—has received support from the DBRW. However, let us compare our position in rural Wales with that of other parts of the United Kingdom. Scotland has 20 European Community-approved abattoirs and Northern Ireland has 28, so we are a long way behind. I 1112 should like the DBRW and the WDA to encourage co-operative marketing groups among farmers and to enable them to set up abattoirs and meat packing plants so that they can compete in the fierce retail food market in Britain and, I hope, to export to mainland Europe where they also need to compete.
Unless we have our house in order and can market products that housewives want and which are in an easily accessible form for modern living, we shall lose out. It appears that unless things change rapidly, we shall be able to slaughter only about 40 per cent. of our lamb crop in Wales. We still have little ability to produce marketable products from meat packing, and so on.
I make no apology for drawing the Minister's attention to an issue that concerns my constituency. I noted the WDA's great success in land reclamation in south and north Wales. It has done an excellent job. However, as the Minister will know, I am very concerned about a continuing burning tyre fire on a derelict site. The fire has serious environmental consequences at Heyope near Knighton, where 10 million tyres have been on fire for the past two years as a result of arson. Water is becoming steadily more polluted in the river Teme. Four million water consumers downstream in the west midlands might be threatened. To be fair, many agencies have tried to tackle the problem, including the Powys fire service, which has gone as far afield as Canada to draw attention to the problem. As many millions of pounds are available to the WDA to reclaim old sites in south and north Wales, will the Minister please consider the possibility of using derelict land reclamation funds from the WDA to tackle that site, which is not large? We are talking about hundreds of thousands of pounds, not millions of pounds, to overcome the problem. There I leave that topic.
§ Sir Wyn Roberts
I know that that problem is causing concern and I am glad to tell the hon. Gentleman that there will be an early meeting of the chairman of the WDA, the local authority and company representatives to discuss it further.
§ Mr. Livsey
I am delighted to hear that and I thank the Minister most sincerely. There is great and mounting concern about the situation, which not only affects a small locality but has wider implications. I believe that the situation is unique in the world.
Another aspect of the WDA and, to some extent, the DBRW which concerns me—I am not nit-picking; I am merely mentioning the matter—is the desirability of having more in-house consultants and agencies in Wales to provide consultancy work for the two agencies. Far too often consultancy services have to come from outside Wales, yet in Wales we have people with professional training who could develop greater expertise in consultancy work, especially financial consultancy. I trust that in future this idea will come more to the fore.
Only yesterday, as the Minister will know, we had a wide-ranging discussion on infrastructure projects in Wales—especially roads. Wales still has poor infrastructure. We still need a north-south road and better links between mid-Wales and the midlands. That will require more public investment than can be provided by local authorities, or even by the Welsh Office. Some of the agencies may be able to assist us. Perhaps the WDA and the DBRW could make recommendations for improved 1113 infrastructure in Wales. That would assist with exports and communications and improve economic activity in general.
I am sure that the Welsh Office already consults on the matter, but perhaps it could consult the agencies more on economic infrastructure, such as roads and railways. Perhaps it could consider jointly with the Department of Transport the desirability of electrifying the railway lines into Wales.
Other hon. Members have rightly stressed the importance of skill training. It is vital. We know that Wales has an immensely dedicated resource in its work force. Hon. Members have also rightly praised the Welsh work force for its ability to get down to the job, tackle it and learn how to increase productivity. However, even given the advance of the training and enterprise councils, we need more integrated skill training and more integration with local education authorities, too. That matter needs more attention. Sandwich courses are important, as is training on the job and then returning to courses run by education authorities—higher education colleges, for example. I was in that environment before I entered the House.
Perhaps with the increased investment available under the Bill the WDA will be able to assist with the problem of unemployment. Wales is still an unemployment black spot, with more than 120,000 people out of work. That is far too many. The problem must be tackled.
The philosophy of the mixed economy is now widely accepted on both sides of the House, despite what the hon. Member for Cardiff, North (Mr. Jones) said, Thatcherism is dead. It may have been a factor in the 1980's, but it does not live in the 1990's. We are in a different era altogether. We all accept the mixed economy and the fact that the WDA and DBRW can contribute to it.
We have been fortunate in some of the tenants of the Welsh Office, especially the right hon. Member for Worcester (Mr. Walker)—I suspect that the tendencies of the present Secretary of State, too, are on the damp side. We have been fortunate that there has been the will to pursue the philosophy of running the mixed economy better. The fact that the Bill provides increased powers for giving financial support to the WDA shows that clearly, too.
The problem of the low-wage economy in Wales still needs to be tackled. We will not get better quality jobs until we have better skill training and more skilled people there. That cannot be emphasised too much—nor can the importance to the Welsh economy of home-based industry and small businesses that grow. More attention must be paid to them, especially in terms of providing better financial arrangements and management assistance. I know that the chief executive of the WDA is now considering that and will soon go round the small businesses of Wales, geeing them up and trying to improve the position. I welcome that initiative.
Increasing the amount of manufacturing industry, after its disastrous decline over the past 12 years, is vital for Wales. The WDA will have a crucial role there too.
The future of Wales lies within the European Community. I strongly endorse monetary union and greater policial integration in the EC. I believe that we will get more for the Welsh economy, a higher standard of 1114 living and a better future for our young people out of better integration within the European Community. Federalism is much misunderstood in some parts of the Conservative party. Subsidiarity—the policy coming out of the EC—fits Wales well. It is about making decisions at appropriate levels in the Community, so one would hope that in future more power will reside at a Welsh level. Parts of the WDA operation already show that. All that we need to do now is to bring greater democracy to Wales to ensure that political decision making, too, is brought nearer to the people.
At a European level, the creation of a single currency is inevitable and will bring great benefits to Wales. It is only just round the corner. We have a few little local difficulties, such as Maastricht, to overcome, but on the whole the British people, especially the Welsh, are behind those moves. We are going in the right direction, and my party welcomes the Bill.
§ Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)
The Welsh Development Agency has been, is and, I am sure, will remain the development lifeline of communities such as mine. We find it difficult now to believe in life without the WDA. But sadly, however much of a lifeline it has been and still is, I have to report that in the past decade it has been unable to cushion us against or insulate us from recession and economic mismanagement.
The Secretary of State said today, as he has repeatedly said in the past, that we face a period of restructuring the Welsh economy because of the loss of jobs in coal and steel over the past decade. I remind him, and the House, that in my community over the past 10 years three times as many jobs have been lost from the manufacturing sector as have been lost from coal and from the closure of the last of the Dowlais iron works. It is not the collapse of coal and of iron in the past decade, but the collapse of manufacturing industry that was brought into our communities to replace the coal and steel jobs which has created the jobs chasm. That has been our major problem in the 1980s.
It could be argued that the problems of the early 1980s led to a need to restructure and to develop new production techniques in the manufacturing sector. That view was taken as much by the trade union movement in Hoover in my constituency as by management and by the Government. However, we rightly feel resentment and bitterness about the second recession and about the second destruction of jobs that is happening now. That is not a consequence of restructuring and it has nothing to do with coal or steel. The self-inflicted recession and loss of jobs are a result of mismanagement by the right hon. Member for Blaby (Mr. Lawson) and the Cabinet during the two years that led to a crazy commercial and property boom not in south Wales, but in other parts of the country. That had to be stopped by cripplingly high interest rates. In turn, that not only brought to a halt the property boom in the south-east, but brought about the sudden and disastrous decline of manufacturing investment in industrial and consumer goods. We have the right to say that the job losses suffered in the past 18 months have occurred as a result of mismanagement by the Government. The Welsh Development Agency has been unable to protect us from that.
The problem is best illustrated in my own community. Effort has been put in by all concerned, including the 1115 Secretary of State, the Minister, the Welsh Development Agency, local authorities and myself. We have worked hard to attract new companies. It was announced recently that two new companies in my community, an exciting prospect, could bring in 170 jobs in the next couple of years. Last week, almost 100 jobs on one line were lost at Nancanco in Rhymney which almost wiped out the job opportunities provided by the new companies. What has happened is a result of economic mismanagement, not of demanding too high wage increases—Hoover workers have scarcely had a wage increase—or of bad industrial relations in the past two years. Workers' rights have been eroded week by week and month by month in our community. There is no citizens charter for people at work who are having to accept poor conditions and relationships. The jobs have gone as a result of economic mismanagement by the Government over the past two years.
Once again, we must try to bridge the jobs chasm which has emerged in communities such as Merthyr Tydfil and Rhymney. We turn to the Welsh Development Agency for support and assistance in bridging the jobs chasm. Two questions lie behind many of the speeches made by hon. Members. Where will the new jobs come from? How shall we attract them? If we can answer those two questions, we can identify the role of the Welsh Development Agency and of the money that we shall approve through the Bill.
Where will the jobs come from? Much has rightly been said about the need to attract inward investment and all communities in south Wales can demonstrate the success of inward investment. However, as my right hon. Friends the Members for Llanelli (Mr. Davies) and for Alyn and Deeside (Mr. Jones) have observed, the game is getting more competitive. Whether from central Europe or from other Community countries, there will be growing competition, and the competition to attract inward investment is already intense. We must not become over-dependent on a new wave of inward investment. In some ways, we do not need to be too dependent on new inward investment because within our own communities with the existing inward investors there are tremendous job creation possibilities.
I read with great fascination a recent publication by the Department of Trade and Industry, and I hope that the Minister, the Secretary of State and everyone in the Welsh Office has also read it. One had given up the Department of Trade and Industry, yet in June 1991 it published a document called "Market Opportunities for Electronic Component Manufacturers—A Study of Demand Created by Japanese Electronic Equipment Manufacturers in the UK". It shows that about £1 billion worth of components are feeding existing inward investment and that the figure will rise in the next four years to £1.7 billion. Hon. Members should think of the jobs potential if we can reach out and develop the contacts, and if we can create the manufacturing capacity to meet some of that demand. The Department of Trade and Industry document refers to local political pressures. I am delighted that somebody in that Department understands the issue, even if the Secretary of State for Trade and Industry does not. The document refers to the pressure that is being put on existing inward investors to diversify and to source in the local communities.
We have heard nothing so far about what strategy the Secretary of State and the Welsh Development Agency will adopt to gain a share of the magnificent Japanese 1116 investment in south Wales and to benefit from the components potential of inward investment. Will we gain a share of the local sourcing? That could be a major area of job creation within our community. Everyone dismisses the sheds. I do not, and I am very glad that there are sheds in my area because we shall need many more if we are to fill the jobs chasm. Companies, whether local, United Kingdom or owned by inward investors, will come to the sheds to feed components into the first generation of inward investment manufacturing. We must appreciate that potential and we should not spend all our time chasing new companies, although we must do that to an extent. We must spend as much time building on the potential that has been identified even in dry Departments such as the Department of Trade and Industry.
§ Sir Wyn Roberts
I take the hon. Gentleman's point. Surely he must be fully aware that with many of the new inward investors, especially the Japanese, there was an insistence that a percentage of the materials should be sourced either in the United Kingdom or in other European countries. He will be aware that many companies in Wales, especially the Gooding Sanken Group, have taken advantage of that.
§ Mr. Rowlands
Yes. My point is that there is pressure for insistence on a growing percentage of local sourcing. We want a far more definitive strategy from the Secretary of State and from the Welsh Development Agency so that we can tap into the growing potential. Sony is now sourced heavily from within the United Kingdom, as is Nissan in Sunderland. One of the companies that is coming into my area will produce goods for the new markets and new opportunities created by the first generation of inward investors.
Are we moving to a new plane raising our sights and setting targets in view of the potential job creation in Wales resulting from those developments? Is there, for example, a view on the enormous Bosch development adjacent to the M4 within 15 minutes' journey time of my community? What strategy has been adopted to ensure that, as a result of the Bosch development, jobs in the components industry will be created in the community of Merthyr Tydfil? We cannot fit the Bosches into our valley communities. We do not have great land sites—we do not need them. We need to create 2,000 to 3,000 jobs as a spin-off from other investments. I should like a lot more. I should like to hear the chairman of the WDA and the Secretary of State overtly, deliberately and consciously in a planned fashion reaching out to the new potential market for jobs in our community. Perhaps they do so behind the scenes.
Unless the Minister of State can prove otherwise, the trouble is that, after all those efforts, information on the Welsh economy is appalling. The paucity of information about the Welsh economy strikes one. Those are not my words; they are the words of the most recently published document, entitled "Valley Skills", an inward investment study. That document came out of the Welsh Office last week, and it states:The paucity of information on a number of basic issues is a theme running through this report".The report makes that point very well. There is a paucity of information about what skills we have and what skills we need.
If there is enormous potential for jobs within the new inward investment that has already occurred, how will we 1117 attract them? How will Merthyr, Rhymney, Neath, Pontypridd or Llanelli attract those jobs? There are two methods—one involves the role that the WDA has been and is playing, and with which it is only beginning to come to terms, as was mentioned by my right hon. Friend the Member for Llanelli. The first is a traditional method. I do not dismiss it. Perhaps my hon. Friends went too far in saying that we have the necessary property. I am not much interested in property, but I am certainly interested in land reclamation. I am certainly interested in the building of modern industrial real estate in communities such as mine, because at least one has something physical to offer and to market, and that is extremely important. That is why I was concerned about and interested in the WDA budget figures for the next couple of years.
In the public expenditure White Paper on the Welsh Office there is a decline in net expenditure by the Welsh Office to the Welsh Development Agency from £85 million or £90 million in 1991–92 to £64 million in two years. That is a drop of more than £20 million in the contribution from the Welsh Office. However, the figure for the gross budget remains at £160 million. It is for the Minister of State to justify the figures, but it seems that the budget will be sustained by increasing rents on new properties from £32 per sq m to £45 per sq m—a good contribution to industrial inflation. I must say—and by existing average rents of the whole portfolio rising from £15 to £24 per sq m.
The second method is a huge divestment of properties. I am not arguing the merits or demerits; that is not my concern at the moment. My concern is whether that will happen and, if it does not happen, what will happen to the WDA budget. The forecast is to go from the current sales this year of 74,000 sq m to 300,000 sq m. That will be three times as much property sold. My right hon. Friend made a point about preoccupation with property. There will be tremendous preoccupation to reach those figures. I cast doubt because the figure for 1991 factory divestment was supposed to be 209,000 sq m this year. The achievement is 74,000 sq m. Given that track record, it is reasonable to ask whether, if we do not reach those figures, and if there is a shortfall in factory sales, the budget will be made up by the Welsh Office and the Secretary of State in the coming year. That is all I ask, and I should like an answer to that question, because we are dependent on that budget.
A major new matter to which the WDA must pay attention is the attraction of our communities, as my right hon. Friend rightly pointed out. It gives me nightmares to watch our society being de-skilled and to watch many people's skills becoming redundant. I remember marching a couple of Fridays ago. Banners were being waved; it was a romantic moment. Pragmatically, I asked the chairman of the lodge committee, "What are you going to do?" He said, "I don't know yet. I am a trained electrician; I was trained by British Coal. The electrics that I know are totally redundant in the world outside. I was a good Coal Board electrician, but I am not an electrician for the new age. I asked British Coal, with all its job shops, to train me again. They said, 'No, we will not train you again, because we have already trained you once.'" From British Coal, British Gas and British Telecom and the South West 1118 electricity board came a generation with good training skills. Privatised companies will let us down on training, just as manufacturing is letting us down on training.
One of the real ironies is what we read in many documents, the latest and glossiest of which is the strategic guidance from the Secretary of State, entitled "Skills and Enterprise: An Agenda for Wales". It was released yesterday. I thought that it was a Labour party policy document, it looks so good and colourful, but it is minus the content. It states:The Secretary of State therefore invites Welsh TECs, working with the WDA and DBRW, to develop proposals for a coherent framework of services on skills that the development agencies can market to inward investors.It is recognised that we shall need skills and market them to attract new jobs and new opportunities to our community. Training is supposed to be employer-led, but I must tell the Secretary of State that employers are not training. We are depending on the very people who have let us down. I do not say that that is the cause of the recession, but they have cut the money that has previously been spent on training. We are turning to a manufacturing and trading base that does not exist. If it exists, it has shrunk to a level that is incapable of sustaining a new training initiative of any character.
Another worrying matter—it relates to the electrician from Penallta—is that the type of training being offered is often out of date. I recently went to a fine training skills centre. It shook me rigid that people were being taught old-fashioned skills and on old-fashioned machinery. It is true that many of those people will go into factories with such machinery, so we are training for the here and now if not for the past, but there is a new generation of manufacturing, and production techniques. Hoover in Merthyr is demonstrating that. Any new inward investor will bring modern manufacturing training and machinery to our communities. We shall have to offer people who will understand and have a feel for that type of production and the training that goes with it, but who will prepare the new generation for the next five or 10 years? Who will help middle-aged redundant people in communities such as mine?
We do not have the manufacturing base or training programmes to go with it. That is why, in the summer, I wrote a special programme and prepared a detailed analysis of what would be a manufacturing training programme for a community such as mine. I put a proposal that we create a centre of excellence. I appreciate my right hon. Friend's point that we may have to send our people to Japan and elsewhere, but we could train them in our own communities, but that would require much more intervention and greater effort to create opportunities for our people. The WDA, alongside our TECs, will have to play a more fundamental part in educating the new generation so that, when we invite and attract new companies to our areas, we will offer not only major new industrial real estate, new factories, and financial assistance, but a community with modern skills, ready to attract modern industry to create a modern economy for the Wales of the 1990s.
§ Mr. Keith Raffan (Delyn)
I agree with some of the comments made by the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), especially about the paucity of the information available to us about existing 1119 skills in Wales, the skills that we need and therefore the importance of a skills audit. He is also right to say that it is at a local level that we can best assess the skills that are needed. My worry about the training and enterprise councils is that they cover too big an area. Sometimes the local authorities know best exactly what skills training we need. The district council in my constituency has played a dramatic role in our area's economic and industrial regeneration. There needs to be much greater integration between the local authorities and the TECs on matters relating to training and skills needed.
Although, as I have said, I respect some of the comments made by the hon. Member for Merthyr Tydfil and Rhymney, he will not be surprised if I disagree with him about the recession. He was unfair in looking at the British economy and British interest rates in isolation. My latest information was that the Labour party had been converted in its thinking on Europe. We must look at the British economy and British interest rates in the European context and bear in mind the fact that we are not the only country in an economic recession: other countries are in the same position.
In addition, the level of our interest rates is now directly affected by factors outside our control, ranging from the strength of the peseta in the exchange rate mechanism, the fact that the German Government have taken on the enormous task of regenerating east Germany with the consequent impact on Germany's interest rates, and even that, according to the chief of staff at the White House, President Bush may have made certain impromptu and spontaneous remarks on a golf course.
All those factors are outside our control but, in the global economic village in which we now live, they have a direct effect on our economy and interest rates. I am sure that my right hon. and hon. Friends on the Front Bench will nod their heads vigorously at that, because nobody could be keener to reduce interest rates than the Government, especially as we have only a few more months to run of this Parliament and we are desirous of re-election. As I have said, we must look at our economy and interest rates in an international context.
I must apologise to the House in advance for not being able to be present to hear the replies to the debate, but, like hon. Members of all parties, I am glad to have the opportunity to support the Bill. As my right hon. Friend the Secretary of State has said, there is no doubt that the Welsh Development Agency has made an immense contribution to the Welsh economy and to the industrial regeneration of the Principality. I have direct experience of that in my constituency, where the partnership between the WDA, the Welsh Office and the local authorities has been remarkable.
If I had to specify one local authority, I should like to pay tribute to Delyn borough council. That partnership has been to the enormous benefit of local people. I remember the dark days of 1985 and the closure of Courtauld's greenfield site where over 800 people were made redundant. That had a multiplier effect on the local economy, with a further 400 or 500 redundancies. Male unemployment in Flint and Holywell approached 40 per cent.
There has been a dramatic improvement since then. The local economy used to be far too concentrated on only three industries—coal, steel and textiles. However, thanks to the partnership between the Welsh Office, the WDA and the local authorities, it is now much more diversified. That 1120 would not have been possible without the contribution of the Welsh Development Agency, especially in the Delyn enterprise zone and the Greenfield business park.
Public sector pump-priming has led to the regeneration of our local economy and is one of the principal reasons why the economy of Delyn is far more resilient in this recession. Our local economy is far more diversified and is therefore far more flexible and capable of resisting this recession, with the result that it is not having so terrible an impact on employment, on local families and on the entire social fabric of our community. Those dark days have gone. I am sure that we shall come out of this recession stronger than we were before, that the local economy will diversity still more and that it will therefore be strengthened still further.
I agree with the hon. Member for Ynys Môn (Mr. Jones) that it is important that, as the private sector takes over the provision of factory space in the more accessible areas—those with the better connections to the motorway network—the WDA follows the dualling of the A55 into north-west Wales. That is where public sector pump-priming is now needed. We have seen the creation of new, private industrial estates in north-east Wales—in Wrexham Maelor, and in Alyn and Deeside.
Although we do not always hear this from Opposition Members, those new private industrial estates and business parks have been a tremendous advance but they would not have been established without initial public sector pump-priming. That is what originally regenerated those areas and made it possible for the private sector successfully to become involved. We must now move that public sector pump-priming further along the north Wales coast, and into the rural areas, to help to regenerate those local economies also.
I join my right hon. Friend the Secretary of State in paying tribute to the WDA's extraordinary record on inward investment. Many countries may well have been seeking to establish plants in the European Community as we approach the creation of the single market, but the WDA has taken the initiative. It has not been passive. Thank goodness, the part of the organisation responsible for inward investment has been renamed Welsh Development International. At least one of the recommendations of the Select Committee on Welsh Affairs has been adopted. I am also glad that we now have a European office in Brussels.
It is amazing that, although the Government usually respond negatively to our Select Committee reports—we are now accustomed to that and can almost dictate the Government's response—a couple of years later, they undergo a Damascene conversion and come round to our point of view. It seems that the Select Committee is sometimes ahead of the Welsh Office. We can only hope that if the Select Committee comes out in favour of a Welsh Assembly, the Welsh Office will eventually follow us on that as well—who knows? The WDA deserves credit for its extraordinary achievement and active involvement in inward investment. The investment may well have been going to come to Europe, but the WDA has made sure that it has come to Wales and it deserves full credit for that.
I intervened in the speech of the right hon. Member for Llanelli (Mr. Davies) on the issue of economic and monetary union, on which he and I disagree. The right hon. Gentleman said that that would have a devastating impact on Wales, but he did not convince me. He did not give any specific details of how that would occur. My view 1121 is that there will be a devastating effect on Wales if we do not have a single currency or join in economic and monetary union. If we remain outside, much of the inward investment in the Principality will be under tremendous pressure from their parent companies to relocate to the mainland of Europe.
My right hon. Friend the Member for Finchley (Mrs. Thatcher) has not commented on that. She concentrates on the symbolism of sovereignty, but I am afraid that I am less concerned about sovereignty, which to me is a commodity that is to be ceded, shared and pooled to the benefit of my constituents; I am more concerned about their jobs and future livelihoods. I am not concerned about the idealism of sovereignty. Indeed, we gave up sovereignty when we entered the Community—or, at least, we ceded or pooled some of it.
When my right hon. Friend the Member for Finchley signed the Single European Act, she ceded sovereignty. When we joined the ERM, we merged still more of our sovereignty with that of our partners with whose currencies we strongly linked our own. My right hon. Friend the Prime Minister and his two predecessors have all seen sovereignty as a commodity to be ceded, pooled, shared and merged to the advantage of our people—and long may that continue. Whatever they may say, that is what they have done, and that must continue.
We must not be left outside the inner currency circle, because that would have a devastating effect on the Welsh economy. The WDA's solid record of achievement in inward investment would be in danger of being undermined if we stand apart and are isolated.
I agree with the right hon. Member for Llanelli on what I hope I may call his overall view of Europe. We are not geographically well placed, because we are on the edge of the continent. The continent's centre of gravity is now moving eastwards. Following the unification of Germany and the opening up of eastern Europe, we are now facing a changed situation. That is why it is tremendously important that the Government strongly support the WDA—and other agencies in the United Kingdom, such as Scottish Enterprise—by increased investment in our infrastructure. This is crucial because, if we stand outside a single currency, inward investment might well relocate to the mainland of Europe. If we do not get our infrastructure up to scratch, we shall lose inward investment, particularly to the so-called golden triangle between London, Paris and Hamburg—principally, the Pas de Calais area.
The Select Committee held an inquiry into the impact of the channel tunnel on Wales. Members who were involved and took part in the visit to France will be well aware of how much further ahead the French are in providing the infrastructure for the tunnel at their end. In terms of both rail and road connections, I estimate that the French are 10 to 15 years ahead. I find this frightening.
At a meeting, the French ambassador talked about a second channel tunnel being started within two years of completion of the first. I wish that we had that kind of positive thinking that, in the words of Iain Macleod, when the ball rolls our way, we would grab it and run. We have not done so in regard to infrastructure. There is therefore a danger that we shall lose out. However much the WDA 1122 does about inward investment, if our infrastructure is not up to scratch, we shall be in great danger of losing future investment projects to the mainland of Europe.
We heard from the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) about land reclamation and industrial dereliction in south Wales. Great sacrifices have been made by the Welsh people and the Scottish people at various times in our recent economic history, in the interests of the nation as a whole. It it time for the people of Kent to realise that we have made sacrifices for the British economy and the welfare of our people in terms of connections, especially freight connections, between the channel tunnel and London—and beyond, to the Principality and further north. It is perhaps now the turn of people in the south to make a similar sacrifice.
I do not for a moment underrate the importance of the environment, but it must not be allowd to obstruct what is essential to the future economy of our country. The French have a highly centralised planning system compared with ours, and I do not wish to impose that on our people, but we must take a more positive attitude, make a more determined effort.
When the people of Amiens rise in protest and march down their streets it is because the high-speed connection to the channel tunnel does not go through their town but bypasses it. I do not expect the people of Kent to go to that extreme, but there must be a change of attitude. We must get our infrastructure right and do so quickly; otherwise, we shall lose out permanently.
§ Mr. Livsey
Will the hon. Gentleman comment on British Rail's announcement last week that passengers from south Wales to the continent will have to get off the train at Paddington and go by underground to Waterloo? In the Welsh Select Committee, the chairman of British Rail promised us that we would have cross-platform changes at Waterloo. Will the hon. Gentleman comment on the fact that one hour will be wasted in the passage from south Wales to Paris?
§ Mr. Raffan
We discussed that with the Minister for Public Transport in the Select Committee. Ministers sometimes change jobs so quickly that I cannot keep up with who is in the post. Several important points came out of that Select Committee discussion. I am sure that the hon. Gentleman will understand that I want to avoid getting bogged down in detail, but it appears at times that the Department of Transport looks in a blinkered way at the transport problems of London, such as the rail link to Heathrow, and new tube links, without co-ordinating them and integrating them into the channel tunnel network. We need a much more integrated and coherent transport policy.
§ Mr. Raffan
I will bring my speech directly back to the WDA. I will forgive the hon. Gentleman for having distracted me.
If the WDA is to be given every opportunity to do what it should do for the economy of Wales, it must not be held back by a lack of adequate transport infrastructure. A team effort has been made to attract inward investment, and in Delyn it is between the WDA, the Welsh Office and the local authorities. Equally, in the all-Wales context, there is a partnership between the WDA, the Welsh Office 1123 and Government Departments in Whitehall. Others are involved. We cannot consider what the WDA does in isolation.
Economic development and our ability to attract inward investment can be held back by a lack of adequate infrastructure, which is the Government's responsibility. Now that we have a Prime Minister who travels by rail, perhaps we shall see dramatically increased investment in the railways in the years to come.
My right hon. Friend the Secretary of State spoke about a Europe of the regions. He mentioned the strong relationship that he and his fellow Ministers had built up with the four motor regions of Lombardy, Catalonia, Baden-Wurttemberg and Rhône-Alpes. I am strongly in favour of all those developments, but I would like to hear from the Minister more detail about how the Welsh Office sees the Europe of the regions liaising with the WDA, and the impact of the one on the other.
My right hon. Friend the Secretary of State spoke in a recent speech on the periphery of the Conservative party conference about the need for an inter-regional body, although he was vague about its aims and powers. It would be an advisory body which would enhance accountability and administer structural funds. I should like to know how such a body might affect the WDA.
Infrastructure is, of course, also important in each of our constituencies. I worry about the division of responsibility for roads between the Welsh Office and the counties. The two do not necessarily integrate their road construction plans. The hon. Member for Wrexham (Dr. Marek), who is not here at the moment, and I have occasionally worked in tandem. We have sometimes shocked the Minister of State by appearing in his office together to discuss this issue.
I have long been worried by the lack of access link roads between the A55 and the industrial estates in my constituency and the tourist areas. If the vast investment of £500 per head—not all of which was spent on the Conwy tunnel—on dualling the A55 is to be worth while, we must have adequate link access roads. We must also have an improved British Rail network, especially in the north of the Principality.
I do not wish to digress too far, but the matters to which I have referred are crucial to the WDA. The agency cannot go to a potential inward investor—whether from overseas or from England—and seek investment without adequate infrastructure. That is the part which the Government must play in the partnership.
The Point of Ayr colliery in my constituency is the last remaining pit in north Wales. It was recently announced that it would switch from the long wall system of mining—I shall not give way to any technical interventions from the hon. Member for Pontypridd (Dr. Howells) on this matter—to the pillar and stall or board and pile system. I am relieved that the hon. Member for Pontypridd is still nodding in agreement. I have been briefed by British Coal on these matters, which is more than can be said for the shadow Secretary of State for Energy.
This change will secure the future viability of the pit. It involves a significant investment. The pilot scheme will involve investment of £2.3 million. Sadly, the new tunnelling method is not labour-intensive, so at the end of 1993 the work force at Point of Ayr will be reduced from the current 496 to just under 300.
It is important that the WDA responds to this situation. We have had the announcement in advance, so we have 1124 time to prepare for the loss of jobs. I am grateful for British Coal's reassurance that there will be no compulsory redundancies. The job losses will affect not only my constituents but those of the hon. Member for Wrexham. The homes of the work force are spread over a wide area. We look to the WDA to work closely with the British Coal enterprise, which also does an important job. Again, a partnership can ensure that the impact of the redundancies on the local community is minimized. We must help those miners who are enterprising and want to start their own companies, and attract other investment into the area. We must ensure that those redundancies do not have a dramatic impact on the fabric of social life in the community. That is important, and I hope that my right hon. Friend the Minister of state will also be able to respond.
I am trying desperately to make an unprovocative speech as I am demob happy, but I could not help noticing that the Labour leader of Clwyd county council, Councillor Dennis Parry, said that he would seek a commitment for further investment from Lord Haslam. He seems to be a little out of date: British Coal's chairman is now Mr. Clark. The board of British Coal has already accepted a proposal for further investment at Point of Ayr. I hope that Mr. Parry and I will contact Mr. Clark together. I have already spoken to British Coal. British Coal and the Welsh Development Agency need to work together to minimise the impact of redundancies.
I am prepared to give the Labour party the credit for setting up the WDA, if Opposition Members are prepared to give us credit for the zeal of the converted in providing it with considerable resources over the past decade. Opposition Members, including those on the Front Bench, have welcomed the increased resources and the great good use to which they have been put to the benefit of the Welsh people.
I do not want to enter into past arguments. There is no question of the WDA disappearing, or of its offices abroad being closed, now that my right hon. Friend the Member for Chingford (Mr. Tebbit) is no longer Secretary of State for Trade and Industry. If ever there was a tribute to the effectiveness of the WDA, it was when he was groaning grumpily about the unfair advantage WDA offices overseas gave us in attracting inward investment into the Principality. Backhanded though it was, there could be no greater compliment to the effectiveness of the agency and its leaders.
My right hon. Friend the Secretary of State mentioned the enormous amount of money that has now been spent by the agency—more than £1 billion. I am concerned about the accountability of the agency, not merely to the Government but to the House. Ultimately, it must be accountable to the House.
I would not want the Select Committee on Welsh Affairs to be so ineffective that, like the Scottish Select Committee, it might as well not exist. It should be reconstituted. We must move away from the present position that membership of the Committee is in proportion to party membership in the House as a whole. It should be formed in proportion to party strength in Wales alone. The Government should not worry about that. If the Welsh Select Committee is to be effective, it should be constituted in proportion to the number of hon. Members each party has in the Principality.
I am in favour of effective Select Committees, although I am not in favour of serving on them for eight years—as I had done until my resignation earlier this year. One 1125 Parliament is the maximum time that any Member of Parliament should serve on such a Committee because it involves a heavy work load.
On the WDA and its accountability to this House, it is important that the chairman and chief executive of the WDA should appear regularly before the Select Committee, especially when such a large amount of public money is being spent. We adopted the Select Committee system from the United States. I shall not enter into the controversy that has appeared in the press about who stayed at what hotel between what legs of an inward investment mission. It demeans hon. Members to make such comments. I hope that we can all rise above that.
The chairman, the chief executive and their colleagues in the WDA work hard and do a good job. However, the appointment of the chairman and chief executive are of great importance. They are responsible for the disbursement of such large amounts of public money that they should be subject to hearings in Select Committee, although those do not have to be as grandiose and pompous as confirmation hearings in the United States. That would be an improvement in the workings of the House.
That might get us away from small-minded early-day motions and the petty personal criticism of the people involved. With hearings there would be some sort of cross-party consensus on appointments, so the appointee would be more likely to be above the party political fray and less liable to be dragged down into it so frequently.
Select Committees should have greater power. I hope that my hon. Friends on the Treasury Bench will consider that—especially the Whip on duty, who is busily writing at a rapid rate and I hope is including all these constructive thoughts in his notes, although the Government may not like my suggestion, because it diffuses power, taking it away from the Government. However, greater accountability would ensure the better working of the Welsh Development Agency.
How can we make the agency fully accountable? By setting up a Welsh assembly. I am almost a lone voice in this cause on the Conservative Benches. I am not worried about that. I do not say that where I go others will necessarily follow, although other Welsh Conservative Members are in favour of various forms of devolution. Ultimately, the WDA and all public sector bodies in Wales should be answerable to an assembly. That would lead to more effective, efficient government and would ultimately help the agency. That will come.
I am not saying that where Scotland goes, we shall inevitably follow, but the intensity of the debate in Scotland convinces me that it will not be long before an assembly is set up there, whatever may be said from the Government Front Bench at the moment, and that ultimately Wales will follow. I hope that the Government's conversion to the setting up of assemblies in Wales and Scotland will be as wholehearted, as convincing and as financially generous as our conversion to the establishment of the WDA.
§ Dr. Kim Howells (Pontypridd)
It is always a pleasure to follow a thoughtful speech and there are rarely any more thoughtful than those by the hon. Member for Delyn (Mr. Raffan). He suggested a number of challenging ideas. I 1126 certainly do not agree with them all, but he always makes me think. I wish that I heard that sort of speech more often from the Conservative Benches.
We have heard many condemnatory and self-righteous statements about attacks on various people. Wales is a small land. One of our great arts is probably gossiping about each other and we are brilliant at sticking knives into each other. There is no question about that.
§ Dr. Howells
The hon. Member for Pembroke (Mr. Bennett) is one of the finest knife wielders that it has ever been my pleasure to encounter.
The chairman of the Welsh Development Agency is as tough a cookie as I have ever met. I am sure that he is well able to handle himself in any situation. As a believer in blood being thicker than water, I shall say little about him because I go mountain climbing with his first cousin. Although they are on opposite sides of the fence politically—about as far apart as it is possible to be—when one is dangling at the end of a rope and has fears about family ties, caution is needed.
The WDA has done a splendid job. It has helped enormously to transform the Welsh economy. We have heard about the high quality of inward investment that has come to Wales. The big search is still on and has brought record bonuses this year for more inward investment.
The WDA has been responsible for ensuring that the investment that has come to Wales has gone out with more added value. In the case of the best inward investment, we have added value to it and we can begin to sell it abroad. That must be a critical aim of any inward investment.
I understand from the agency's publications that it aims to "grow" small and medium-sized firms—that is a gardening term that it is now common in business. Wales has about 3,000 firms employing between 50 and 500 people. About two thirds of them are involved in manufacturing industry and about 1,000 are in the service sector. It worries me, however, that, although the WDA has played a positive role in trying to make those firms grow, it is subject to some criticisms. I do not want to criticise the disasters that we have seen—the Parrot corporation, the fly-by-night cowboys who came in, took the money and ran, and the bad investments. They are bound to happen. The point of the hon. Member for Delyn on accountability is important in that respect. Select Committees have an important role in monitoring that side of the business.
Some matters perplex me and I hope that the Minister can help. I see that he is having a briefing at the moment, understandably. Some time ago some colleagues and I sought clarification from the Welsh Office about why the WDA could help, for example, a Japanese firm seeking to settle in Wales and to develop its business, yet could not help, let us say, a group of coal miners who might wish to take advantage of the dearth in supply of high-quality anthracite by opening up a new mine or expanding an existing small mine. There have been serious problems of that sort.
Several private firms have approached British Coal, which has a monopoly in these affairs. It is the only body that can issue licences to mine coal. Those firms approached British Coal with a view to purchasing mines that British Coal had closed or intended to close. They 1127 were treated appallingly. For example, Ryans International, a firm based in St. Mellons in Cardiff tried to purchase the Blaenant colliery in the Dulais valley and the Cwmgwili colliery in the Gwendraeth. Both mines have substantial reserves. Both suffered badly from the inflexible technological approaches that the hon. Gentleman mentioned with regard to Point of Ayr. Yet, those firms were denied the opportunity to employ men and mine the coal profitably, not simply on a British or European basis, but on a world basis. Ryans International is confident that it can produce coal at sufficiently low prices to export it to European member states. The price might be as low as £20 or £25 a tonne. I understand that as many as 600 jobs could be tied up in such a project in the Vale of Neath alone. The WDA should have a role in that.
Wales has gradually struck away from its identity as a coal mining area. That is fair enough. None of us wants to go back to those dreadful days of colliery accidents and pneumoconiosis—that image of Wales. We want to nurse our resources in the best way possible and to bring into fruition a new era of coal mining. That new era could be led by such projects.
If we are prepared to risk capital on firms from the other side of the world or on individuals with appalling track records, without checking up on them before giving them money, we should think seriously before turning down the justifiable approaches of companies with great experience in mining which could do a good job.
§ Mr. Denzil Davies
There seems to be a tendency to disparage coal completely. The new high-tech industries are fine, but the anthracite coalfields could be developed. Does my hon. Friend agree that the WDA is well placed to help in that development?
§ Dr. Howells
I could not agree more. My right hon. Friend makes the point clear. The Government must think seriously about what they will do with British Coal's right to hand out licences.
British Coal is retreating from south Wales for bad, unimaginative reasons. The Government are not being energetic and intervening to ensure that it stays. The Government could intervene by encouraging the WDA to recognise the best projects that have been mooted by people who are interested in mining coal in south Wales. If British Coal will not mine it, let some one else do so. Those are revolutionary words from these Benches. I am advocating competition—competition against a monopoly that has done no good whatever in south Wales, certainly not in the past decade.
I hope that the Minister will look carefully at that and perhaps give the WDA the right at least to begin considering the matter. Some of our hardest-hit areas could be helped and much could be done to alleviate the criminal prices that we are paying for specialist coals such as anthracite and coking coal.
I congratulate the agency on its achievements in the environment. I know that that has been played down and earlier the hon. Member for Cardiff, North (Mr. Jones) pooh-poohed it. As my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) pointed out, the transformation of the landscape plays a great part in transforming the mentality of people. It is important to eradicate the worst of what we have had to put up with for years. That is one of the WDA's great achievements.
1128 To revert briefly to what I was talking about a few seconds ago, there is a hidden agenda on mining. It is that we should extract that anthracite and coking coal by opencast coal mining. There is an alternative. People are ready to mine coal just as cheaply, but without ravaging our landscape. The WDA has done enormous work cleaning up our landscapes, especially our derelict areas. It would be short-sighted and criminal to undo that work, albeit temporarily, simply because there is not the imagination to put forward an alternative way of extracting it.
I hope that the WDA will be given the means to help local authorities move on to the whole business of cleaning up the environment. I know that it is keen not merely to take away the slag heaps from the mining and steel industries, but to help local authorities to clear up the stench from chemical factories, the dust from steel works and so on. The agency plays a central role in all that and I hope that it will continue to do so.
My hon Friend the Member for Merthyr Tydfil and Rhymney asked about the sale of property. I understand that the administrative budget is about £167 million a year. In the current year the WDA is expected to raise about £35 million from the sale of properties and next year it is to raise £50 million. My hon. Friend's analysis of future provision of factory space and so on was good. I wish to ask a different question: what will happen when the Welsh Office, understandably, pushes for a higher proportion of funding to come from the sale of property? What happens when it has no property left to sell? We shall, indeed, be considering the construction of empty sheds, as the hon. Member for Cardiff, North described it. I should like some answers on that.
I am troubled by rumours. I know that Members of Parliament should not listen to rumours and I do not expect Ministers to confirm them. I have heard from various management consultants that it is said throughout the Treasury that the WDA's budget is large. Questions are perhaps asked about whether it should be reduced, whether the agency should be broken up along the lines of Scottish Enterprise, which is a disastrous reorganisation, or, at the very least, whether the agency should have its property function—a major generator of income—hived off.
The WDA is focusing on the right targets. For example, it is seeking to improve a woefully inadequate skills base in Wales and is trying to promote technology transfer, about which we have not heard much in the debate. Our technology transfer infrastructure is a grossly under-developed sector in Wales, as it is in most regions of the United Kingdom. The WDA is also forging European links with some of the most robust regional economies in Europe. The aims are to develop new opportunities for Welsh firms and to learn about the best practice available from some of the more innovative continental development agencies.
While those initiatives do not have a direct job creation role, and might therefore be subject to some criticism from the Treasury, they have potential for generating employment in the longer term as well as enhancing the innovative and competitive basis of the Welsh economy.
One of the most crucial areas of the initiatives—as mentioned in the excellent contribution of my hon. Friend the Member for Merthyr Tydfil and Rhymney—is the issue of training on a Wales-wide basis. The Welsh Office has now absorbed the training, enterprise and education 1129 directorate. The north-west region of Britain has a good regionwide training and enterprise council network, with a single contact person to liaise with the EC in Brussels. That point was made well by my hon. Friend the Member for Alyn and Deeside (Mr. Jones). That is an extremely important development and one must ask what is happening in Wales on that front. As a region, what are we doing in Wales to exploit EC training opportunities? Will the Welsh Office now play a more co-ordinating role, with the help of the WDA, in that sphere? Although I feel that the WDA would like to play a co-ordinating role with the TECs, that idea has been largely ruled out by the Welsh Office, which of course wants a hundred flowers to bloom, so to speak; it would like each TEC to do its own thing. The training places that have been cut out by the TECs should be restored as soon as possible.
§ Sir Wyn Roberts
It might help if I cleared up that point immediately. The co-ordinating role for education and training clearly belongs to the Welsh Office. The TECs have been established, as the hon. Gentleman is well aware, but he will also be aware that the strategy document mentioned by the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) refers to the strategy being related in particular to inward investment. The hon. Gentleman will be further aware of our co-ordinating role in the Welsh Office on further and higher education, following the passage of the Further and Higher Education Bill which is now in the other place.
§ Dr. Howells
I thank the Minister for that useful piece of information and I am glad that the Welsh Office has moved in that direction. But there must be far greater co-ordination, if only between the work that is going on in the WDA and the other areas to which I referred. I have grave doubts about the wisdom of TECs doing their own thing without that co-ordination. I can see the virtues in allowing more local identification and initiative, but it needs more macro co-ordination.
On the whole issue of technology transfer and innovation, the WDA needs more support from the Welsh Office to promote the take-up of United Kingdom and EC funds. For example, the take-up of Department of Trade and Industry schemes for innovation and technology transfer appears to be very low. I shall be interested in anything the Minister can say about that.
The Welsh Office take-up of research and development funds from the EC is similarly low. That was exposed recently in an article in The Western Mail. Again, it is a Welsh Office rather than a WDA responsibility and I hope that the Minister will explain what the Government intend to do about that crucial area.
A number of issues affecting the Welsh economy should be aired. The first and foremost is how Wales is faring in the current recession, which is undermining much of the positive work that has been done in the past six years. Although the recession hit Wales later than some other regions, notably the south-east of England, we are also in the midst of it now, witness rising unemployment since the spring of 1990.
The hon. Member for Cardiff, North, who unfortunately is not in his place, made the interesting point that this week's fall in the Welsh level of unemployment was the first since April last year. There have been rising business 1130 failures and falling output. It would be interesting to know how Wales compares with other regions on those three critical indices.
I hope that hon. Members in all parts of the House appreciate that that is not trying to talk down Wales. It is trying to address the continuing fight to restructure the Welsh economy in such a way that its reaction to recession and downturn, when it occurs, is stronger than at present.
Apart from the current recession, there is the deep-seated problem of low per capita income in general and low pay in particular. Those points were made by my right hon. Friend the Member for Llanelli (Mr. Davies). The low per capita income rates in Wales have not improved. Indeed, I understand from Welsh Office statistics that real wages in Wales have been declining relative to the rest of the United Kingdom and they seem to be declining in some of our key industries, such as electronics and motor components.
It would be helpful if the Minister would provide figures for Wales relative to the United Kingdom as a whole, for our recent success in attracting inward investment may have been due as much to low pay as to anything else. I hope that that is not true, but it may be true and it seems that it could be playing a part in recent developments.
In the inward investment battles of the 1990s, Wales will not be able to compete with the new low-cost zones of eastern Europe. Nor should we want to compete on that basis. I suggest that we concentrate, in terms of the economy, on unemployment and real wages, which are two critical indicators of well-being. They are not to be denigrated by any suggestion that Opposition Members want to talk down Wales. We need an improvement in our vocational education and training system to improve the take-up of United Kingdom and EC policies for research, development, innovation and technology transfer. We must improve the evaluation of WDA and Welsh Office initiatives.
We have too little information in those areas, an information deficit which is no small academic matter, for unless we know where Wales really stands compared with other regions of the United Kingdom, we shall be subjected to the kind of economic miracle hype that we have had for the past 10 years and are still getting.
We have made some great strides towards creating a new identity for the economy of Wales and the WDA has played a part in that. But there is still a long way to go. We can build on the great strengths that we have and I hope that the Government will ensure that the WDA continues to play a central role in that construction.
§ Dr. Dafydd Elis Thomas (Meirionnydd Nant Conwy)
The two interesting and analytical speeches of the hon. Members for Delyn (Mr. Raffan) and for Pontypridd (Dr. Howells) will be good reading for the board, chief executive and chair of the Welsh Development Agency. They pinpointed a number of issues to which I shall return, in particular about information research and the links between development and job creation and investment and higher education.
It is extremely important for the Welsh economy in connection with economic and monetary union that we move rapidly to integration in the European Community economy and society. Out of that will come stability for 1131 Wales, provided that we strengthen regional policies within the Community so that we do not become a periphery of a periphery.
§ Mr. Christopher Gill (Ludlow)
While it is generally accepted that, if a single currency is adopted, a massive amount of funds will have to be transferred from the richer to the poorer countries, has it occurred to the hon. Gentleman that, in the context of a wider Europe, the regions of the United Kingdom may no longer be regarded as the poorer parts of Europe? Rather, the transfer of funds would be from the northern countries to the much poorer countries of southern Europe.
§ Dr. Thomas
I am aware of the debate on regional policy, which is why the Opposition Members who have just spoken have all argued for strengthening the regional infrastructure rather than depending on transfer payments. I regard transfer payments as a transitional phase in regional policy because, unless a region can become more self-sustaining in terms of its development, its future cannot be guaranteed. I do not wish to enter an argument in which people say—some hon. Members seem to be expressing this view today—that investment should not take place in the southern states of the Community, new member states, or east Germany because that would disadvantage Wales. We need to ensure that all those regions have a more sustainable level of development. That is the challenge that we must face in the third generation of European regional policy.
The Welsh Development Agency allows us to have a flexible form of intervention and partnership with the market economy. It is a tribute to the nature of Welsh public policy culture that the agency and the Welsh Office, far from becoming restricted in their activity under the Conservative Government, have widened and deepened their activities. It is not sufficiently recognised by those who look at the Welsh political system from the outside that Wales has developed a distinctive way of operating. It is a kind of 1960s corporatism without some of its worst features. The tenure of the right hon. Member for Worcester (Mr. Walker) symbolised that. The bringing together of trade unions, management, local authorities and the agencies is a feature of the scale of Wales. Bringing together those activities has enabled decisions, particularly on the location of projects, to be made faster than they have been made elsewhere.
We have already heard about the links between the regions of Europe. Wales has got in on the act because, when areas such as Cataluña were seeking a partner in the United Kingdom, its governmental infrastructure was already in place, albeit not with the democracy that exists in Cataluña with an elected Generaletat or Parliament. So it was possible for the Government of Cataluña and the other regions to relate directly to the Government of Wales in the Welsh Office. I shall ask the Minister to report hack from Cataluña later.
Our political culture has enabled us to develop internal and external infrastructure. The Welsh Development Agency has played a key role in that and has taken its particular form of partnership intervention in all sectors of our economy. I was interested in the latest development, perhaps not of post-socialism but certainly of post-Marxism, which was outlined by the hon. Member for Pontypridd when he proposed competition in the energy sector and challenged the WDA and the Welsh Office to 1132 allow it to take place. Within a residual public sector, it is important that agencies such as the WDA can play an innovative role. If the new monopolies that are created out of privatisations are not to be responsive to the needs of a smaller scale activity, the WDA should be able to intervene flexibly.
The WDA's activity in relation to multi-national capital and inward investment has been discussed at length. I shall not repeat the points that have been raised except to say that, with the current international movement of capital within the economy, it is crucial to test how effective the agency's international role has been and is. The need to target potential investors and growth sectors more accurately arises now that we are in recession.
I am particularly interested in highlighting the WDA's activity in relation to small and medium sized enterprises and the so-called "third sector"—community enterprise and co-operation. I declare an interest because of my involvement with several of those community enterprise agencies in Wales and the WDA's activities with them. The agencies work, especially its rural initiative programmes, shows how bottom-up incentive activity, which is mobilising resources and capital within the community, can lead to effective small-scale job creation. At that level and at the level of small and medium size enterprise, the technology transfer question and the development of infrastructure are particularly important. Technology transfer means not only large-scale transfers but also transfers to smaller enterprises—sometimes single, two or three-person enterprises—which can provide a stable economic growth in a peripheral niche of the economy.
An infrastructure does not mean simply the magnificent Sir Wyn Roberts' memorial tunnel at Conwy, but also the essential need to ensure that we have information technology and telecommunication networks throughout Wales. The rural development initiatives are so important because, as we look to the future, we see that it is now possible, through new technology, to establish effective businesses and communicate effectively. The development of the so-called telecommunications cottage industries is important to the peripheral areas of the Welsh economy. The WDA and the Development Board for Rural Wales are keenly involved in that sector. The Minister of State and I hope to attend a conference tomorrow when I hope that he will make some announcements about that sector. In the past 10 years we have developed a network of local enterprise agencies which come together in a national organisation. There again, Welsh Office, WDA and DBRW support is crucial. Those activities have been tapping entrepreneurial resources that were not obviously present within the Welsh economy. It is important that the Welsh Office should continue to encourage that.
The international role of the agency and the Welsh Office is one of the most exciting developments of recent years. It includes the relationship between Wales and the four motor regions of Baden-Württemberg, Cataluña, Rhône-Alpes and Lombardy. That activity represents the future development of regional policy within the community—
§ Mr. Morgan
Was the hon. Gentleman about to confirm what I was saying, that the motor regions would not let Wales join their group because they thought that we were the exhaust pipe while they were the motor car?
§ Dr. Thomas
The hon. Gentleman knows that the Welsh Office concluded agreements on a range of activities with Baden-Württemberg and Cataluña. I understand that further agreements are to be made with another two regions. Far be it for me to speak on behalf of the Welsh Office, although I am willing to do so if called on. I am sure that the Minister of State will come back to that point when he winds up the debate, and give us a report on his latest visit to our friends in Cataluña.
Direct relationships with regions is crucial to the future regional policy within the community. As the hon. Member for Delyn said, the opening of the Brussels office was something that we proposed a long time ago in Select Committee. It shows how the structure of government in Wales, through the Welsh Office and the agency, can link directly with mainland activities in the rest of Europe. That seems to be the way in which future patterns of co-partnership investments in those regions should develop. That will lead to further diversication within the Welsh economy.
I wish to emphasise not just the networking with smaller-scale businesses and the private sector, but the need to relate the activity of the agency, to education and training. That subject has been touched on and I shall pursue it because we now have the opportunity to create for the first time an integrated education and training system for Wales. It all rests with the Welsh Office, which has responsibility for training education, including further and higher. I want the Welsh Office to develop an innovative strategy. I shall expand the point when we discuss a Bill which is not yet before the House, but is in another place. I hope that the new higher education funding council will direct its funds to sectors of innovation in research and development. I believe that the University of Wales has let us down badly over the years in terms of its so-called priorities in research and development. I speak as a graduate and postgraduate of that university.
§ Dr. Kim Howells
Does the hon. Gentleman agree that one of the most extraordinary claims from the Welsh education establishments and, indirectly, from the Welsh Office was to laud the decision by Imperial college, London to open a science park near Newport? I am sure that the hon. Gentleman could tell me why the University of Wales did not open a science park near Newport—or anywhere else for that matter.
§ Dr. Thomas
I shall return to that point on Second Reading of the Further and Higher Education Bill. The University of Wales has not given sufficient priority to exploring opportunities for research and development related to the technological and economic needs of Wales. There are exceptions to that, such as research relating to the countryside and agriculture. However, I hope that the people now responsible for co-ordination of the federal structure of the university will investigate that issue; otherwise, many of us will argue that the federal structure of the university will become redundant once there is a higher education funding council.
When the new funding mechanisms—all of which are answerable to the Welsh Offce and the Secretary of State —are in place, I hope that the Welsh Office will ensure that it has a strategy and a set of priorities. One of the priorities must be to develop a better relationship between the formal education sector of further and higher education, 1134 and training and enterprise councils. I welcome the activities of the TECs, but I am worried that we are not identifying the types of skill already available sufficiently clearly as a package when we consider further education opportunities. I agree with what was said earlier about the need to be sensitive to where the available skills are located and to the fact that the regions covered by TECs may be too large. We need an integrated approach to the levels of skills.
We also need to look to the agency and its continuing role in derelict land clearance and environmental activity. I should like the agency to develop its role so that it not only clears derelict land but develops the greening of its policies. We do not want the next generation of development in Wales to damage the environment. The European Community and the Government both have green priorities, but it is essential that all new and existing projects should be subject to a full environmental audit.
Any strategy for development must be a strategy for sustainable, resource-balanced development. Green priorities must be an integral part of the agency. Greening is not additional to economic activity but an integral part of it. The cost benefits of each project and development must be related to ecological cost benefit as well as any other cost benefit calculation. Wales still lags behind in terms of environmental assessments of new projects and the effects of existing projects.
I wish now to raise a constituency matter which will come as no news to the Minister of State or to other hon. Members—an ecological problem caused at Trawsfynydd. The nuclear power station has not produced electricity since at least February. A decision will be made sooner rather than later on whether to decommission the site within the national park. Clearly, serious choices will have to be made on the decommissioning aspects and the timetabling of the decommissioning. I shall not go into them in detail now, except to say that the decommissioning and cleaning out of that site must be done to the highest environmental and safety standards, and must be done completely.
There is no way I would accept a decision to maintain radioactive materials on that site in perpetuity. Much has been made of the Welsh work force and I would not accept it if the local work force at the site were gradually made redundant without an effective programme of alternative employment. I have called on a number of occasions, and do so again, for a similar policy attitude towards electricity generation closures such as that at Trawsfynydd as we have had in the past towards steel and coal closures.
§ Dr. Thomas
I am glad to have the support of the hon. Member for Alyn and Deeside (Mr. Jones).
That district has, over a long period, had an almost mono-economy derived from the major extracting and generating industry. That employment potential will be lost and there must be a response to that. The Development Board for Rural Wales and the Welsh Development Agency—the border cuts across the travel-to-work area of the power station—and the Welsh Office must be directly involved in the creation of alternative enterprise.
§ Mr. Alan W. Williams (Carmarthen)
The hon. Gentleman knows of my interest in the matter. He knows that the Trawsfynydd power station has been closed down 1135 since February because of technical problems and so on. I notice that the hon. Gentleman talks about decommissioning and the severe employment problems that would ensue. Is he of the mind that the Trawsfynydd power station should be decommissioned?
§ Dr. Thomas
That is a matter not for me but for the nuclear installations inspectorate. It is for the Nil to decide at what stage a site licence should no longer be given to that station. I suspect that it is not far from making that decision. It is a technical and scientific decision, but clearly it has environmental implications. I make it clear that I have strongly opposed the Secretary of State's decision to establish an incinerator for low level waste on that site. Although that would deal with material from the site, it would proliferate radioactivity on the site and that is something to which we should object.
To return to the employment implications of the closure which are so relevant to the debate, I hope that when the Minister replies he will say that adequate funds will be made available. My nominated successor, Mr. Llwyd, talked about a figure of £10 million. Whatever the figure is, the Secretary of State should have an appropriate figure in mind for alternative investment. But the form of alternative investment should not be considered as another major construction project. The problem of the diseconomies in Gwynedd for major construction projects has to be tackled. The north-west and mid-Wales economies need a diversity of small and medium-scale enterprises, not a reliance on major construction work. The agency, Antur Dwyryd, whose representatives we shall be meeting tomorrow, has a particular role to play because it is a locally based enterprise agency and is well able to assist small-scale enterprises in the locality to take advantage of whatever funds may be available. The role of the WDA is to be the big partner of those smaller-scale activities. The agency is well capable of doing that and I am pleased that we shall this evening vote more funds for that activity.
§ 8.2 pm
§ Sir Anthony Meyer (Clwyd, North-West)
I should be grateful to you, Mr. Deputy Speaker, for calling me to speak, but I am not particularly grateful to you for calling me after the hon. Member for Meirionnydd Nant Conwy (Dr. Thomas). Every time I listen to one of his speeches I feel obliged for good party political reasons, to find something about which to disagree with him and I find it harder on each successive occasion.
The hon. Member for Cardiff, West (Mr. Morgan) has made one of his fitful appearances in the debate. Fortunately, he is not even doing me the courtesy of listening to what I have to say. It gives me no pleasure to say it, but I regard his allegations against the chairman of the WDA—trivial, footling allegations which have attracted undue publicity—as reflecting no credit on him, damaging to Wales and damaging to the causes in which we all believe.
There has been much play, particularly at the beginning of the debate, about people changing their minds. To my embarrassment. I recall speeches that I made when the WDA was first set up in 1976. I spoke about the unfulfillable expectations that it would arouse. In the end, I was glad to be proved wrong. Because of the policies that have been pursued by successive Conservative Secretaries of State for Wales, we have managed, in many senses, to 1136 have the best of both worlds. Beginning with what might be called "Walkerism" and what is now "Huntsmanship", we have had Conservative Secretaries of State who have not hesitated to make use of the limited interventionist role that the WDA can exert. It is, as my right hon. Friend the Minister of State said, a very different animal from what it was when it was first set up by the Labour Government.
Now that the Government have adopted a middle course, I ask myself whether, were a Labour Government ever to be returned to office, which still seems dubious, they would try to revert to their original concept of the WDA as a picker of winners and a direct player in the economic scene. Above all—this may be an even graver worry—Governments and Government bodies are not very good at picking winners, but they are even worse at trying to save losers.
The hon. Member for Alyn and Deeside (Mr. Jones) and I went through a common experience. He was the leader and I merely gave him what support I could in trying to prevent the closure of the steelmaking plant at Shotton. I find it hard to rid myself of the belief that, equipped with an agency such as the WDA, a Labour Government would be unable to resist demands to save jobs at all costs. Yet the hon. Gentleman and I now know perfectly well that the diversification of the Deeside economy has turned out to be pretty nearly an unmixed blessing for the area.
My worry is that, if a Labour Government were to revert to a more directly interventionist role for the WDA, we would soon have demands to save existing jobs at all costs. I know the pressures on any constituency Member of Parliament to fight like a dog for any job that is threatened in his area. One could not blame a Government who gave in to such pressures, but it would be dangerous. It is important, therefore, that we try to remain on the centre ground of a limited role for the WDA which it carries out admirably. How well it carries it out is shown by the jealousy demonstrated on each and every occasion by English Members of Parliament when they ask why they cannot have an English development agency. That seems to suggest something.
I have good reason to be grateful to the WDA and, in particular, to its chairman. I have not had, certainly not in my present constitutency, problems of dereliction or even problems arising from the massive transition from smokestack industries to modern industries with the consequent mass unemployment. But I have had devastation in the form of the Towyn floods, when I had every possible reason to be grateful to the WDA for the way in which it came in and, together with the Secretary of State, assumed leadership in a community which was badly demoralised by the appalling blow that had befallen it.
Had there been no instruments ready to co-ordinate the renewal of economic activity, it would have taken much longer to get that area back on its feet. In the end, as a result of some well-targeted operations by the WDA, in conjuction with local enterprise, the environment in the Towyn area is noticeably better that it was even before the floods. For that, I am grateful to Dr. Gwyn Jones, the WDA and its officers.
However, I have one query about the operation of the agency. I recognise that it is right that it should operate commercially and seek to maximise its returns. I am a little concerned that it is in some cases increasing the rents at a 1137 substantially higher rate than that of inflation, thereby conceivably placing in danger the future existence of firms that the agency itself helped to create.
The agency and the use that three successive Secretaries of State for Wales have made of it are just about on the right lines. I reject the Thatcherite-Marxist analysis of society—that only economic forces are determinant of conduct. On the contrary, I believe that there is a role for the individual, and that the individual can turn a situation around. The last two Secretaries of State in particular are conspicuous examples of that. I regard Dr. Gwyn Jones as being very much in the same mould.
I am delighted to support tonight this hotly contested Second Reading and I wish well of the agency and of my right hon. Friend the Secretary of State in the use that he makes of it.
§ Mr. Alan W. Williams (Carmarthen)
We all strongly support the work of the Welsh Development Agency and generally want it to have more resources and to be ever-more involved in all our areas.
I was asked by the farmers' unions and the prospective parliamentary Labour candidate for Pembroke, Mr. Nick Grainger, to make a few remarks about the problems of abattoirs in rural areas. The abattoir at Withybush has invested £40 million in modernisation and now faces a further £250,000 investment to bring it up to European standards by 5 January 1993. Its problems are shared by more than 50 Welsh abattoirs.
Of the 60 abattoirs in Wales, only four meet European standards. According to the Meat and Livestock Commission, only 27 have modernisation plans, and only 14 of those are remotely likely to execute them. If the abattoirs are not licensed by 1993, they will be compelled to close—and there would be far fewer buyers for farmers. The export of live animals would also increase. Already, one half of Welsh lambs are exported live, and that is an unsatisfactory and cruel trade. I cannot understand why the Welsh Development Agency or the Welsh Office cannot help those abattoirs to modernise. That major problem will indirectly hit farmers' incomes, as well as rural employment. It is difficult to find major employers in rural areas, where abattoirs are an important source of jobs.
Wales would be left exporting raw materials, in terms of live lambs and calves, but it would be much better if the livestock was all slaughtered in Wales, then exported. The creation of value-added industries such as meat processing would also be welcome.
In Mid-Wales the Development Board for Rural Wales has unofficially helped the firm in Llanidloes with its £1 million modernisation programme, but I would like the WDA and the Welsh Office to consider broadening that kind of assistance as a matter of urgency. I know that they are lobbied by many other people, but they cannot sit and do nothing while abattoirs go out of business. That would be bad for the rural economy and rural jobs and for farmers' incomes. Surely the WDA should be allowed to become involved as the DBRW is.
As to the agency's more general work, we in Dyfed would like it to be more involved. My area is on the western fringes of Wales, and from Port Talbot and 1138 Glamorgan westwards, it is difficult to attract major inward investment. The area also needs more factory buildings.
Dyfed has more than 10 per cent. of the population of Wales and more than 10 per cent. of its unemployment, but in terms of factory buildings, only 5 per cent. of the WDA's resources are invested in Dyfed. That prompted complaints by Dyfed county council's industrial development department, which has time and again exerted pressure on the agency to increase its activity in our part of the world.
Amman valley has particular problems. It is a major unemployment black spot, with many rural communities suffering unemployment of more than 20 per cent. It is over 50 per cent. in the village of Garnant. That is as bad as anywhere in south Wales. Dyfed commissioned, in conjunction with the Welsh Development Agency, a report by Coopers and Lybrand Deloitte on unemployment in the Amman and Gwendraeth valleys and what could be done to reduce it. They concluded that there would have to be investment in road links to the M4, particularly to Ammanford and the Amman valley, and an examination of the coal industry.
That matter was commented on by my right hon. Friend the Member for Llanelli (Mr. Davies) and my hon. Friend the Member for Pontypridd (Dr. Howells). The Amman and Gwendraeth valleys have 50 million tonnes of high-quality, low-sulphur anthracite, which has a ready, high-value market. However, we do not want that anthracite to be extracted by opencast mining.
§ Sir Wyn Roberts
Regional selective assistance is available for mining ventures, if they meet the RSA criteria. My right hon. Friend the Secretary of State announced in September such assistance for Anglesey Mining, with the creation of 147 jobs. As part of the package for small firms that we announced in August, RSA was extended to Pentre colliery for the exploitation of coal reserves. Regional selective assistance is available, provided that the criteria are met.
§ Mr. Williams
I am pleased to hear those comments, but I had in mind something much broader. My right hon. Friend the Member for Llanelli has frequently said that west Wales would like British Coal to establish a small mines company. As British Coal will not do so, will the WDA consider our 50 million tonnes of anthracite and develop environmentally acceptable ways of exploiting and developing those resources, which would be proactive in that the industry could create jobs for a few thousand people?
The Capel Hendre industrial estate is just two miles from the end of the M4, so it is ideally located for major industrial development. The borough of Dinefwr, which is responsible for Amman valley, is placing great store by developments that could be attracted to that site. I was delighted to see Dinefwr develop last year, in partnership with the Welsh Development Agency, a £3.8 million project. We badly need a major internal investor. The Amman valley has lost nearly 2,000 jobs over the past two or three years, at Abernant and Betws. Those jobs must be replaced, and I hope that Capel Hendre, with 50 per cent. involvement by the WDA, will help to create the employment that the area so desperately needs.
§ Mr. Peter Hain (Neath)
I apologise for my absence at the beginning of the debate; I was serving on the Standing Committee considering the Competition and Service (Utilities) Bill.
For all its limitations, some of which have been identified in the debate, the WDA has been a success story —a story begun by the Labour party in 1975, and continued by successive Conservative Secretaries of State since 1979. I pay tribute to those Secretaries of State, who include the current Secretary of State for Wales.
My hon. Friend the Member for Pontypridd (Dr. Howells) referred to rumours of a hidden agenda to dismember the WDA and hive off, at the least, its property sales activities. I hope that those rumours do not prove correct, since such action would be folly indeed. The Scots, for example, are deeply envious of the WDA, and would like a similarly enterprising agency of their own.
In many respects, the agency has, through its success, defied the laws of Thatcherism. It has certainly defied the laws of the No Turning Back group, of which the Under-Secretary of State, the hon. Member for Pembroke (Mr. Bennett), is still a member. As the hon. Member for Delyn (Mr. Raffan), to whose speech I listened with interest, pointed out, the agency has undertaken the public sector pump priming of the Welsh economy that has been so crucial in the 12 bitter years since 1979.
That pump priming has been especially important following the cuts in regional aid that have taken effect over the past few years. No doubt the Minister will recall the reply given to my hon. Friend the Member for Pontypridd by the Secretary of State on Tuesday 26 November about the regional aid cuts in the valleys programme area. Such significant cuts should be properly explained.
Regional development grant, which is especially important to the valley areas, has been cut from £17.2 million in 1988–89 to a derisory £6.9 million. Cuts have also been made in regional selective assistance. The overall cuts in regional aid have been astonishing: it has been cut from £28.9 million in 1988–89 to barely £14.5 million in 1990–91. In just two years, regional aid has been halved, and compensation in the form of regional support elsewhere does not appear to have been provided. The regional enterprise grants introduced two years ago have hardly managed to creep up from a small £0.1 million to a—still small—£0.5 million. I hope that the Minister will explain how he proposes to fill the gap in regional assistance to the valley areas.
Let me now say a little about my constituency, Neath. As I have told the WDA's chairman, Dr. Gwyn Jones, if I have a criticism of the agency, it concerns the lack of inward investment in Neath. There has been plenty elsewhere in south Wales, especially around the M4 corridor, and I pay tribute to the agency for that, but, as the agency has conceded, there has been none recently in Neath. The WDA's property development programme for 1991–92, of which I have a copy, does not mention Neath; it makes no reference to property sales or property development portfolios held by the agency there. I trust that this will be the last year in which Neath is omitted. I know that representations have been made to the WDA, not only by me but by Neath borough council.
My constituency—not just the Neath valley, but the Swansea valley and the part of the Amman valley that falls 1140 within it—desperately needs inward investment. For that reason, I invited Dr. Gwyn Jones to visit the constituency on 11 September. I escorted him around a series of prime industrial sites in Cadoxton, Blaenant, Aberpurgwm and other parts of the Neath valley that are crying out for inward investment, and have traditionally enjoyed the benefits of enterprising industrial activity.
Whatever other areas the WDA chairman may have visited over the past few months, he can have encountered no more exotic venues than those to be found in the Dulais and Neath valleys,—places such as Banwen, Crynant, Resolven and Glynneath. Those areas are very attractive in terms of inward investment, and I hope that, when the chairman considers what his visit has achieved, he will decide to ensure that my constituency receives the investment to which it is entitled.
There is, however, a problem of access to the Neath valley, in particular, because of the missing link on the A465, which has been neglected for more than 15 years. I know that the Secretary of State is aware of that, and I am grateful for the way in which, since the summer—when we discussed the matter—he has hurried through some of the planning issues, and hastened the day when work will begin on building the road up the Neath valley and thus creating an artery that will attract inward investment. The people of Neath very much appreciate the way in which he has cleared away many of the planning obstacles.
Nevertheless, I was disappointed that the Minister of State's announcement yesterday to the Select Committee on Welsh Affairs apparently did not include the A465 missing link in the programme of new roads for Wales in 1992–93. I understand that £195 million is to be spent next year in the programme, and it is worrying that the missing link has not been included.
§ Sir Wyn Roberts
I am speaking without my notes, but I believe that I said yesterday that we would be involved in the start of work on that section of the A465.
§ Mr. Hain
If that is so, I am delighted. I hope that the Minister will be able to confirm that; as a Welsh speaker, he will know that the Eisteddfod is coming to Neath in 1994. It will be held just below Glynneath. If the missing link is in place by then, it will make an enormous difference to the event, and to the prosperity of the valley.
The agency's dynamism is also needed in respect of coal production and investment: that is equally important to my constituency. My hon. Friend the Member for Pontypridd made many important points in that regard. I understand that the Welsh Office is now studying a very exciting investment initiative, and I hope that the Minister can give me some assurances about it.
Ryan Mining International has presented an investment proposition. It wishes to establish a new project in the vale of Neath, which will bring at least 600 direct jobs to the area, and many more indirect jobs. The project involves £18 million-worth of investment; it will be environmentally sensitive and very attractive generally. It will hide much of the infrastructure that surrounds mining areas, landscaping it behind environmentally attractive "curtains".
Above all, it will ensure that the heavy lorry traffic that passes through our valleys is taken off the roads and transferred to the railways by reopening the Vale of Neath railway link and taking the coal straight from the Pentreclwydau line—which it is proposed to reopen— 1141 alongside Ryan's existing mines at Rheola, Lyn and Venallt. The coal from that attractive integrated mining project will be taken down the Vale of Neath railway directly to Cardiff docks or conceivably to Aberthaw power station.
Ryans has applied to the Welsh Office for a grant of 80 per cent. of the £6.7 million that it will cost to create the infrastructure. That excludes reopening Pentreclwydau pit, which it will finance. I hope that the Welsh Office will look favourably on its application for £5.3 million, which, I understand, meets all the Welsh Office's criteria.
The Neath valley and the surrounding valleys have some of the finest anthracite in the world. It is clean and has a low sulphur content, and its abstraction would be of enormous benefit not only to my constituents and the local community but the south Wales economy.
I agree with my hon. Friend the Member for Pontypridd that Ryan has shown more imagination and dynamism than British Coal in the past few years. British Coal has seemed almost enthusiastic about closing every south Wales pit, and the last pit in the Neath constituency—Blaenant—closed last July. It is significant that Ryans made a bid to keep the pit open, but, despite the fact that it would get a fat profit from it, British Coal refused. I can only conclude that British Coal does not want competition to show up its traditional inadequacies and failure to provide a future for coal mining, particularly an industry that is environmentallly sensitive and that respects local communities, as the Vale of Neath project will.
Valleys such as Neath—my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) made this point well earlier—need a distinctive strategy. It is not sufficient to treat the south Wales economy as though it were simply the M4 corridor and, welcome though it is, to congregate inward investment around the motorway. The valley areas must not be regarded as commuter areas for new plants and manufacturing companies. Although it is a rather fanciful notion in view of the class base of the valley, I have heard it argued seriously that the valleys could be yuppified and become commuter belts for the M4 corridor.
That is not a serious strategy for the valley communities. The WDA and the Welsh Office must devise a distinctive economic strategy for them. After all, they are attrative areas, yet their traditional skills are wasting away. They are environmentally attractive, particularly for modern high-technology manufacturing investment. Experience in Europe and America shows that such investment often is attracted to rural sites that offer an environmentally sensitive location.
The valleys communities have a history of industrial activity that is waiting to be taken forward into the next century. I hope that the WDA will look at the success of areas such as Baden-Wurttemberg in West Germany, where public sector initiatives and the power of government and public intervention work in partnership with the private sector to provide roads, education, housing and the local environment and all its facilities and the skills and research for technology transfer to achieve the skills base that is necessary to attract manufacturing investment.
The WDA must provide grant aid or allowances to ensure that we keep the Welsh economy to the fore not 1142 only of the British economy but of the new emerging European economy. We need capital allowances to assist with manufacturing investment in the valleys.
§ Sir Wyn Roberts
I was surprised to hear the hon. Gentleman say, if I understood him properly, that there was no WDA involvement in his constituency. I have a list of 26 WDA investments in Neath, worth £884,000. Furthermore, we are well aware of the Ryan Mining International project.
§ Mr. Hain
I am glad that the Minister is well aware of Ryan's application, and I hope that he speeds it through the processes of the Welsh Office. The right hon. Gentleman misunderstood me—I do not blame him for that—because I specifically said that there had been no inward investment. I freely acknowledge that there has been plenty of WDA activity, for which I am grateful, but no inward investment from foreign companies such as we have seen elsewhere in south Wales. Moreover, the property development programme does not refer to Neath, despite the fact that it has many ideal sites that the WDA either owns or could develop.
§ Sir Wyn Roberts
My understanding is that since April 1983, Welsh Development International, which was previously WINvest, has secured eight projects generating £22.64 million worth of investment in the Neath area. But I shall look into it further.
§ Mr. Hain
I hope that the Minister of State will look into it further. He will find, as the chairman of the WDA conceded, that there has been no major inward investment in recent years, although I acknowledge that it has come in bits and bobs over the years. That issue must be addressed.
Ryan's application is a welcome and exciting attempt to use the potential that still exists for coal extraction in the coal valleys and elsewhere in the valleys, but we are entering into what I would describe as a post-mining culture and need a distinctive economic agenda as we proceed into a new century. The Welsh Office does not show sufficient understanding of the need for that new agenda, but the gap must be filled urgently. I hope that the WDA will consider that and the future of the top of the valleys, which are often neglected and are decaying. They need sensitive investment to ensure that they have a future in their own right and do not simply become commuter belts for elsewhere.
§ Mr. Alun Michael (Cardiff, South and Penarth)
This has been a good and constructive debate. It has been one of those rare and valuable debates when several of my hon. Friends and a number of Conservative Members have made positive and thoughtful speeches. I refer particularly to the hon. Members for Clwyd, North-West (Sir A. Meyer), of whom it is characteristic, and for Delyn (Mr. Raffan), who described himself as slightly demob happy today. The one jarring note came from the hon. Member for Cardiff, North (Mr. Jones) who, I regret, was both churlish and smug in his contribution. It was sad to have that approach brought to the debate in that it illustrated the way in which some Conservatives appear increasingly shrill and divisive. All that we heard from the hon. Gentleman was cheap nonsense—he made no positive contribution to the debate. We heard of his experience on parliamentary missions abroad—I must say that if he 1143 believes that two days in Tahiti is equivalent to a coffee break, I hope that that does not say anything the way in which he approaches his working day. His contribution was an exception to the nature and tone of the debate.
§ Sir Anthony Meyer
I was slightly puzzled by the equivalence between the hotel in Tahiti and the Membury service station. Clearly, there has been a marked rise in the standards at the Membury service station since I was last there. [Laughter.]
§ Mr. Michael
Clearly, the hon. Gentleman shares the puzzlement of my colleagues about that contribution.
I want to pick up some comments and contributions but, first, I pay tribute to the Labour Members of Parliament and Ministers who made the debate possible. We recognise the value of the Welsh Development Agency and welcome the fact that that is not a point of contention although it must be remembered that it was established by a Labour Government and that the Conservative party opposed it. That experience is repeated elsewhere—it is something of a tradition for the Conservative party to oppose and criticise efforts to encourage enterprise. I had the same experience when I and others—including councillor Paddy Kitson and people such as Arthur Gilbert and David Davies from the private sector—planned the establishment of Cardiff and Vale Enterprise. It has since been a great success and is now supported by the Conservative party and, indeed, by Ministers.
§ Mr. Michael
The Minister seeks to cast doubt on that, but I assure him that it was opposed most vigorously by the Conservative party on Cardiff city council, not by Conservatives in the Welsh Office. It was good that, at the end of the day, the Conservatives in Cardiff came to recognise the value of the organisation and to support it.
A little anger is sometimes caused when the Conservatives claim to be the party of business because in recent years it has pursued economic policies that have damaged industry and business. That neglect of economic policies has undermined the manufacturing industry in particular. Above all, it has done enormous damage to small local and family businesses in Wales. There was an example of that yesterday—I refer to the Government's decision not to pursue large businesses that break the law which gave a terrible example of unfairness. Firms which want to obey and observe the law as it has been passed in Parliament are being squeezed and pressed, in order to maintain their market share, to follow those which have less respect for the law. There is also pressure on employees as a result of that.
I set the context against which the WDA undertakes its work by the mention of legality. I must also say that the work of the police and the increasing crime in Wales is a considerable problem for business. There has been an increase of about 22 per cent. in crime in the south Wales police area, and I was absolutely appalled to learn today that the Government's decision to increase policing in some forces includes not one additional policeman in answer to the modest request for 44 by the south Wales police. That is an appalling decision, especially when one increasingly finds—as I am sure my right hon. and hon. Friends do—that business men are concerned about break-ins and problems that must be dealt with in their communities. There has been a scandalous undermining of 1144 the situation, and the decision will not help businesses in Wales any more than it will help the law-abiding communities in every part of Wales.
Against the background of the WDA's work one must consider the Government's failure to ensure that all European money is brought in that is available to help the economy of south Wales. I think the estimate that has been given is of about £100 million in regard to RECHAR. A number of my hon. Friends have commented on that. There is much concern about the fact that Wales is not obtaining assistance from Europe which should be available to it and about the withholding of RECHAR assistance for mining areas and of other forms of assistance.
It is not only the valleys that lose out. We must consider the levels of unemployment in our cities and urban areas. Cardiff, Central's unemployment rate of 15.1 per cent. is the highest of any Welsh constituency. The chairman of the city council's economic development committee—Councillor Jon Jones—has drawn attention to that fact as something whichwill he sure to shock people.It has certainly shocked us to discover that that was the situation, especially when one recognises that the constituency with the second worse unemployment is Cardiff, West with a rate of 13.2 per cent. Cardiff, South and Penarth registers eighth place in the worst in Wales table.
One of the problems with which I hope the Minister will deal in his response is that the work of different agencies —including the WDA, local authorities and everyone else—will be undermined if assistance from Europe is taken away. There is a danger that Cardiff will not he regarded as an area in severe need of assistance—which it certainly is—and that it may miss out when the Commission and the European Parliament undertake their review of current assistance areas. The European regional development fund under Objective II provides funding to areas in industrial decline for improvement to their infrastructure. Traditionally, selected areas of Cardiff have benefited from that scheme and our worry is that the major review of funding announced earlier this year may lead to a redrawing of the map and to assistance to Cardiff being cut in favour of other parts of Europe. For that to happen, when the figures show all too clearly the dire need in central Cardiff for more investment in business and jobs, would be to undermine the situation and would be greatly to the detriment of the work undertaken by the WDA and others.
One must underline the levels of unemployment that have to be tackled in Wales: Swansea, West has an unemployment rate of more than 13 per cent.; Ynys Môn and Rhondda more than 12 per cent; Cynon Valley, Merthyr Tydfil and Rhymney, Torfaen and Newport, West are well over the 11 per cent. mark. Unemployment is still a major problem to be tackled. In recognising the efforts made locally and by the WDA, it would be unwise not to stress the continuing major problems experienced by communities throughout Wales.
Some of my hon. Friends and, indeed, the hon. Member for Delyn referred to the railway system. We desperately need a link to the channel tunnel but, at the moment, we are about to see the ending of the last train from Paddington to south Wales which has particular relevance tonight for my hon. Friend the Member for Cardiff, West (Mr. Morgan). We need a later train up to London from 1145 south Wales, which would encourage the entertainment business and the tourist industry in south Wales. We need a rail link to Cardiff Wales airport, similarly for the benefit of economic development in the whole region. That idea has been pursued with vigour by my hon. Friend the Member for Vale of Glamorgan (Mr. Smith) but it is relevant for the wider region of south Wales. The lack of spending on the infrastructure—especially on rail—when our European competitors who are much closer to the heart of Europe are galloping away from us and making such investment is of great concern.
One of the most important factors for businesses—both new and expanding, whether inward or home grown industries—is the importance of good advice. In that respect, the work of the WDA in conjunction with local agencies is very important. Recently, we have witnessed a massive increase in the number of European grant consultancy firms who suggest that significant grants are available from the European Commission. Usually for a fixed fee of several hundred pounds, the consultancy undertakes to find grants for which a business is eligible and a money-back guarantee is often offered. The information often provided by some of the firms is generally available free of charge from a number of official organisations, including the EC office in Wales, the Welsh Office exports branch, larger enterprise agencies, the Wales Euro Information Centre and the European Business Centre in Cardiff as well as through the advisory work of the WDA. It is not uncommon or unreasonable to charge for research services undertaken on a client's behalf, but the businesses concerned often develop unrealistic expectations of their chances of obtaining grant aid and can be disappointed by their subsequent failure to obtain grant moneys. I have been told of one company, now in liquidation I believe, which, not only provided irrelevant information, but defaulted on repaying the initial fee charged, despite offering a money-back, no-risk guarantee.
That is a worrying activity. The question of such consultancies has been raised in the European Parliament in Strasbourg by the Member of the European Parliament for south Wales, Mr. Wayne David. I ask the Minister of State to note the concern, and to agree that what is needed is a partnership between bodies such as the Welsh Office and the WDA, and local authorities and local enterprise agencies, to provide a one-stop shop which would make such advice available. Then people could be certain that they were getting neutral, objective advice, and being told the hard truth as well as the encouraging possibilities. There should be a partnership among bodies with expertise in Wales to provide such information. This is not an area in which the opening up of competition is helpful.
We must consider the work of local authorities in Wales. I was rather sad that although the Secretary of State gave credit to the Welsh work force—and then to himself and to the WDA—he failed to put the local authorities at the top of his list of bodies deserving considerable credit for success in finding inward investment. Bosch, Japanese investment, and organisations such as the Chemical Bank, British Airways and a number of others have come to south Wales because of the hard work of local authorities, which often takes place behind the scenes and is in partnership with the WDA and the Government.
1146 The Minister will note that I mention the Welsh Office specifically. It would come better from Ministers to speak of the achievements of the Welsh Office and the WDA if they gave the same credit to the local authorities in south Wales that those authorities give to the help that they receive from bodies such as the WDA. I hope that the Minister will respond generously on that subject.
Credit should also be given to the Wales TUC. As I said in an intervention, I was sad at some of the comments made earlier about that body. Like local authorities, the Wales TUC has recognised that the real key to success in that area is partnership, and every report from organisations such as Cardiff and Vale Enterprise, of which I remain a director, gives credit to the co-operation of the WDA and refers, often in fulsome terms, to Welsh Office money or money from the European Commission. Local authorities, enterprise agencies and others work, too, with bodies established by the Government in Wales, including even the development corporation. I underline the role of the local authorities, for example, in the redevelopment of central Cardiff, where partnership with the private sector was so important.
We must recognise the initiatives that can be taken by local organisations. Against that background we need to consider the way in which the WDA should be working to strengthen the Welsh economy. There has been much discussion recently of procedures and processes, and there has been criticism of the way in which the WDA has done certain things. Those matters should be investigated and the systems must be put straight. The people at the head of the WDA must recognise that they are not operating in a private company. Public money is involved, so the standards of care and accountability required in public life must be observed at every stage. We also need stability within the WDA. There is some concern that the many changes in recent years may have led to an element of instability in decision making.
Those are serious points, but it is also important that we do not weaken the agency's credibility both inside and outside Wales. The best way to strengthen that is for the agency to be open to criticism, ready to put its house in order and to discuss the way forward with everyone else concerned. Monitoring techniques in job creation have always been difficult. Monitoring is not easy and needs care. We worked very hard on deciding which method to use in Cardiff and Vale Enterprise, and came to the conclusion that we should always attribute the minimum to the work of the agency and credit the maximum to other agencies involved in any partnership work. That gives credibility and authority to the figures released. I suppose that I am recommending what might be described as a conservative estimate—although nowadays it would be odd to use that expression, because modesty does not appear to be part of the job description for Secretaries of State in this Administration.
Part of the problem was caused by pressure from the Secretary of State's predecessor and others for high figures that could be trumpeted in presenting the achievements of the WDA. What is needed is a more sober and reasonable assessment of what is being achieved and targeted.
In recent pronouncements we have heard described four objectives of the WDA. The first is to attract new inward investment. That is all right but, to expand on the idea, we need to target that inward investment and to take a realistic look at the potential of different forms of inward 1147 investment for building the economy rather than simply considering the raw numbers of jobs created in the first days following the investment.
The objective is to work with existing businesses in Wales to promote economic development. I hope that that would include working with such businesses to help them expand and to encourage their activities, not simply seeking to involve them in the economic development of the area. More must be done to help our own indigenous businesses.
The third objective was to generate environmental improvements by land reclamation, and the fourth was to promote economic development in rural and urban areas. The debate shows that there are many good ideas around, and many positive contributions that could be made if the partnership and decision making is taken to a local level.
I pay tribute to the speeches of my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), who has ministerial experience in such matters, my hon. Friend the Member for Neath (Mr. Hain), who brings a fresh approach to the problems of his valley, and my right hon. Friend the Member for Llanelli (Mr. Davies), who made a cogent contribution early in the debate. Each of them described the creativity in their communities in the valleys, which could be harnessed to develop the local economies. They were examining real needs, as was my hon. Friend the Member for Carmarthen (Mr. Williams), who spoke of the importance of abattoirs to the rural economy. My first experience in local authority was to be put on the abattoir committee in Cardiff in 1973. I do not envy anybody who has to tackle that activity, whether at the practical or at the economic level. My hon. Friend is right to stress its importance and I hope that we shall have a positive response from the Minister.
I hope that the WDA will listen to my hon. Friends' points and will accept that there is a need to be adventurous and imaginative, while also being rooted in the communities for which my colleagues have spoken.
I especially enjoyed the thought-provoking and imaginative speech by my hon. Friend the Member for Pontypridd (Dr. Howells). The Minister may agree that my hon. Friend showed an ability to think laterally, which is what we need to tackle the enormous problems that we face in Wales. He was very much to the point in his comments on training funds. I am not sure that I agree with him on the idea of hiving off the land and property of the WDA. There is much to be said for a one-stop shop in these matters and there is much to be said for the body that is responsible for job creation looking at the various job creation factors in relation to property and to the development of land rather than looking at matters only from the point of view of letting. The criticism might be that the WDA has been pushed too far by Government policy into looking too commercially at its lettings rather than looking at developing the job creation potential in its decision making. We come together on the target and the argument needs to be pursued in considering how we develop the work of the WDA.
We need to consider a number of points about inward investment. The figures to which I referred have caused problems because recent audit reports suggest that the WDA claims a high proportion of inward investment, and that it includes moves from England and expansion in plants that were once inward investment. There is a need to examine objectively the validity of the figures, not as 1148 matters of debate or point scoring, but to enable us to be precise about the facts with which we are dealing in our debates.
We keep hearing that there is a big push on at the Welsh Office to create links with the European motor regions, such as Baden-Wüurttemberg, Cataluña, Rhône-Alpes and Lombardy, to which several hon. Members have referred. We need more information about the pay-back so far and about the quantifiable measures that will judge the success of those policies. We are not talking about a background of specific objectives. I remind the Minister that the contacts with the motor regions build very much on links forged by south Wales local authorities over many years. The investment in time by local authorities, especially in the case of Baden-Würrttemberg, has made it possible to look at the policy from the Welsh Office point of view.
The opening of a European office is to be welcomed, although we need to know about the mechanisms for disseminating the benefits back in Wales. How will that relate to the European activities of other organisations, such as the local authorities that make use of European funds?
I draw the attention of the House to the fact that, by 1988, 75 per cent. of Japan's overseas investment was in non-manufacturing activities. What is being done to attract that market to Wales? What analysis is the WDA making of the potential there? Targeting is an important part of the question. I suggest that it is not just a numbers game of how many jobs can be attracted. We need to look at the areas of real potential because there is a danger of missing opportunities.
One example is the supply of parts and materials to incoming industries. We should consider the mistakes made in the United States and elsewhere. The Minister may be aware that in America imports, accounting for almost 30 per cent. of the United States car market, along with cars produced by United States based transplants, have swallowed more than half the American car market. The United States autoparts trade deficit with Japan is heading up to $12 billion from $3 billion five years ago. According to one study, it would hit $22 billion by 1994. That is relevant to Wales. In some cases, our indigenous industries find difficulty in getting a fair share of supplying the industries that have come in. That is important with the industries that have come in with the declared policy of encouraging local suppliers. Bosch and some of the Japanese industries have come in with that stated aim.
The problem that has been experienced in America is that, over time, those doors close. The opportunity may be there for a period, but it needs to be seized. If it is not seized, it may disappear. A University of Michigan study of the supplying of one Honda transplant found that 38 per cent. of the components had been manufactured in Japan, 46 per cent. by Japanese transplant suppliers and 16 per cent. by United States suppliers. The Americans are protesting about that.
It would be silly to moan and blame Japanese companies or the incoming Bosch firms. We need partnerships to be formed in Wales and for the WDA to work positively to help our own companies, and to help the creation of home-grown industries where necessary, in order to seize the opportunity. That must be done with a positive approach. It will not just happen accidentally, and it should not be taken for granted. We need to concentrate on supply and secondary manufacture in partnership in that way. One of my worries is that there seems to be a 1149 broad-brush approach from the WDA about its intentions and hopes. We need to see some of those things brought down to very specific intentions which are agreed and developed in partnership, and very specifically, with local authorities, enterprise agencies and others.
Another point is the need for the WDA to respond to change. The problems of the recession have perhaps not been met sufficiently. There was a little bit of an exchange about advance factories. Some Conservative Members were dismissive of the contribution that was made. However, is it right that the WDA should still concentrate on building bespoke factories? I understand the argument that advance factories frighten off the private sector, but the private sector is not building at the moment, certainly in many areas of Wales. Is not this just the time when the WDA should be flexible enough to step up advance factory programmes, in a property slump, and enable Wales to be prepared and ready to take whatever opportunities are available?
The Secretary of State made a passing mention of indigenous companies. That is where I want to concentrate the emphasis. We have seen in Wales over the years a loss of headquarters companies. We have seen the importance of headquarters companies which are in Wales. In particular, I pay tribute to ASW—Allied Steel and Wire —in my constituency. It is an excellent company which works with the community, not to advertise itself or ingratiate itself but because it sees itself as an integral part of that community. It sees itself as a part not only of the business community but of the whole community in Cardiff, and indeed of a wider area of south Wales. Its approach to the recession was shown by the way in which the chairman and top management took a cut as they saw the recession coming on. That showed the way in which they wanted to make sure that the business prospered and was able to cope with the recession. That is in contrast, for instance, with organisations such as Welsh Water, which did not approach the onset of the recession in the same way.
There is a need for concentration on our indigenous companies. There is a need for the WDA to move decision making to a more local level so that partnerships with local authorities, private companies, chambers of commerce and so on can be made more fruitful and effective. We hear too much about the headquarters and international aspects of the WDA and not enough about the local work of the WDA, which, of course, is the aspect on which virtually every one of my hon. Friends concentrated.
The next point is the importance of training and enterprise education. Even supporters of the idea of establishing TECs feel that they are not moving quickly enough. We recognised the problem that they faced immediately they were established—that is, immediate cuts in their finances—but we need skills, we need the skills audit to be developed, and we need a partnership between different aspects of government, local and national, to tackle that serious difficulty. We need also to support start-ups. That matter has gone off the agenda in recent times, although many of us have spent much time on it and the Minister of State's predecessor took a leading role in some of the discussions about seven or eight years ago. We need to remind ourselves of the importance of this matter 1150 and the significant contribution that it has made to creating new jobs in Wales in recent years. That is something that can happen only at a local level.
I have something of a reservation about the report "Skills and Enterprise: An Agenda for Wales" that was published the other day. It seems to suggest a worrying transfer of influence, which could turn into a power, to the WDA. That is all the more worrying when local authorities are sometimes unwilling to take a stand on justifiable issues because they fear that, if they stand up to the WDA on one issue, that might jeopardise their joint working on another venture. To see the WDA extending its influence into training makes one feel that it is tending to become a mini Welsh Office. Perhaps the Minister of State should look out for his job if the WDA further extends its role.
That report makes scant mention of the role of the local authorities, which still have a big part to play in training, and which will have a residual role even if the Government go ahead with their crazy idea of removing colleges from local authority control. Local voluntary organisations, such as the Women Workshop, compacts and in-house company training provide training opportunities in various parts of Wales.
The report also leaves one with little confidence that anything other than lip service is being paid to the needs of unemployed and disadvantaged people. That matter should have been one of the major headings rather than the subject of passing references on, I believe, page 13 and in the appendix.
Not enough is being done at the moment to provide employment and training for adults with learning difficulties. I have been involved with the work of the computer workshop in Colleg Glan Hafren where we have seen the way in which a real contribution to employment can be made if proper training and opportunities are offered.
I pay tribute to South Glamorgan county council for recognising the need to establish training places to enable people to work on from their placement to a real job from which, in the longer term, they can find permanent employment with the local authority. We need such a means of moving people from a placement into full employment. I recognise that that is not an easy thing to manage and it needs considerably greater encouragement than it is given at the moment.
I was sad to find that one organisation which deals with adults with learning difficulties in my constituency had been left high and dry by the company that was its contracted trainer. Although there was no longer any contract to provide training, the managers and the trainees at Track 2000 in Splott continue to attend voluntarily—the trainees do not receive their training allowance—and the social services are still referring adults with learning difficulties to that organisation although it had fallen off the agenda locally.
I ask the Minister of State to take note of that example and to find the best possible way of ensuring that, in the present economic difficulties, people with disabilities of all descriptions do not get lost once again, as has happened all too often in the past. We must remind ourselves of the importance of creating a training opportunity for people with disabilities. That is why I ask the Minister of State, in his response, to agree that he will look specifically at that point——
§ Mr. Deputy Speaker (Mr. Harold Walker)
As the House knows, debates can range widely on Second Reading, but the hon. Gentleman is going very wide of the purpose of the Bill.
§ Mr. Michael
I take your admonition, Mr. Deputy Speaker. I referred to those points because the document that was published this week referred to an increased training role for the Welsh Development Agency, especially in relation to those aspects of training.
It is important that training is developed in partnership and that the WDA recognises the role of other bodies and does not take on too strong a role for itself in developing employment training initiatives.
The WDA recently stated that over 400 of the factory units that it owns in Wales are currently unoccupied. While that is undoubtedly a sign of the depth of the recession in Wales, the Government should ensure that every effort is made by the agency to let those properties and get people into work.
The work of the WDA cannot be viewed in isolation from the general economic climate and the way in which it affects the Welsh economy. In the past year, unemployment in Wales has risen by more than 37 per cent. Business failures have risen by almost 90 per cent. Average earnings in Wales are lower than in any other region of Britain, with 40 per cent. of adult full-time employees earning less than £2 per hour.
A Labour Government would work with the WDA to create a climate which would enable business to prosper in Wales. We shall give serious consideration to making available new sources of investment and finance for growing Welsh firms. As my hon. Friend the Member for Alyn and Deeside (Mr. Jones) said, we must tackle the skills shortages that prevent many Welsh companies from expanding. In consultation with the WDA and higher education institutions, we shall investigate the establishment of Welsh technology trusts to work with small businesses to improve the quality of technology transfer and access to it.
Growth, common sense and, above all, partnership are the qualities that a Labour Government will bring to Wales and to the work of the WDA in Wales and for Wales. Business in Wales, like the people of Wales, needs that day to come quickly.
§ The Minister of State, Welsh Office (Sir Wyn Roberts)
We have had a thoughtful and therefore helpful debate. Seldom have I found myself more in sympathy, if not in agreement, with the views expressed by Opposition Members, especially when it seemed that they were edging towards coal privatisation. Perhaps the prospect of an election concentrates the minds of hon. Gentlemen. However, I must not be too provocative. It is abundantly clear from what has been said that there is widespread approval for the work of the Welsh Development Agency and for giving it adequate resources to carry out its task.
The WDA has played a full and vigorous part in transforming the outlook for the Welsh economy, but, of course, much remains to be done. Through its wide range of services, including the provision of modern industrial floor space, the supply of financial and technological advice and the attraction of inward investment, the WDA has done much to help bring about the transformation that we have witnessed in Wales. But the agency is not standing 1152 still. Increasingly, its emphasis is on becoming a catalyst, a facilitator and a pump primer to stimulate private sector enterprise and investment.
The hon. Member for Alyn and Deeside (Mr. Jones) referred to the Welsh Development Agency Act 1975 and the origins of the agency. In an intervention, I mentioned the change that we wrought on that body in 1980. The Government have indeed given the WDA an expanding role and a new dynamism. I am sure that my hon. Friend the Member for Clwyd, Noth-West (Sir A. Meyer) and others would like to be reminded of some of the facts. The current budget of £160 million is an all-time high in both cash and real terms. As we heard from my right hon. Friend the Secretary of State, next year's budget will be even higher, at £166.75 million. We are spending more in cash terms on the WDA in one year than was spent during the whole of its time under Labour between 1976 and 1979. We have spent more on factories than the Labour party did. We are spending more on clearing derelict land. The average allocation under this Government for land reclamation is 30 per cent. higher than under the previous Labour Administration.
§ Mr. Rowlands
I am sure that the Minister will deal with the facts of the budget in a moment, but I wish to ask a specific question. The figure of £166 million was announced in the autumn statement. What is the net contribution of the Welsh Office to the £166 million for next year?
§ Sir Wyn Roberts
It is about £76 million. I shall come to the hon. Gentleman's point in a moment.
One of the first things that we did when we took office was to introduce the Industry act 1980, in which we gave the WDA the more catalytic role of stimulating private sector investment by encouraging private sector ownership of factories. That was important, because it was the only real way to achieve sustained high growth and prosperity. The attraction is that it gives the companies a real stake in Wales. The agency has succeeded in bringing more private money into Wales. For example, last year, for every pound that it spent on joint property ventures, it was successful in attracting more than £4 of private investment.
The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) rightly referred to our Command Paper 1516 on Government expenditure in Wales. I draw his attention to paragraph 5.21:Net grant in aid will decline significantly over the 3 years (from £87 million to £62 million), with the balance being made up from increased receipts.I give him an assurance that, in setting sales targets, we take into account economic factors and the state of the property market in the year in question.
§ Mr. Rowlands
I am only teasing the right hon. Gentleman. We are trying to check the plausibility of that investment. That Command Paper assumed that the 1991 forecast of the factory sales would be 74,000 sq ft. Originally it was intended to be 209,000. We should have an idea what that figure is now likely to be. The figure for next year is 260,000. In terms of factory sales, how feasible are those figures?
§ Sir Wyn Roberts
My right hon. Friend the Secretary of State has made an announcement. I have told the hon. Gentleman the proportion by way of net Government contribution. We anticipate that we can achieve the rest of the difference between net grant in aid and the gross. We shall make up the balance with increased receipts.
§ Sir Wyn Roberts
As my right hon. Friend the Secretary of State said, I can only refer to our record, which, in terms of expenditure by the WDA, has been very good indeed.
In 1983, we set up WINvest, now Welsh Development International, to provide a sharper focus for the drive to get more overseas companies to choose Wales as a base. To date, we have had remarkable results. Last year, 147 projects were won, which will generate about £585 million of capital investment and are projected to create or safeguard about 15,000 jobs. We have also provided for the increased presence of the WDA abroad. Offices have now been opened in Canada, Taiwan and Korea, and an office in Germany is planned for next year. Offices were already placed in the United States and Japan before 1979.
Until the hon. Member for Cardiff, South and Penarth (Mr. Michael) spoke, it seemed that Opposition Members wanted to extend the range of the WDA's responsibilities still further, especially in training. Hon. Members will know that a transfer of the responsibility for training in Wales has been approved by my right hon. Friend the Prime Minister. From 1 April 1992, it will rest with the Welsh Office and not the Department of Employment.
The assumption of responsibility for training gives us a great opportunity to capitalise on what we have achieved to date with the establishment of TECs, in economic development and in our education reforms. Training will sit alongside enterprise and education in the Welsh Office. My right hon. Friend has set up a special unit at senior level to co-ordinate policies and activities across Wales. As a first step, he has issued strategic guidance to the TECs, setting an agenda for Wales within the national priority areas. Naturally, inward investment features prominently in that strategy.
In addition, if the Further and Higher Education Bill becomes law, we shall have further and higher education funding councils for Wales. Again, that will be the direct responsibility of the Welsh Office. Therefore, the whole of education and training at almost all levels will be beneath the umbrella of the Secretary of State at the Welsh Office.
Much earlier, the National Audit Office report was referred to. I wish to clarify a point about grants. The main form of grant, regional selective assistance, is indeed paid in relation to the number of jobs created, but it is important to realise that these grants are normally paid in stages over a period of time as projects develop. Naturally, a company's plans sometimes change, and the number of jobs originally foreseen at the time of the company's announcement changes. Sometimes job numbers increase but, it is true, sometimes they fall. If they fall, the amount of grant payable can also be reduced. There is also provision for grant to be recovered in certain circumstances if the project does not proceed as anticipated.
The WDA is active in urban development. It is vital to reinforce and strengthen local economies, particularly in the urban areas of Wales, which may have suffered as a 1154 result of the rundown of traditional industry. The WDA recognises that, and has set itself the job of bringing about urban regeneration and development to create an attractive environment for working and living. The involvement of the private sector is desirable in all that. The agency's role is essentially to act as a catalyst and co-ordinator.
My right hon. Friend referred to the general policy and the priority now attached to this work. Resources are being focused and targeted on specific towns or areas where there is both need and the potential for improvement. Under that programme in 1991–92, the agency plans to spend a record £12 million in some 28 towns or areas throughout Wales.
The agency cannot act alone, and partnerships or joint ventures with both the private and public sectors are often formed to take projects forward. I should like to mention some specific examples. The problems of Holyhead are well known, particularly to the hon. Member for Ynys Mon (Mr. Jones) and me. The solution requires a combined, co-ordinated and targeted effort. The WDA has been joined by Ynys Mon borough council, Gwynedd county council, Sealink Stena, Holyhead opportunities trust and Holyhead town council to form the Holyhead urban joint venture. Some £5.6 million has been announced to regenerate the town. That involves the relocation of the port operations, the redevelopment of the west dock to provide major tourist attractions; developing land and the provision of premises for industrial investment. It also involves a marina, general environmental improvements and pedestrianisation works. There will also be a housing renewal area.
I should also like to mention the Cynon valley, where the borough council—again, a local authority—and the WDA have joined in a major plan to revive the valley's environment, prosperity and prospects. The plan, which will involve substantial private sector resources, will involve expenditure totalling some £18 million over the next few years. There will be substantial development of land for industrial purposes and major infrastructure work, including highway improvements. The town centres of Aberdare and Mountain Ash will also be the subject of a programme of commercial improvements. Major environmental and land reclamation works are also scheduled, which is particularly important for sites such as that occupied by the former phurnacite plant.
However, the plan cannot be achieved by physical works alone, and the improvement of training facilities is also included, along with substantial marketing campaigns, to attract new investment. I look forward to seeing the plan developing on the ground.
Further west, in Llanelli, the WDA is also involved in major proposals to regenerate the south Llanelli coastal area. The agency plans to invest over £1.6 million on residential and business park sites, a new coastal link road, coastal protection works and improved landscaping. Towns such as Merthyr Tydfil, Milford Haven and Rhyl are also to receive substantial investment through joint ventures, and 18 other towns are earmarked for urban investment.
Reference to Merthyr prompts me to inform the hon. Member for Merthyr Tydfil and Rhymney, in connection with local sourcing, that the WDA is well aware of the potential for local Welsh firms to supply large inward investors. The WDA and the Welsh Office have programmes to ensure that investors are aware of 1155 opportunities for local supply. An example of that is our "Source Wales" campaign, which is operated by the Welsh Office.
In its rural development activities, the agency has been responsible for creating a wide range of job opportunities in rural Wales and has played a key role in strengthening local communities. At the beginning of last year, the WDA launched its rural prosperity programme. As a result, 15 rural communities will benefit from a co-ordinated programme of action totalling over £5 million. Throughout the Principality, rural towns and communities will benefit.
For example, in Gwynedd, action plans have been prepared for five communities, including Llanrwst, Porthmadog, and Bethesda in my constituency. In Clwyd, places such as Corwen and Denbigh have been targeted. In Dyfed, a programme of improvement works will be implemented in five areas, including Llandovery, Fishguard, and Narberth. The programme will implement a range of new opportunities in the communities concerned to enhance job prospects and local facilities.
I am a great believer in this initiative. The process involves collaboration between the local community, the voluntary sector, the private sector and the public sector, the objective being to harness the skills and enthusiasm of the community with the resources of the public and private sector to bring a new vitality and viability to the communities concerned.
That method is proving effective, due to the willingness of everyone to work together. I am impressed by it. I saw the partnership efforts at first hand when I visited Narberth not long ago. That is the way forward in the rural areas, and I am delighted to say that the agency will be considering other areas for action under the programme.
The Government are fully committed to the work of the agency in rural areas. That is one reason why we have given it record resources this year, which has in turn enabled the agency to increase by £5 million its expenditure in rural areas this year. In total, it is investing £25 million in this financial year, in support of development in rural areas, representing a substantial and growing commitment by the agency.
§ Mr. Alan W. Williams
On rural areas, the hon. Member for Brecon and Radnor (Mr. Livsey) and I referred to the problem of abattoirs. Why is it that the Development Board for Rural Wales can help the project in Llanidloes, but the Welsh Office cannot become involved in the widespread problem in the rest of Wales?
§ Sir Wyn Roberts
The hon. Gentlemen are right to say that the Development Board for Rural Wales can make grants for abattoirs. Grants are also available outside the board's area. The real problem is that the establishment of a new slaughterhouse cannot be assisted if it adds to the slaughtering capacity in an area. The building of a new slaughterhouse must not create over-capacity—in other words, it must be a replacement of an old slaughterhouse. I have cut my answer rather short, but I am willing to write to the hon. Gentleman giving further details.
I thank my hon. Friend the Member for Cardiff, North (Mr. Jones) for paying a personal tribute to me on my involvement with Europe. There are great opportunities for Wales, Welsh business and the WDA in Europe. My right hon. Friend the Secretary of State mentioned that we 1156 have been working actively in recent years to develop closer links between Wales and other regions in Europe. We have enjoyed a great deal of success, which the WDA has followed up effectively. We have signed formal partnership agreements with Baden-Wurttemberg in Germany and Catalonia in Spain. We are also working actively with the Lombardy region in Italy and I have signed a letter of intent with a view to an agreement with the president of Lombardy, Dr. Giovenzana. We also have a relationship with the Rhone-Alpes region of France.
Those four motor regions of Europe have among the most powerful economies in the Community. They have considerable populations of some 5 million to 10 million people—6 million in Catalonia—so they have considerably larger populations than Wales. Nevertheless, although our relationships are good and primarily business-based, they extend more widely, particularly in the academic sphere. We lay great emphasis on technology transfer, and I believe that, by putting ourselves alongside those advanced regions of Europe, Wales can only benefit. We also have cultural contacts with those regions.
I am convinced that we must avoid the trap of regarding Europe simply as an abstract concept. It is a real place and a real market, full of opportunity for Welsh business. Europe must be approached in a positive and practical way, not simply with rhetoric.
The purpose of our regional relationships is to form the framework at political and administrative level that will help and encourage our companies and institutions to make practical, collaborative projects and explore business opportunities in each other's territory. It makes sense for Wales to approach this question region to region. We have been very encouraged by the results so far. I have visited Stuttgart, Milan and, most recently, Barcelona to pursue those opportunities. I am in no doubt that such opportunities exist and that there is a good welcome for an energetic approach by Wales within Europe.
I also believe that the partnerships that we are now establishing will be of lasting benefit to Wales within the Community.
It is also becoming increasingly clear that others, outside Wales, are of the same opinion. Wales is admired for the way in which it has pursued industrial recovery and environmental improvement, while at the same time attracting international investment and fostering the growth of indigenous small companies. We are also admired for the way that we are now looking outward, on a regional basis, to opportunities throughout Europe and the world. In many ways, it seems to me that ours is a model for regional development. President Pujol of Catalunña is of the same opinion. Others, in both western and eastern parts of Europe, are now interested in learning from our experiences. The WDA, as my right hon. Friend has said, has a most important role to play in all these sectors.
The House has heard today, from my right hon. Friend, myself and others, a story of growing success, and true co-operation in Wales. I know that some may seek for their own reasons to paint a picture of gloom and doom, and to undermine those who are working for Wales with energy and optimism, but they are the minority, and they have not been sounding off too much today. Clearly, we in Wales are moving forward; business confidence is reviving.
Unemployment in Wales fell last month. Since 1986, long-term unemployment has fallen from 78,000 to 31,200—a reduction of 60 per cent. That is 8 per cent. more 1157 than the fall for the United Kingdom as a whole during the same period. There are now nearly 100,000 more people in employment in Wales than there were before the 1983 general election. We want quality jobs, and we want to raise the level of remuneration.
Our success in attracting inward investment is well known, but I make no apologies for returning to the theme: Wales does extraordinarily well for its size in the battle—and battle it is—for foreign investment. I must tell the House that these projects do not arrive of their own accord, on a plate, gift-wrapped. Wales has no God-given right to them.
Competition is increasingly fierce. I agree with those who say that it might become fiercer, especially among the EC's 80 or so development regions, yet in 1990, with 5 per cent. of the United Kingdom population, Wales generated 20 per cent. of all incoming foreign investment projects. With 0.8 per cent. of the EC population, Wales achieved 5 per cent. of the investment. Wales chalks up another overseas investment project roughly every three working days—and that does not include business from the country's biggest source of investment, the rest of the United Kingdom.
All this means more jobs for Wales. We are all agreed that we want skilled and good quality jobs. Welsh Development International is charged with the task of continuing to generate such jobs. It has already sown the seeds, for example, with the joint venture between Imperial college, the agency and Newport borough council. Imperial park is set to become one of the leading science parks in the United Kingdom, combining the advantages of a superb site in Wales with the strength of one of the world's leading research institutions.
In addition to the creation of quality jobs, we are creating a better environment for living and working—Wales a "land of quality" as our own logo has it. The success of the WDA's land reclamation scheme is also the 1158 envy of many. Today, derelict land is being reclaimed in Wales at the rate of a football pitch a day and at the lowest cost among comparable programmes in the United Kingdom. Last year alone, projects worth £175 million were located on reclaimed land.
This year's budget, at £27 million—10 per cent. more than last year and more than double that of five years ago—will allow more than 1,800 acres of derelict land to be reclaimed. Reclaimed land has provided sites for enterprise zones, the Swansea and Penarth marinas, and for housing, factories and amenity or leisure sites such as the national garden festival site at Ebbw Vale. Nearly £20 million has already been spent on the reclamation of the old colliery and steel works site at Ebbw Vale. More than 1,000 jobs will be created when the festival is in progress.
There is much to be proud of, and the WDA has played a key part in the success so far. Looking forward, the new financial unit will provide the WDA with the headroom that it needs to pursue its tasks in the years ahead. I urge the House to support the Bill.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Committee of the whole House—[Mr. Boswell.]
§ Further proceedings postponed, pursuant to Order [22 November].