HC Deb 28 June 1971 vol 820 cc6-10
2. Mr. Kinnock

asked the Secretary of State for Wales what conclusions he has reached on the survey made by the Confederation of British Industry on investment in Wales, a copy of which is in his possession.

8. Mr. McBride

asked the Secretary of State for Wales what conclusions he has reached after reading the report of the recent survey made by the Confederation of British Industry in Wales, a copy of which is in his possession.

9. Mr. George Thomas

asked the Secretary of State for Wales if he will list the courses of action he proposes to take following the respresentations he has received from the Confederation of British Industry in Wales.

28. Mr. Alan Williams

asked the Secretary of Wales if he will make a statement on the recent Confederation of British Industry report on industrial prospects in Wales.

Mr. Peter Thomas

I am currently examining this report in detail.

Mr. Kinnock

While the right hon. and learned Gentleman is examining the report, will he take note that 48 out of the 52 firms which have curtailed investment projects, according to the C.B.I. report, have done so for reasons which are either directly attributable to or could be directly ameliorated by a change of Government policy? Will he encourage his right hon. Friend the Chancellor of the Exchequer to bring forward any plans that he has for reflation of the economy? Otherwise, the Welsh economy will go down the plug hole.

Mr. Peter Thomas

The report, which will be examined in detail by my Department and by other Departments, has one or two encouraging features in it. Probably the most encouraging point to emerge from the survey was that 96 out of the 194 firms which participated said that they had taken decisions to expand or to undertake new projects in Wales in the next 12 months.

Mr. McBride

Is the right hon. and learned Gentleman aware that at first glance the document supports the view that the C.B.I. believes that stagnation has been caused in Wales? Does not the fact that 52 out of 194 firms have cancelled their plans because of reduced demand lead to a decrease in employment and the maintenance of high unemployment in Wales? Will he, as the representative of Wales, support a policy of increased reflation in the Cabinet to reduce the intolerably high level of unemployment in the Principality?

Mr. Peter Thomas

The position is that there is no other survey with which one can compare this one. Therefore, it is difficult to say whether 52 out of the 194 firms compares unfavourably or otherwise with what would have been the situation, let us say, two or more years ago.

Mr. George Thomas

Is the right hon. Gentleman aware that the report gives a disturbing indication that the change from investment grants to investment allowances has been a serious contributory factor in the decision of firms not to expand? Does the right hon. Gentleman not regard that as a challenge to him to reverse his policy?

Mr. Peter Thomas

I disagree with the right hon. Gentleman, because it is significant that the changes in incentives do not loom large in the survey. In fact, only 11 firms out of a total of 194 gave that as their first or second reason for cancelling projects. It is also of importance to note that the survey was undertaken largely before the Budget, and the changes announced by my right hon. Friend in the Budget were, therefore, not known to many of those who participated.

Mr. Alan Williams

Will the right hon. Gentleman explain to the House why he is denying investment grants to Wales, while the Cabinet, of which he is a member, is allowing investment grants in Tory Northern Ireland, and will he say which is the wrong decision?

Mr. Peter Thomas

There are special circumstances in Northern Ireland, and it was considered that the measures that were in operation should continue. The position in Wales is the same as that in the United Kingdom. The change from investment grants to the new incentives, and all the changes that were made, will undoubtedly be of permanent benefit to Wales.

Mr. Gower

Alongside the report, are not there indications of increased strength and resilience in the Welsh economy, which has stood up to the recent difficulties of the United Kingdom better than any other development area in the country?

Mr. Peter Thomas

My hon. Friend is right.

Mr. Roy Hughes

Will the right hon. Gentleman bear in mind that it is not only private enterprise that is now failing to invest in Wales, but this Government, too? Will he bear in mind that the Labour Government sited the Motor Taxation Department at Swansea, the Royal Mint at Llantrisant, and the Census Office at Newport, thereby providing thousands of jobs, while his Government have decided to site the value-added tax department at Southend, which will do a lot of damage to Wales?

Mr. Peter Thomas

I think that the hon. Gentleman should put down a Question to the appropriate Department on that. He will understand that it was necessary for the V.A.T. office to be part of the Customs and Excise, and to be near London, and Customs and Excise already has premises at Southend.

17. Mr. Roderick

asked the Secretary of State for Wales when the Government's new policies of incentives will begin to take effect on job opportunities in Wales.

21. Mr. Gwynoro Jones

asked the Secretary of State for Wales what assessment has now been made by his Department of the effect on investment in Wales as a result of a change in Government policy to investment allowances.

Mr. Peter Thomas

I am satisfied that the changes made in the system of investment incentives, combined with the various measures taken by my right hon. Friend the Chancellor of the Exchequer, will encourage the profitable and viable investment which is so much needed in Wales.

Mr. Roderick

I asked the right hon. and learned Gentleman when the Government's new policies would begin to take effect. He keeps on telling us that they will take effect soon or his colleagues in the Government tell us to wait and see. Does he find on his visits to Wales that he has many friends outside the loyal supporters of his party? Do they think the Government are following the right policies? Will he use the considerable influence which he claims to have in the Cabinet to get the Government to change this policy in the way that his friends in Northern Ireland have succeeded in doing?

Mr. Peter Thomas

Apart from the abolition of investment grants and the substitution of investment incentives, many measures have been announced to stimulate investment, including a reduction in corporation tax and income tax, the halving of selective employment tax, increased building grants, a cut in bank rate and an increase in grants for house improvements. All these things will encourage investment in Wales. Many of them have yet to come into effect. For example, the cut in S.E.T. does not come into effect until 5th July. It is, therefore, far too early to say when the full effect of these policies will be felt.

Mr. Jones

Does the right hon. and learned Gentleman appreciate that in the last year job opportunities and job prospects have fallen sharply while the rate of redundancies has been running at a higher level than for many years, that the number of inquiries from industries and companies wishing to come to Wales is running at a very low level and that in the first five months of this year only 21 new firms came to Wales, while in the first five months of 1969 24 new firms came to Wales under the investment grant policy followed by the Labour Government?

Mr. Peter Thomas

We undoubtedly have high unemployment in Wales, but it started in July, 1966. [Interruption.] In the last six months of that year the rate of unemployment in Wales doubled and that brought about the most prolonged period of high unemployment in Wales since the 'thirties. It was made worse by the endless attacks on company profits made by the Labour Government, and accelerated by their surrender to the forces of wage-cost inflation, leading up to the last General Election.