WELSH AFFAIRS

HC Deb 05 November 1976 vol 918 cc1699-801

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Coleman.]

Mr. Victor Goodhew (St. Albans)

On a point of order, Mr. Speaker. Is it possible to arrange for the Lord President of the Council to give us a new Business Statement for next week in view of the utter rejection at the polls yesterday of the policies he is putting before the House?

Mr. Speaker

I am not surprised by that question, but, even so, it is still not a point of order.

11.8 a.m.

The Secretary of State for Wales (Mr. John Morris)

This is the third Welsh Day in two and a half years that I have had the honour of opening, and one problem confronts me, as with all my predecessors: given the whole range of my responsibilities, what subjects I should concentrate on in my speech today. My hon. Friend the Under-Secretary of State, if he catches your eye, Mr. Speaker, will deal with some of those I am unable to cover. There will be ample opportunity in the coming months to talk on devolution, and it will be no surprise, given the seriousness of the problems facing us, if I concentrate on the economy of Wales.

Industrial and agricultural problems take up the lion's share of my time as Secretary of State. I welcome the recent fall in unemployment, from 84,750 in August to 79,456 in October. There are now about 6,500 fewer school leavers on the unemployment register than in August, though some will have gone back to school. Nevertheless, to all of us born and bred in Wales, steeped in the fear of unemployment flowing from the experience of the 1930's, these figures are to me and to my hon. Friends wholly unacceptable.

Our future prosperity lies in conquering the problems of inflation, and more than halving the rate of inflation is an important step in the right direction. Our emphasis on regeneration of manufacturing industry has meant action to limit the growth in public expenditure. The latter is of course unwelcome to those of us who wish to improve our social fabric, but the recent limitations must be put in their right perspective.

The limitation on the growth of Welsh Office expenditure in fields other than housing in 1977–78 is £12 million. An increased allocation for housing—a recognition of our needs in Wales—will come to £20 million in the same period. But both these figures are dwarfed by the £350 million the Government have offered to the British Steel Corporation to invest at Port Talbot. This is the scale of our endeavours and this is the perspective.

The BSC is now carrying out its reappraisal at the request of the Government of the problems of further development at Shotton and Port Talbot. But it is my earnest wish that they take full advantage as rapidly as possible of what the Government have offered at Port Talbot.

On unemployment we have sought to mitigate the worst effects of the recession The full complex of measures has in United Kingdom terms created or saved half a million jobs. In Wales the measures have saved 14,000 jobs through the recruitment subsidy for school leavers which has been paid in respect of 2,500 people at a negligible cost of less than £200,000 and the temporary employment subsidy, now £20 per full-time worker per week, has been approved for over 100 schemes involving some 7,500 workers in Wales by the end of September. The job creation programme in Wales has created over 4,000 jobs amounting to 140,000 man weeks of employment—again by the end of September.

In addition my right hon. Friend the Secretary of State for Employment has since given details of the work experience scheme for young people and the job swap scheme. Wales can be expected to benefit substantially from them. I am proud to be associated with these measures, difficult as they are to devise, and limited in their application, but they are the human face of the Government in a very personal problem to each and every one who is unemployed.

The most important single factor in ensuring a firm economic base to South Wales will be the completion of the M4, to which in all our public expenditure reviews I have attached particular importance. By the end of next year a further 31 miles at a total cost of £117 million will have been completed, and it is not without significance that it is estimated that the construction work involved the creation of some 5,000 jobs both directly and in the various associated service industries.

I said in the earliest period of my office that I believed that things would get worse before they got better, and we have recently had pieces of very bad news from Courtaulds, for example; nevertheless I believe the tide is turning. Provided we do not relax our zeal to fight inflation I beleve we are beginning to see signs of the dividends ahead. There may be some way to go to the end of the tunnel, but I do see, at least, some light.

This is the information I have—I will buttress it with the details—from my officials who maintain close contact with manufacturing firms through Wales. There are reports of companies expecting to increase recruitment, and suggestions that under-used capacity is being more fully used than hitherto. This is true for automobile component manufacturers. for firms supplying equipment to meet the increased investment by the National Coal Board; in Pharmaceuticals and in the toy industry. There are also multi-million pound investment projects nearing completion now in both the ferrous and non-ferrous sectors. The picture is not all gloomy.

There has also been an increase in the inquiries and visits made by representatives of Welsh-based firms to factories and sites with a view to expansion. Already this year the level of inquiries is equal to that for the whole of the previous two years and the number of visits made exceeds that for each of the past three years. Although at present this involves mainly smaller projects I take it as a good indication of the underlying strengths we have in Wales. On the other hand, though, I must tell the House that the number of visits and inquiries by firms outside Wales unhappily continues at a low level. That is the balance sheet. The steel industry is crucial to the Welsh economy. Production has improved recently in response to increased requirements for stock building and the demands of the car industry.

It is, in a sense, unfortunate that while every closure and every redundancy announcement hits the headlines, much of the improvement which is taking place in industrial investment is not public knowledge, largely because the information is commercially confidential and is given to my officials only on that strict basis. But hon. Members will know that last week I announced an important development in the Heads of the Valleys area—a 45,000 sq. ft. factory at Hirwaun to be expanded by 50,000 sq, ft. to provide over 200 new jobs. In Cardiff the Radiochemical Centre development is well under way; that is another 500 jobs in the pipeline. Also the GKN scheme is nearing completion.

At Newport the Alphasteel project is making very rapid progress. There will be over 200 jobs there next year. At Waunarlwydd the massive investment by Alcoa on new hot and cold rolling mills—the largest single investment by the private sector in Wales at present—will be completed next year, and provide several hundred new jobs. Sony at Bridgend has announced plans to increase its labour force; Matsushita in Cardiff announced two weeks ago a speeding up of its recruitment programme; Girlings at Cwmbran and Pontypool have announced a major investment programme. Those are just some of the schemes which are public knowledge but it is as well to put them in the forefront of our minds.

But there are a host of other encouraging signs—mainly of existing firms taking on more labour within their existing capacity, that is. taking up under-used capacity. Details are confidential, but let me give the House if I may a flavour of what I have in mind, without breaching confidentiality. This is what I am told of a firm in the Rhondda, After a very slack, period earlier this year the order book is now very healthy "; of a large firm in Gwent, Not materially affected by the economic situation in the past two years "; of a firm in the Rhymney Valley, Employment has continued to expand since 1975. Sales have increased dramatically. The order book is lengthening, and now adds up to 10 months work "; of a large firm in Swansea, An increase in the labour force is likely "; of another Swansea firm, The long term demand for products is seen as excellent. Management are hopeful of increasing employment before the end of the year "; of a Gwent firm, There has been a small increase in labour in the past three months, and a further increase of 100 is expected in the next six months"; of a mid-Glamorgan firm in September, The labour force expected to increase by over 100 by the end of the year"; of a Dyfed firm, Now recruiting 40, 20 per cent growth in output in the last year, 30 per cent, growth expected this year "; of a Swansea firm, £1 million investment approved "; of a mid-Glamorgan firm, The labour force is 50 more than at the beginning of the year "; of a Gwynedd firm, The last few months have seen a significant increase in demand "; of a Clwyd firm, A steady increase in employment is in prospect"— and so on.

That is the picture and it is right for us, against the background of the redundancies of the last few months, to bear it in mind. Those are the encouraging signs which I see in the reports from my officers.

Since July 1975 I have been responsible for the provision of selective financial assistance under Section 7 of the Industry Act. The powers are flexible and are administered in ways that meet the particular circumstances and needs of applicants. Loans can be provided on favourable terms, including interest-free periods; alternatively interest relief grants can be paid to subvent commercial borrowings; and for undertakings moving into Wales we can meet a substantial part of removal costs. Those forms of assistance, coupled with regional development grants, make up a very powerful package of incentives to encourage the establishment or expansion of manufacturing enterprises in Wales.

But selective assistance applies not only to manufacturing industries but also in certain circumstances to service industries. Indeed, I recently announced revised and much more generous grants to encourage the growth of employment in service industries in the assisted areas. This was greatly welcomed.

There has been a decline in the number of applications for assistance in comparison with earlier years, and the average size of projects covered by the applications is smaller than a year ago. This reflects the general economic situation. An encouraging feature, however, is that, whereas there were 27 applications in 1975–76 for rescue assistance—involving nearly £17 million to safeguard about 6,800 jobs—there are no rescue cases currently under consideration. Although the number and average size of applications has declined, there is still a steady stream being processed. At present there are 60 applications under consideration or for which offers of assistance have been made but not yet accepted by the applicants. The value of the assistance involved in terms of loans or of their equivalent is some £24 million and the number of jobs about 4,500. Even in these difficult days, therefore, there is a good deal happening on this front.

As I indicated, these industrial matters take up a great deal of my time. But I am convinced that far too many firms are not fully aware of the range of incentives that is available. This is a view which is shared by the Welsh Industrial Development Advisory Board. It is my intention, therefore, to mount a publicity campaign, in which WIDAB will participate, to spread the selective assistance gospel. I am sure that there are firms which are now sitting on the fence not knowing whether to go ahead with a project. I believe that the assistance we may be able to make available to them could convince them that they ought to press ahead and, in so doing, create the jobs we need.

Mr. Ian Grist (Cardiff, North)

Would the Secretary of State agree that the best incentive that any industry can have is the right to make after-tax and after-inflation profits of the size of which his party disapproves and always has disapproved?

Mr. Morris

That observation is quite incorrect, as my right hon. Friends the Prime Minister and the Chancellor of the Exchequer have made quite clear. In recent times, the Chancellor has given enormous assistance to industry in his taxation proposals, and I know that this is appreciated by industry. I am anxious that the whole range of these incentives—many of which, as the hon. Gentleman should know, flow from an Act brought into being by the Tory Government—should be made better known to industry and that those who have the decision making in their power should know what is available so that we can create the jobs we need.

I turn to exports. I am also glad to be able to say that while home demand in many sectors is slack our Welsh exporters are continuing to do well. More and more firms are joining the growing number of export missions from Wales, and I have asked my industry department to give very high priority to helping firms to boost exports. This is of crucial importance, of course, in the national interest. But it is also of vital importance to the firms themselves, in that increased exports at profitable prices will enable them to keep going in otherwise difficult times, and the more they export the greater is the likelihood that they can increase employment. Indeed, I believe that when as at present, there is not a great deal of movement of industry into the assisted areas one of the quickest ways of creating extra jobs in these areas is via increased exports.

Firms which are to the fore in the export business are found in every part of Wales. They include the following firms. Aluminium Wire and Cable Company of Swansea, which my right hon. Friend the Prime Minister in company with my hon. Friend the Member for Gower (Mr. Davies) visited earlier this year, has through sheer persistence and resourcefulness secured an order worth £5½ million for 1.4 million metres of cable for Abu Dhabi which will provide the company with work for two years.

Wallace Evans, consulting engineers of Penarth, will lead a team of four British firms, including the Cardiff-based quantity surveyors, I. E. Symonds, on a Saudi-Arabian programme for building 97 hospitals worth £2,000 million. Thomas Hoskins, a small Cardiff manufacturer of specialised vehicles, has won a contract in Iran for mobile veterinary clinics. Doncasters of Blaeavon, which makes highly technical forgings for gas turbine engines, has secured German and French business against very strong international and local competition. BICC at Wrexham has recently won orders for power cables worth £5 million from Qatar and £4£ million from Saudi Arabia. There are many more which are equally successful.

On 25th November there will be a major conference on exports—the Exports Dynamics Conference—held in Barry with Sir Frederick Catherwood, Chairman of the British Overseas Trade Board, in the chair, supported by other members of the Board, including His Royal Highness the Duke of Kent. The basis of the conference—the first of its kind ever held in Wales—will be the case studies of four leading Welsh exporters of varying size and different industrial sectors which have agreed to present their export experiences, warts and all, for debate and questioning in front of representatives of 300 companies who have been invited along. The object of the conference is to provide an opportunity for firms to learn from each other and to help each other. I am confident that many participants will benefit a great deal from the occasion; and as the firms benefit so, too, will Wales.

This year, of course, has seen the Welsh Development Agency swing into action. On 1st January the Agency took over the ongoing responsibilities and work in hand of the Welsh Industrial Estates Corporation and the Welsh Office's own Derelict Land Unit. This is ongoing.

Since then, the Agency has more and more put its own stamp on these activities.

The Agency also has now responsibilities. It can make grants to improve the environment and with my consent has made such a grant, in association with the Job Creation Programme, to the Blaenau Gwent Borough Council. It also has a duty in the field of promotion on behalf of the Principality, and here it is working in close consultation with the Development Corporation for Wales. But its most important new function, however, is the support, whether financially or otherwise of new industrial development. Roughly 100 inquiries have been received in the first 10-month period and, as a result, 20 schemes are or will shortly be under active consideration. This is an interesting commentary on the view which private industry takes of the Agency, and it is a view quite opposite to that forecast by some hon. Members opposite.

The Agency has been concerned to build up its resources of staff with expertise in investment matters, and with experience of industry and commerce. This will enable it increasingly to seek out new opportunities for investment.

This week the Agency announced that it will develop an area at Rassau which will provide up to 100 acres for industrial purposes. The development will be phased according to the rate at which space is taken up, and it is intended that factory building should commence as soon as the first 30 acres have been prepared. Eventually the area to be developed will provide about 500,000 square feet of factory space which could accommodate about 1,000 jobs

Mr. Nicholas Edwards (Pembroke)

At Welsh Question Time on Monday the Secretary of State sought to give the impression that 1,000 jobs had been created by this action and that the figure would rise from 1,000 to 3,000–4,000. Will he confirm that what has happened is an administrative change in planning arrangements at the site and that not one single job has been created?

Mr. Morris

The hon. Gentleman must do his homework and follow what is happening at Blaenau Gwent. Perhaps he has never visited that place.

Mr. Nicholas Edwards

Answer the question.

Mr. Morris

I do not know whether the hon. Gentleman is aware or understands what is happening. Perhaps he should visit Blaenau Gwent and find out for himself.

Mr. Nicholas Edwards

Answer the question. The Secretary of State is being totally irrelevant.

Mr. Morris

The hon. Gentleman must not behave in this unseemly way. He must now behave himself.

Mr. Nicholas Edwards

Answer the question.

Mr. Speaker

Order.

Mr. Morris

I wish that the hon. Gentleman would behave himself as if he were a Member of the House of Commons and not on the barrack square. If he did behave himself he would know that on Monday I said that the Welsh Development Agency had taken an important decision. The planning aspect has been resolved. The Development Agency has said that it will go along with a partial development of the site. There is a great deal of work to be done and it will mean the investment of millions of pounds so that in due course the factories can be built. The hon. Member for Pembroke (Mr. Edwards) knows that an announcement on Monday cannot create a single job within a matter of days. That was not the impression that I gave the House and if the hon. Gentleman did not live in cloud-cuckoo land he would know that to be the case. The hon. Gentleman must behave himself.

Mr. Nicholas Edwards

It is Mr. Speaker's job to keep order.

Mr. Morris

This is an important decision by the Welsh Development Agency. I hope that the hon. Member for Pembroke will do some homework and that he will realise the importance that the people of Blaenau Gwent attach to the development. The decision has been welcomed by the people there. They need the jobs and the tragedy is that his Government made no serious proposals to ensure that jobs were brought to the area. Under them the area would have been allowed to die. I shall certainly not allow that to happen.

The decision will help to bring new hope to the area and it will show other areas which have to suffer the problems of industrial rationalisation in a practical way the force of my comment on 21st March 1974, that the Llantrisant decision should not be seen as a negative one, but that there must be a renewal of our commitment to enhance and develop the existing communities which have shown a remarkable resilience and a greater potential for industrial development than was thought possible some years ago.

Mr. Jeffrey Thomas (Abertillery)

Does my right hon. Friend realise that the people of Gwent and of North Gwent in particular are extremely grateful for his announcement on Monday? It will in due time provide much-needed jobs in the area.

Mr. Morris

I am grateful to my hon. and learned Friend, who has followed this matter with interest and has added his advocacy, as have my hon. Friend the Member for Brecon and Radnor (Mr. Roderick) and my right hon. Friend the Member for Ebbw Vale (Mr. Foot).

I return to the remarks made by the hon. Member for Pembroke a few minutes ago. He claimed that I said that the decision has created new jobs. The Hansard report has now been brought to my attention and I find that I said: That is a significant development that will allow for more than 1,000 jobs in the first phase and eventually 3,000 lo 4,000 jobs."— [Official Report. 1st November, 1976; Vol. 918, c. 944.] The hon. Gentleman is misleading the House.

Mr. Nicholas Edwards

The Secretary of State accused me of having drafted my question before I had heard the announcement which gave a clear implication that these jobs were already on the line. He was attempting to mislead the House because those jobs are over the horizon and we do not know when they will appear.

Mr. Morris

The hon. Member should read Hansard and when he has done that I hope that he will apologise to the House. I invite him to familiarise himself with the problems of Blaenau Gwent and compare what we are seeking to do to bring new life and new hope to the area with what his hon. Friends did and would have done if they had been in power.

Turning from the town to the country we have seen this week the Development of Rural Wales Bill further on its way to the statute book. It is a matter of pride to me that in my short period of office two important and unique pieces of economic and social legislation for Wales have been brought to the House. It has never happened before and I want to thank my two Under-Secretaries of State—my hon. Friend the Member for Flint, East (Mr. Barry Jones) for guiding this last Bill through Committee, and my hon. Friend the Member for Rhondda (Mr. Alec Jones), who did a great deal of the preparatory work and consultations. I regret, as I am sure he does, that he was not able to play a part in the Bill.

It is no good the Opposition pouring cold water over this Bill as they did to parts of the Welsh Development Agency Bill. Their record in office, having killed the Rural Development Board, was sterile and barren, and all mid-Wales knows it. As I am sure every person in mid-Wales knows nothing was done between 1970 and 1974. Everyone who knows and understands the area, who lives in mid-Wales and knows the problems realise that we have done something. We are putting on the statute book an important measure which will in time bring new hope to mid-Wales.

I turn to another of our major industries—agriculture. The prolonged drought came as a severe blow to Welsh farmers, and everywhere it was a grim picture to witness our sunbaked fields for endless weeks. Fortunately with the coming of the rains earlier fears of a grave shortage of fodder this winter, such as the industry suffered two years ago, were abated. The House will know the measures announced by my right hon. Friend the Minister of Agriculture, at the beginning of last month to assist those sectors of the farming industry most severely affected.

The measures should be of particular benefit to Welsh farmers, because they are concentrated in the livestock sector which is the mainstay of our agricultural production. The increase in the milk guarantee will be of direct assistance to our dairy farmers; and the increase in the guarantee for fat sheep is a realistic recognition of current market prices and will further strengthen confidence in that sector. We have also relaxed the rules relating to beef cow subsidy to assist those who because of the drought, temporarily reduced the size of their herds. We also propose to increase—by an additional 20 per cent, of the cost for a 12-month period—the grants under the Farm Capital Grant Scheme and the Farm and Horticulture Development Scheme to encourage the installation of on-farm water storage.

I hope that this doubling of the rate of grant under the Farm Capital Grant Scheme and the lifting of the Farm and Horticulture Development Scheme rate from 25 per cent, to 45 per cent., will be accepted as a genuine—indeed, generous—effort by the Government to help those farmers who this year were sorely hit by failing water supplies. I hope that, in the affected areas, our farmers will take full advantage of this very substantial increase in the aid available.

We have to acknowledge, of course, that the drought caused a serious setback on our road to recovery. But it was a temporary setback only and there are clear indications that the industry has recognised it as such. The milk industry is climbing back and preliminary reports for the beginning of October suggest that, in comparison with the corresponding period last year, production has almost caught up again.

There are other clear signs that, despite its recent difficulties, the industry is not lacking in confidence. Market prices for store as well as fat cattle at Welsh markets are being very firmly sustained, and the suckled calf sales have so far been very good. In the sheep sector there is a growing interest, which I welcome, in the benefits to be obtained from fat lamb production. This is very encouraging. More than 60 per cent, of all lambs produced in Wales are now being fattened and are attracting prices well above the guarantee. Firm prices are also being returned at the autumn sales of breeding ewes and lambs and this should give encouragement to our sheep farmers.

If further evidence of the industry's underlying confidence were needed, it can be seen in the increasing recognition of the benefits to be gained through investment associated with the Farm and Horticultural Development Scheme, the conditions of which were simplified this summer, when the range of eligible items was extended. The agricultural advisory services have made a special effort to advise farmers about the scheme, and this has led to over 800 applications being submitted in the six months ended 30th September 1976.

Generally, therefore, the picture on the agricultural front now is much brighter than we had expected a few weeks ago. Difficulties remain, of course. But I am convinced that the broad outlines for selective expansion which were set out in our White Paper "Food From Our Own Resources" are as realistic today as when they were published, and it will continue to be our aim to bring about conditions in which that expansion can be achieved.

Lastly, it is as part of my concern for employment that I briefly turn to education. That there is more to education than in this context I would be the first to claim. But I am concerned—and I share this concern with my right hon. Friend the Prime Minister—that education, which accounts for 70 per cent, of the current expenditure of county councils hi Wales, should provide all the children of Wales with the means of sharpening then- talents, and drawing out the resources that were given to each of them, mitigating whatever inherent disadvantages they may have, not only so that their lives will be richer but so that they are equipped to play a full part in society.

Local authorities throughout Wales are carrying out their reappraisals of expenditure in this field. The Government have quite properly set out guidelines for local authorities in relation to current spending on the various services they provide, but it is not for us to determine their priorities. Local education authorities have wide discretion, and this gives them considerable scope for assessing and meeting local needs within the limits of their resources, bearing in mind certain minimum standards prescribed in statute or in regulations. But side by side with this freedom goes the responsibility indeed the painful duty—of determining priorities at times of pressure upon resources. The decisions that have to be taken by local education authorities this year are difficult. Account will have to be taken of statutory obligations, of the already difficult teacher employment situation, of the legitimate interests of parents, but above all of the educational needs of our children.

The teachers of Wales have given, and continue to give, devoted and inspiring service to our communities. But, however great the devotion or the improvements in buildings or facilities, it is right to question from time to time our standards and achievements. Our aim is to ensure that our children become both literate and numerate, that they acquire the basic skills, knowledge and reasoning power needed in today's world so that all their lives may be fuller.

There is room for discussion about how we should seek to achieve this. My right hon. Friend the Prime Minister has lanched a national debate on this vital issue, and it will be my aim in the coming months to try to ensure that the debate in Wales is constructive and purposeful. One aspect of this is the need to link the activities of our schools as closely as possible to the realities of present-day life. Surely no one can be content with a situation in which—I take this only as an example—the numbers of young people in Wales offering mathematics and French at O level have actually fallen sharply since 1970. Our economic future as a country depends on our ability to make and sell the products needed by the world. Without scientists, technologists and engineers we shall be unable to design and manufacture those products. Without a knowledge of modern languages it will be more difficult to sell them abroad.

It is entirely right indeed, essential—for the school curriculum to be drawn up with a proper appreciation of these facts. That is why I have arranged for every head teacher in Wales to receive a copy of the remarks on this subject which I delivered at the official opening of Bryn Elian School, Colwyn Bay, last month. We are not advocating centralised State control of the curriculum or diminished freedom for constructive developments in teaching methods. But teachers will, I think, recognise that though their own contribution to the debate will be of major importance the views of our universities and colleges, of both sides of industry, of professional and learned bodies, of the Government, and, not least, of parents have also to be taken into account. It is my hope and belief that out of this debate there will emerge a clear consensus on the role which the schools in Wales should be performing in the last quarter of the twentieth century.

I began by indicating that I would be selective in my themes. I am sure that I shall be criticised for that. Hon. Members on both sides of the House will, I know, raise a whole host of issues which concern their constituents, and my hon. Friend the Under-Secretary hopes to deal with them in due course, but I thought it right on this occasion to try to bring together the various strands to try to weave a picture of the economy of Wales as a whole.

There are so many in all walks of life, and in the public service in particular, who serve Wales. I am grateful for the co-operation that I receive in the performance of my office. Whatever our differences, we all seek to serve the nation of Wales.

11.49 a.m.

Mr. Nicholas Edwards (Pembroke)

I, too, intend to bring together strands to weave what I suspect may be a rather different picture. First, hon. Members throughout the House will wish to join me in congratulating those who were elected to this place last night and in thanking them for giving us such clear guidance on the people's views about the performance of this Government.

Mr. If or Davies (Gower)

I should be obliged if the hon. Gentleman would include in his congratulations the winning of a county seat by a Labour candidate in my constituency.

Mr. Edwards

I am sure that the election of any person is a matter for congratulation. I am glad that the hon. Gentleman can find a small crumb of comfort in that.

I should like to welcome back to health and to his place in our discussions on Welsh affairs the hon. Member for Rhondda (Mr. Jones). We do not always agree with the Under-Secretary, but we respect him and we are grateful for his courtesy and for the agreeable way in which he and his fellow Under-Secretary always seek to respond to discussions in Committee. The Secretary of State is fortunate to have two such colleagues to sort out the difficulties that he so often creates for himself.

I take this opportunity of paying tribute to those who have given great public service in Wales. Lord Brecon made an immense contribution to Welsh public life and was untiring to the end in the most difficult of jobs, in spite of the grave ill-health which beset him. We mourn his passing. Fortunately, the other Welshman I wish to praise is still with us, and I would first say this of Mervyn Jones. If his successors do half as much with half the enthusiasm, good humour and success as he has achieved for tourism in Wales we shall be very fortunate.

I turn now from people to procedure, to protest, as we are entitled to do, at the shabby way in which Welsh Members, and therefore Wales itself, have been treated for the second year running. The suggestion that our debates might again be divided was intolerable. The uncertainty about the starting time caused hon. Members inconvenience, and to have the debate on a Friday has added to that inconvenience as is clearly evidenced by the fact that fewer than half the Welsh Members are in their places today.

When I first came into the House our Welsh day debate was usually held on about 1st March. I cannot understand why it is now always slipped in at the tail end of the Session in this shabby way, so that we are very lucky if it gets slipped in at all.

Listening to the Secretary of State describing the task he inherited, the difficulties that he faces and the immense problems which lie ahead, it is hard to remember that his Government have been in power and he has been in office for two years and eight months. Yet I suppose that it would be unfair to blame him too much for the tragic condition of the Welsh people. One does not blame the cabin boy when the ship goes on the rocks. The responsibility rightly lies primarily with those who matter—the captain and the mate. We blame the Prime Minister—I was going to say first and foremost, but I suppose that we blame his predecessor even more. We blame the Chancellor. We blame first those who carry weight and influence in drawing up Labour Party policy.

The Secretary of State cannot escape unscathed, however. He is pleased enough to accept the glory of his office and he must accept the responsibilites that go with it. Let us make no mistake, the responsibility for the present disastrous state of the Welsh economy is that of the Government. It was they who put party before country in 1974, and it was they who abandoned the public expenditure cuts introduced by Mr. Barber, as he then was, in the wake of the oil crisis. It was they who let public expenditure rip in the wake of the election and it was they, not while in Opposition but with the knowledge of eight months in government, who talked of inflation at 8.4 per cent, after they had served eight months in office. It was they who, in their Welsh manifesto in October 1974, boasted of "strong action to strengthen the Welsh economy" and said that "the Labour Government would continue to build on the firm foundations which it has already laid". "Firm foundations, not a bleak inheritance was what they offered the electorate. They told us that they had" pressed ahead vigorously in attracting new manufacturing industry to Wales". They talked of giving "further impetus to the task of developing the valleys and improving the quality of life for those living in them. This would mean providing even more jobs and a wider range of jobs", they said. That was the promise and the expectation in October 1974.

The reality, two years later, is that male unemployment in the valleys is almost 10 per cent. Is that what the people of Wales were led to expect? Did Mr. Gordon Parry, as he was then, tell the electorate in Pembrokeshire in October 1974 that two years later, under a Labour Government, 4,213 people would be thrown out of work—more than double the figure in any previous October between the outbreak of war and the October election? Not even I imagined that a Labour Government would put 20 per cent, of the population of Milford out of work, or leave nearly 17 per cent, of those in Pembroke Dock unemployed. It is the same sad story elsewhere in Wales. The facts and the figures are a shocking condemnation of the Government. They said that we would do it, but it is they who have done it.

The tragedy is that the sacrifice has has been entirely wasted. The immediate impact of the measures needed to solve our economic crisis may well be to increase unemployment for a time. But once it is realised that a Government mean business, the firm expectation that inflation will be beaten is likely to restore investment and modify wage demands, so that instead of the nightmare we now face we would have—sooner than many people realise—rising production, increasing job opportunities and expanding pay packets.

I said that the sacrifices had been entirely wasted and I referred to a nightmare. The nightmare is that we have rising unemployment and no prospect of inflation being defeated. The nightmare is that action will have to be taken when unemployment in Wales is almost 80,000. It could have been taken a year ago, when the figure was 9,000 fewer. It could have been taken in October 1974, when it was 39,000 fewer. A less irresponsible Opposition than Labour then was would have supported and maintained the corrective measures taken in October 1973, when unemployment was only 32,000. Now the operation has to be performed with the patient already gravely weakened. Let the cancer go unchecked and avoid what needs to be done and the job is made much more difficult, with much less chance of success.

Certainly the recent fall in total unemployment gives no grounds for complacency for the future. It has come about largely as last year, because school leavers have found jobs, but the underlying trend is still rising. Industry in Wales deserves our congratulations and thanks for the way in which it has taken on the school leavers, but the fact that it has done so cannot disguise the gloomy prospects we still face.

During Question Time on Monday I referred to coming redundancies in West Wales. There is the certainty of Courtauld's closures. There is the sad fact, described by the Welsh Industrial Development Advisory Board, that the initial impetus to secure new projects for the areas hit by steel closures has not been maintained. There is the fact that the impact of the pay-roll tax, which was imposed in July, and which will cost Welsh business about £60 million, has not yet been felt. Now there are the devastating consequences of the penal unprecedented interest rates imposed by the Government. All this takes place against a background that the present upturn in the world economy may well reach its conclusion by the end of next year and that before then we shall face an increase of at least 10 per cent, in the price of oil.

To have thrown so many out of work is a shocking failure of government. To have done so without achieving the necessary restructuring of the economy makes the failure doubly reprehensible and doubly tragic. The Government argue that to cut Government expenditure will endanger the social fabric. Surely nothing is more likely to endanger the social fabric than a double failure of this kind, coupled with a growing realisation that the situation will get worse. The Government used to argue that the sacrifice was worth it because the inflation rate had been halved. The Secretary of State fell back on that argument this morning.

The reality is that the inflation rate is still much higher than it was when the Government came into power. It is still 50 per cent, higher than the 8.4 per cent, boasted of by the Chancellor. The rate is still double that of our main competitors and is now likely to go on running at 15 per cent, or more throughout the next year. The Government have recently taken some comfort—the Secretary of State was able to see a glimmer of light at the end of a long tunnel—from the fact that industrial production in Wales has shown an upturn from the dismal figures of 1975, but the index is still substantially below its lowest point during the previous three years and prospects are varied.

The Secretary of State gave us the highlights. Building and construction is in a dreadful state with nothing on the horizon. Transport is doing very badly and sub-contracting engineering very poorly. Although firms concentrating on exports have done significantly better, there is no sign of any upturn in the home market generally. For every good bit of news listed by the Secretary of State it would be equally possible to list bad news. Most worrying, the steel industry, after a slight recovery, seems to be on the downturn again. Certainly the order book for the first part of 1977 is disappointing.

The steel industry is operating in a world market that is in surplus but there is reason to think that the home market is being affected more directly as a result of destocking due to the high interest rates imposed by the Government. Against this background it is no surprise to discover that investment is at an unprecedentedly low level. The number of expansion projects in Wales in the year ending 31st March 1976 was lower than in the previous year by 40 per cent. The Welsh Industrial Development Advisory Board reports a low level of applications in respect of expansion projects and states that the number of applications received during the period January to March 1976 was below that of any earlier three-month period. It was significant that the Secretary of State had to fall back rather desperately on inquiries from firms inside Wales. The number of inquiries from firms outside Wales seeking industrial locations there is 221 so far this year. Compare that with 855 in 1973, 635 in 1974 and 315 in 1975 and the story is all too clear.

The same pattern is to be seen in the number of official visits—again sharply down over previous years. The Secretary of State spent little time telling us today what he was doing about that. He talked of meetings with industrialists to encourage exports, but the right lion, and learned Gentleman told us remarkably little about what the Government are doing. He fell back on talking about the development agency and the Rural Development Board and advance factories. All these things are totally irrelevant while the economic ship is being steered with such irresponsibility.

All these things may be good in themselves but they are completely worthless while the economy is being mismanaged. This is the first speech that I can recall the Secretary of State making in which he has not boasted about advance factory building. The reason may become clear in a moment. Advance factory building has been proceeding rapidly. But it is easy to understand why members of the development agency speak rather bitterly about the obligations they have inherited to build even more of these factories regardless of whether they are of the right kind, in the right place or whether there is the slightest prospect of their occupation in the foreseeable future.

The Secretary of State boasts that he has authorised 960,000 sq. ft. of new advance factory space since February 1974. The significant fact is that only 185,00 sq. ft, have been formally allocated. Even more staggering is the fact that out of the total number of 132 advance factories completed since 1965, 44 are currently vacant. That represents one-third of all those advance factories built. That is not the whole story. A total of 53 Government factories are now vacant in Wales—14 of them having been empty for a year or more.

Perhaps it was a little unkind of me last week against a background of 27,000 redundancies in Wales this year, to ask the Secretary of State how many jobs had been provided in Wales by firms occupying Government premises for the first time during the year. If it was unkind it was nothing like as unkind as the right hon. and learned Gentleman's answer was for the unemployed in Wales. The Secretary of State said that 701 jobs have so far been produced in 1976. Worse, only 1,150 new jobs have been provided by manufacturing firms opening in Wales since March 1974. It is a story of financial irresponsibility, declining investment and economic decay.

Before I turn from economic affairs and the gross mismanagement of the Welsh economy by this disastrous Government, I shall deal with a suggestion made in the Western Mail Economic Review that Wales should be spared the cuts in public expenditure which I believe are necessary for the economic recovery of the nation. 1 am sure that it is wrong to base the argument simply on the fact that the percentage of people employed in the public sector in Wales is higher than in Great Britain as a whole. That is to a considerable extent due to the importance in Wales of the steel and mining industries. When we talk about cutting public expenditure we should be thinking primarily of cutting the unproductive sector. The CBI is absolutely right to emphasise in "The Road to Recovery" that cuts on commercially justifiable capital expenditure in national industries must be avoided. The theory that Wales cannot switch its public sector employment into an expanding private sector is particularly dangerous because such a large part of Wales is economically dependent on small businesses.

It is the small businesses that are being so gravely damaged by the irresponsible spending policies of the Government. It is this sector that is being forced to lay off so many people. This is clearly borne out by the unemployment figures for Wales outside the industrial valleys which run at levels of 15 per cent., 16 per cent. and 17 per cent, in constituencies like that of the hon. Member for Cardigan (Mr. Howells). The small business sector has a vital interest in seeing the burden of Government expenditure and administration eased. Wales has at least as important an interest as Britain as a whole in seeing that the country lives within its means.

We must not elude people into thinking that we can be spared the impact of necessary measures. These measures are necessary to avoid the prospect of 3 million unemployed and the collapse of social institutions proffered to us by the Chancellor. What is true is that Wales has certain needs and problems that in any allocation of priorities must be taken into account. Welsh industry would regard the maintenance, and indeed the improvement, of an adequate transport system as a hight priority to be kept even in a period of austerity.

Equally, we cannot ignore the changing structure of industry and the need to cushion the impact of all these changes. We share the Secretary of State's views on this point and it is utterly misleading for him to pretend otherwise, as he did earlier today. It was we who established the task forces in Blaenau Gwent and set on the road the work that is now going on. If our object is to reduce the numbers employed in the public sector—something that can be achieved substantially through natural wastage—we must actively be seeking to stimulate the conditions in which industry can take on people as it grows, in confidence that inflation will be halted and that it can look forward to a period when profits can be made and maintained.

My argument about capital expenditure for the nationalised industries has particular relevance to the investment strategy of the British Steel Corporation. A year ago in this debate the hon. Member for Gower (Mr. Davies), whom I am glad to see in his place today, pointed out that Indecision and delay in revitalising the British steel industry has already given our overseas competitors a huge lead in the international race."—[Official Report, 12th November, 1976, Vol. 899, c. 1565–6.] He urged the Government to give Port Talbot the tools to get on with the job by implementing the BSC strategy. He pointed out that failure to do so could be disastrous to the South-West generally and to the tin-plate industry in particular. On Monday when pressed by me on this matter the Secretary of State was characteristically less than frank, as he was again today. He knows perfectly well that the go-ahead has not been given for extra steel-making capacity, and that without that extra steel-making capacity the expenditure of £250 million for a new strip mill makes very little sense.

Mr. John Morris

Rubbish

Mr. Edwards

The Secretary of State says "Rubbish". I hope that those who know the industry and the BSC will take note of his assessment of the situation; I am sure that the hon. Member for Gower knows that it is not their view.

At a time when the Government castigate the private sector for a failure to invest, it is extraordinary that they should take two years and 8 months without taking the vital investment decision about Port Talbot and Shotton.

Mr. John Morris

The hon. Gentleman should know, or should find out, that there is unanimity in West Glamorgan—among the trade unions, the local authorities, everyone I talk to—that the Government's firm offer of £350 million for investment should be taken up by the BSC. Despite the protestations to the contrary by the hon. Member, we are concerned with employment generally and with the social consequences of unemployment, as I am sure the hon. Member for Flint, West (Sir A. Meyer) would be the first to agree. We have given the go-ahead to the BSC for that part of the investment which does not prejudice the reappraisal of development and increased steel-making capacity, wherever it may take place. We want that to go ahead, and I hope that very soon we shall have the results of the inquiry by the BSC.

Mr. Edwards

The right hon. Gentleman talks about there being unanimity in West Wales. I have the report prepared by the West Glamorgan County Council giving the views of the West Wales Development Steel Committee, which states that £250 million for a new strip mill is seen by BSC as being inextricably linked with the expansion to 6 million tons optional on BSC. Without the extra steel-making capacity an expenditure of £250 million on a new mill would only serve to increase the price of hoi rolled coil". So much for unanimity.

Mr. Ifor Davies

I am a member of the West Wales Development Steel Committee, and at a recent meeting the unanimous view was expressed that the BSC should be pressed to accept the offer made in the House last July by the Secretary of State for Industry of an investment of £250 million, which the hon. Gentleman has criticised, for the new mill at Port Talbot.

Mr. Edwards

It is characteristic of the Government that they should press the BSC to continue with half an investment decision regardless of the cost impact on the Corporation at a time when it faces additional costs of £30 million as a consequence of the devaluation of the pound sterling, as stated in the Press this morning.

During the debate on 12th November last year, the Under-Secretary of State gave hope of a decision on Shotton before the end of 1975. Here we are, a year later, with uncertainty as great as ever. What a way to run a country.

The Secretary of State referred to agriculture—another industry vital to Wales. What he failed to say was that nothing has been done to translate the White Paper into reality, though surely at a time when world food surpluses are disappearing and we as a country are virtually bankrupt, with our credit exhausted, it should be a central objective of Government policy to do so. To reduce the import bill is at least as important in the fight against inflation as to hold down consumer prices.

The March 1976 sample survey showed declines in important sectors of Welsh agriculture. The cattle breeding sector and the dairy herd showed continuing decline, and the beef herd decreased by 7 per cent. over the year a fall that is having its impact now. It is clear that without a long-term strategy, operating under the handicap of a penal tax structure, faced with the 45 per cent, distortion of the green pound and with a situation in which, as we approach the end of the transitional period, fair competition does not exist, Welsh farmers cannot make the contribution that they should to the national economy.

The Secretary of State should be concerned about a situation in which farmers are getting high prices in the markets this autumn, as he rightly said, but largely because of the decline in stocks due to the policy of the Government last year. That is not a healthy position for the future.

The present distortion of the market is the direct responsibility of the Government. It has destroyed the value of the pound sterling. No one imagines that the present grotesque misalignment of the green pound can continue indefinitely. Our European allies will see to that if we do not. But if we go on putting off the evil day the eventual correction will be much more painful. A start will have to be made at some time, and it is as much in the interests of the British housewife as of the farmer that the process should not be too long delayed. I find it hard to see why the Government have been so obdurate about what could have been the first phase of a step-by-step realignment, because the impact in terms of prices would have been minuscule.

I turn to the Government's housing policy in Wales, which lies in ruins. In the housing debate in the Grand Committee in March I suggested that the strategic approach had in any case been wrong, that the policy followed in this country for so long of colossal expenditure, indiscriminate subsidies, huge local authority building programmes and the destruction of the private rented sector had failed to solve our fundamental housing problems, had produced limitless queues of people waiting for subsidised housing, an overall surplus in the United Kingdom as a whole, combined with pockets of acute shortage, a degrading system of house allocation and massive numbers of houses still judged unfit. I urged an alternative strategy.

It is clear from recent statements by Ministers that at least part of the analysis is now accepted by Government and we are to see major changes of policy, a reduction of expenditure, and sharp increases in rents. My criticism today is concentrated on the reckless and ill-judged manner in which the Government have implemented their past policy and of their accounting of it to Parliament, which, to put it mildly has been less than frank.

In 1974, the Government, through the mouth of the lion. Member for Merthyr Tydfil (Mr. Rowlands)—now Minister of State, Foreign and Commonwealth Affairs—told the local authorities to spend, spend, spend and break the Bank". They did so to such effect that the Government had to dole out an extra £30 million within two weeks of the publication of their White Paper on Public Expenditure and a further £20 million for 1977–78. The Secretary of State reveals his financial irresponsibility by saying "Jolly good".

So much for the White Paper, so much for the control of public expenditure, so much for the suggestion that the whole think was part of an intelligent, planned programme. The local authorities were told to formulate long-term programmes. The Secretary of State said on 10th March that there will be no cut in the council house building programme". He said that the local authorities were to have the greatest flexibility in planning their programmes and that they should decide for themselves what to do". Repeatedly warned in the debate that there would be a massive cut-back in the housing programme in Wales in the years ahead, the Under-Secretary of State, in replying, stated categorically that '… no reduction is planned in house building.' That is a statement of Government policy".—[Official Report, Welsh Grand Committee, 10th March 1976; c 8–49.] On 23rd July Welsh local authorities were told that for the time being no new contracts were to be let. They were warned that if new building remains unchecked, the Welsh provision would be significantly overspent". On 11th August the suspension of letting was eased but local authorities were asked to seek specific Welsh Office approval for tender acceptances. It was estimated that only £5 million remained for allocation and local authorities were asked to submit bids.

On 27th September they were told: It has been necessary, therefore, to limit severely the schemes allowed to proceed". On 30th September they were told of a new block grant system and new freedom to allocate priorities within totals to be kept rigidly within the White Paper—that is, the White Paper plus the extra £20 million and £30 million which had been doled out a few weeks after its publication.

At present there is total uncertainty about the way in which the new formula will work. The general expectation among Welsh local authorities is that they will be able to complete about 60 per cent, to 70 per cent, of what they had planned to do next year. So that even if the Government can claim that at present there has been no cut-back in overall expenditure on house building, in the last six months local authorities have had to face detailed control and a substantial reduction of their previous plans. That was not the picture given by the Minister in the last debate in March.

But worse is clearly still to come. This is where I charge the Government with lack of frankness. On Monday the Undersecretary was still talking about maintenance of the building programme, and he took refuge in the £30 million that has been added to the programme in 1976–77 and the £20 million added for 1977–78. I shall have more to say about that in a moment. What I say now is that the repeated statements that there will be no cut-back in local authority house building is palpably untrue. Either that, or the public expenditure White Paper is untrue. The Government cannot have it both ways.

The PESC total for local authority capital expenditure on housing in 1976–77 is £104.9 million. For 1977–78 the figure is £88 million, including the additional £20 million which has been announced. For 1978–79 the figure is £65 million and for 1979–80 it is £63 million, which, incidentally, is lower than any figure in the last six years. Only a charlatan or a fool could pretend that whatever use is made of block budgeting one can get as many houses for £63 million as one can get for £104 million. It is, in fact, a cut-back of 40 per cent.

The realities are that Wales is faced with a considerable fall in local authority building, an even more drastic cut in local authority improvements, and a catastrophic reduction in local authority lending. In March, I pointed out that the cuts in Wales would be more severe than those in England. The Secretary of State replied that he would not expect them so to be. Yet the facts are as I explained them during the debate in Welsh Grand Committee in March. Welsh housing expenditure will fall by 15 per cent, whereas United Kingdom expenditure will rise overall by 1 per cent. By 1978–79 local authority lending in Wales will be down by 67 per cent, while in England it will fall by only 14^ per cent, compared with 1975–76. Investment in new local authority dwellings will be cut sharply in Wales while in England it will remain unchanged. Subsidies will be down by 7 per cent, in Wales. In England they will be 2 per cent. up.

We are as entitled today as we were last March to an explanation why Wales should be treated so much worse than England, particularly as per capita expenditure on housing is already below the British average.

The Welsh Office's administration of its housing policy takes us back to where we began. It is directly linked with and helps to explain the economic disaster we are facing. It is a story of economic folly, incompetence and deceit. The Government started with bland promises and reckless undertakings. For example, in October 1974 they said they would "establish a new sound basis for financing mortgages and assisting home buyers". That looks pretty sick now. They also urged local authorities to spend, spend, spend and to break the bank while hitting private housebuilding and improvements on the head. They encouraged recklessness and imposed no control. Despite the warnings they received, they accelerated violently down the road and then they sharply applied the brakes when they saw the bend which they had always known was there. That is a crazy way to drive a car and an equally crazy way to run a country.

The financial irresponsibility revealed is shocking. The results of breaking a bank are unpleasant for all concerned. That is literally what the Government have almost done—they have almost broken the national bank. The Secretary of State boasts of the extra £50 million allocated to Welsh housing after the publication of the public expenditure White Paper. It should be a matter for shame, not pride, that the Government have lost control of public expenditure in this way. They did not produce the money as part of a planned allocation of priorities, but because they had to stand behind the commitments which they encouraged local authorities to undertake, regardless of the availability of resources.

The best comparison I can make is to compare the performance of the Welsh Office with that of the Crown Agents. In both cases the Government were forced to bail out an organisation because of commitments entered into during a period of total financial irresponsibility. It is because of that kind of financial irresponsibility that we have 15 per cent. inflation, a devastated currency, and 80,000 people out of work in Wales. A Treasury Bench was once compared with a row of extinct South American volcanoes. At least those volcanoes were comparatively harmless. A better comparison for the present administration would be a row of South Wales coal tips—wet, slippery, and dangerous. The trouble with coal tips is that when they collapse they destroy not just themselves but the people round about as well.

For too long the present Administration have damaged and endangered the Welsh environment. Now they should be swept away, before the Welsh people suffer the final political and economic catastrophe.

Mr. Speaker

There are 11 hon. Members who wish to speak in this debate and there are only 140 minutes left for them. I have been working it out. I hope that hon. Members will keep their speeches short.

12.27 p.m.

Mr. Ifor Davies (Gower)

The hon. Member for Pembroke (Mr. Edwards) will not be surprised to hear that I disagree with a great deal of his speech, but he may be surprised that I agree with his opening remarks about the timing of this debate. This is the first time that Welsh affairs have been debated on a Friday. I hope that it will be the last. This is the day when Welsh Members have an opportunity to clear up constituents' problems with local authorities. It is not good enough to set aside a Friday for Welsh affairs. It was a far happier arrangement when Welsh affairs were debated in March—preferably on St. David's Day.

My right hon. Friend the Secretary of State emphasised that the economic situation in Wales must be given considerable attention. The Prime Minister has repeatedly emphasised that the regeneration of British industry is a central feature of Government policy. This has a vital bearing on South Wales as our future is closely bound up with basic manufacturing industries, particularly steel, tin plate and coal. These industries are interdependent and the success of our policies of regeneration of manufacturing industry will depend on the efficiency of these industries.

The British Steel Corporation after a very detailed and protracted study produced its investment strategy a few years ago. This accepted on economic, technological and sociological grounds that the right place to expand was at Port Talbot, if Britain was to keep its competitiveness in the steel and tin plate markets of the world. A further review of the situation was called for by the Secretary of State for Industry in his statement to the House on 19th July. At the same time, he made an important announcement that the go-ahead would be given for £100 million investment in steel making modifications and new coke ovens, together with a further £250 million for the proposed new hot strip mill. It is rather amazing that today—four months after that statement—the offer has still not been accepted by the British Steel Corporation. I do not accept the excuses of the hon. Member. I believe in the old maxim that a bird in the hand is worth two in the bush. I urge the Corporation to give immediate attention to this matter.

As for the workpeople, I attended a recent meeting of the West Wales Joint Development Committee at which it was unanimously decided that, despite the difficulties, the Government's offer should be accepted. This view is also strongly supported by Mr. Bill Sirs, the General Secretary of the Iron and Steel Trades Confederation, who stated in a recent speech in Cardiff, as reported in the Western Mail on 24th September: This investment will give improved quality—and it is quality that sells steel. He gave his blessing to the proposal. 1 deplore the fact that we are now no further forward than when the Government made the announcement last July.

The industry is now approaching a critical position. I intervene in this debate to draw attention to the repercussions on the tinplate industry in particular which has not been mentioned so far in this debate, and which is facing a disastrous situation. It is essential to emphasise that when we speak of development at Port Talbot we are dealing with an issue that affects the whole of industry in South Wales—industry which in one form or another is interdependent on steel. The tinplate industry, above all, is vitally dependent on steel, West Wales having been the home of the tinplate industry for more than 200 years. The Velindre plant in my constituency and the Trostre plant in West Wales stand as proud reminders of our great tinplate tradition.

The key factor is that Port Talbot supplies the hot-rolled coil for the tinplate industry. In the plans for development perhaps more important than the increased tonnage capacity is the absolute necessity to improve the quality of the coil to meet customers' demands. If this is not carried out, it will be no exaggeration to say that this state of affairs will condemn the tinplate industry in West Wales to a slow death.

As the new expertise has progressed in the tinplate industry, satisfying the customers' requirements has become a vital matter and the important issue is that of quality. The fact is that the quality demands of customers are increasing all the time, and in consequence a modern mill designed for the production of hot-rolled coil specifically for tinplate products has become an absolute necessity. Failing this, it is inevitable that the tinplate industry will have to seek coil of the required quality overseas or that tinplate customers will themselves seek new suppliers. In the event of this happening the 5,000 jobs at Velindre and Trostre will be seriously at risk.

In addition, one of the major factories in the area is that of Metal Box in Neath, which is one of the biggest packaging factories in the world, employing over 2,000 people and using large quantities of tinplate from West Wales plants. If tinplate production were to cease or run down for any reason, the fact that Metal Box would have to be kept in production by importing tinplate would be a damaging blow, and the future of many other firms related to the industry would be seriously at risk.

In addition to the local situation, the importance to the national economy needs to be considered, since the approximate value of tinplate production is £260 million per annum. Direct employment in steel and tinplate amounts to over 20,000 jobs with an equivalent dependent number in rail and road haulage, docks, service industries, packaging and construction. Any changes in these basic industries would, therefore, have a multiplier effect on other areas of employment.

It has been estimated by the British Steel Corporation that the construction stages of the proposed development programme at Port Talbot would provide, at peak, 6,000 jobs. A large pool of local construction skills has been established through the initial development of the Abbey Works at Port Talbot and in the development of the BP Petro Chemical complex at Baglan. New development at Port Talbot would provide welcome employment for a large construction work force experienced in large-scale development projects. Without this development it is not possible to foresee any future projects getting under way which would take up such a large pool of labour.

To say that there is concern among the steel and tinplate workers in South Wales is a serious understatement. There is growing fear—so much so that a mass Lobby of Parliament will take place at the end of the month. I submit that in considering the regeneration of our industries priority must be given to our basic industries. Time is not on our side, and I urge the Government to proceed as a matter of urgency to implement the BSC strategy for steel and tinplate.

I am conscious of the social consequences of development at Shotton, and I see the hon. Member for Flint, West (Sir A. Meyer) present in the Chamber. He will know that the Beswick Report made it clear that Shotton has been saved until 1981, and I believe that, in the meantime, we should proceed with maximum investment at Port Talbot and then perhaps in a year or two the Shotton problem may have righted itself. There is no justification for any delay at this stage just becaue we are looking over our shoulders at Shotton.

In view of Mr. Speaker's call for brief speeches, I turn briefly to another matter which has been in the news this week namely, the need to develop and rebuild Morriston Hospital. I understand that on Tuesday a petition was delivered to the Welsh Office in Cardiff signed by a very large number of people from within and outside the medical profession. I personally have received a very large number of letters from constituents. In addition, this morning I received an important message to the effect that this hospital also covers the whole of the Swansea Valley. I am glad to be able to say that the people of the area have demonstrated their steadfast support for the Government by winning yesterday's county council elections for Labour. I am sure that following the Secretary of State's recent visit to the Morriston Hospital he will recognise that its needs are paramount.

The major problem, as the Secretary of State saw for himself, is the general condition of the fabric and services—almost all of which were provided in 1942 as part of the emergency medical services. In addition to the unacceptable conditions of the buildings and services, the accommodation provided is grossly deficient. On the other hand, the hospital is a centre for the School of Radiography and plays a prominent part in the nurses' training programme. It has a proud record of teaching and research and houses the postgraduate centre which has established for itself a high reputation.

I emphasise that Morriston also provides important sub-regional services for the whole of West Wales—for example, neurosurgery, neurology, oral surgery, thoracic surgery, neuro-radiology, and spina bifida. The requisite surgery in some of these specialities is undertaken in operating theatres with no modern means of ventilation or air conditioning. Patients from the theatres have to be transported down steep ramps and corridors, and in some cases through an open covered way.

Despite all the difficulties and shortcomings, this hospital has rendered a service to the community which is second to none. It would have closed long ago but for the great dedication of the staff, and I pay a warm tribute to the nurses and doctors, and particularly to the leadership of Dr. Daley, who is known to my hon. Friend the Under-Secretary.

In the language of priorities and on the essential basis of need, there is an unanswerable case for a greater share of the capital allocation to be granted to the West Glamorgan Health Authority in whose area the hospital is situated. I hope that my appeal will not be in vain.

Mr. Geraint Howells (Cardigan)

I believe that very little can be achieved for the people of Wales by debating their problems in this Chamber. The people of Wales are looking for action, not promises, and the sooner we have a power-based Assembly in Wales, the better. I hope we shall then be able to solve many of our economic and social problems with Welsh Members who care for our nation.

In common with the rest of the United Kingdom, we in Wales are worried about the steadily worsening state of the eco- nomy. On many counts we are a great deal worse off than are many other parts of the country.

It is horrifying to see the unemployment figures creeping up year by year. They have more than doubled in the last three years—from 32,043 to 79,456. This represents 7.6 per cent, of the working population in Wales, compared with the national average of 5.7 per cent. In my constituency the figures show the same alarming trend, and in Cardigan they have reached 15 per cent.

We have all been shocked and saddened by Courtauld's decision to close two major factories in Wales. I hope that the firm will reconsider its decision, because it would be a major blow to as all.

There is a depressing picture in our industrial areas. The latest figures—to the end of 1975—show that finished steel production in Wales has fallen by one-third since 1973. Coal production has improved slowly, but at the expense of increased unemployment, with all the consequent social distress in mining areas, where there is little alternative employment. Welsh Office statistics show that total industrial production in Wales in the first quarter of this year does not match the figure for the first quarter of 1975, which was not particularly good in any case.

As another reflection of the general economic trends, we have seen a steady decline in house building, from a peak of 20,000 completed houses achieved by the Labour Administration in 1967 to an estimated 13,748 completions this year. No wonder many young people turn up at our surgeries, week after week, desperately looking for a house. The priority of any Government should be to make sure that our young people are housed and then, if possible that work is found for them.

The only ray of hope in this gloom so far has been the setting up of a Development Board for Rural Wales, which, as the hon. Member for an important part of mid-Wales, I welcome. The Board offers some hope for the eventual recovery of this region. I congratulate Mr. Emrys Roberts on his appointment as chairman. He has been associated with the area for a long time, knows its problems well, and1 has worked towards their solution for many years. The Government are also to be congratulated on this enlightened appointment.

I trust that the Board will now be able to go about its business of improving the fortunes of mid-Wales and will encourage the much-needed investment in the area. I hope that it will also be able to halt the depopulation which has been taking place in my area for many decades. Since I was at school, I have seen many friends leave rural Wales. I hope that the day will come when they will stay and live happily among us.

I am also greatly relieved that this measure does not seek to interfere with the pattern of agricultural life in rural Wales and that independent small farmers will not be forced out of their farms where they earn their living.

I am grateful for the Minister's assurance that some road improvements are to be brought forward in mid-Wales, but there should be a determined effort to improve the communications, which have been lacking for many years, so that the area can be more accessible to potential investors. As soon as the financial climate improves, new road building and improvements should be quickly implemented.

The rail services in mid-Wales have been mentioned in this House many times. In Wales, we have examples of the two extremes in British Rail. We see the very fast, efficient and splendid new service, with excellent facilities from Paddington to Swansea and, on the other hand, services in mid-Wales with poor rolling stock and minimal facilities. We deserve better treatment than this. Have the Government any plans for the long overdue improvement of rail communications in mid-Wales?

12.40 p.m.

I have referred briefly to some of our problems, including high unemployment and low productivity, but the greatest problem is the disillusionment felt by people in Wales and throughout the United Kingdom towards politicians and Government. They are tired of promises made and never kept, and tired, also, of the constant blaming of all ills on their opponents.

We are talking at great length about Welsh affairs, covering the same ground that we have covered many times before. I am doubtful whether, after all these discussions, there will be any meaningful action taken. It is no wonder that the man in the street is disillusioned with Parliament.

Now is the time to encourage involvement in our affairs, to bring government closer to the people. It is important for our economic recovery to achieve this involvement, because without it we cannot hope to get the improved production that we need. That is why I am such a firm believer in devolution. With the right kind of devolution, we should have involvement right down to community level and we could bridge the great gap which now exists between Parliament and people. I want the Government to produce a separate devolution Bill for Wales—a Bill that gives far more to our people than is indicated in the White Paper.

The Government have underestimated the resentment felt at the discrimination between Scotland and Wales, and our people will reject the half-hearted measures outlined so far.

Turning to my own constituency and to the problems that we have in Aberystwyth, I should like the Minister's assurance, if possible, that every effort will be made to bring the medical staff at Bronglais Hospital up to full strength and to make sure that not all the resources are concentrated at Carmarthen, to the detriment of the very large area in mid-Wales served by the Aberystwyth Hospital. I should be glad also to learn whether there has been any further development in the carrying out of phase two of the extension at the hospital.

I wish to comment briefly on agriculture. I wonder whether the Secretary of State is in agreement with the Minister of Agriculture about the green pound, or whether he feels, as I do, that unless steps are taken to devalue it gradually, the farming industry in Wales will eventually suffer and this, in turn, will adversely affect the consumer. I am sure that the Minister is aware that at present our feed and food import bill has increased by more than 400 per cent, in the past 15 years and that production from the land will decrease. I am wondering what plans the Secretary of State has to increase production from the land and to stop this trend continuing in our part of the country.

As for the methods needed, although I accept that in recent months the Government have brought forward proposals which were acceptable to the agriculture industry, I ask the Minister to reconsider the promises given by the former Minister of Agriculture, who deserves our thanks for his services to British agriculture. During the Committee stage of the Agriculture (Miscellaneous Provisions) Bill, he promised that he would look at the possibility of setting up a land bank. Has the Secretary of State any views on the setting up of such a bank which might be able to persuade many of our young farmers to go for risk capital in order to produce more from the land of Wales? Their counterparts in France and Belgium can get financial aid or loans from the banks at a reasonable and moderate rate. I hope that the Minister will look at this.

I want now to spend a brief minute or two discussing the position of the self-employed. They play a major role in the social life of rural Wales. They are the backbone of the rural community. I am wondering whether the Welsh Office will consider publishing an interim report. In 1971, following the Bolton Report, the promise was made that in five years an interim report would be published on the plight of the self-employed and small businesses in Britain. I hope that the Government will reconsider and also give all possible aid to small businesses and the self-employed, who play a major role. Once we have lost them from the rural areas, the backbone of community life will be broken.

12.55 p.m.

Mr. Jeffrey Thomas (Abertillery)

I begin with a comment on the speech of the hon. Member for Pembroke (Mr. Edwards). No one could fail to hear it. He assailed our ears, if not our minds. It was the usual barn-storming speech of the kind that we have come to expect from him. When he was not being offensive, he was being hysterical, and, when he was being neither offensive nor hysterical, he was inaccurate and full of sound and fury.

I remind the hon. Gentleman that Wales is not an island unto itself. It is not cocooned, cushioned and buttressed from national and international economic affairs—[Interruption.] That inter- ruption from the Strangers Gallery is no doubt the kind of behaviour that we should have if we had home rule in Cardiff. However, I shall not be deterred by behaviour of that kind.

The hon. Member for Pembroke quoted part of the economic review in the Western Mail. However, he was very careful about what he singled out to mention in that speech. What was said was that without the past years' deluge of Government help for the unemployed, there might be 100,000 people on the dole in Wales alone. The level of assistance sounds impressive, and in human terms it is. More than 450,000 people in Britain, 30,000 of them in Wales, will have their jobs protected and are being helped into work at a cost of several hundred million pounds by measures which the Government have already taken. We have to look at the measures which the Government have taken in Wales. That is what is important.

What is worrying, however, is that in the course of one of the most destructive speeches that I have ever heard, even from the hon. Member for Pembroke, there was not one word about what a Conservative Government would do if they were in office today. Extraordinary though that may seem, there was not one reference to what Conservative policy would be and what they would do to meet the kind of difficulties which not only Wales but Great Britain and most other industrialised countries face today.

I welcome enthusiastically the announcement earlier this week that the Welsh Development Agency will develop an industrial estate at Rassau, which, although in the Ebbw Vale constituency, will provide jobs for hundreds of people from my own constituency. The complete estate as now planned will allow for 1.5 million square feet of space and eventually—eventually—will provide between 3,000 and 4,000 jobs. We shall need every one of them and more. This represents a major step forward and is the best news that we have heard in North Gwent for many a long year.

We are grateful, too, for the assistance which the Welsh Development Agency has given in terms of the job creation scheme—[Interruption.] The Government are keeping faith with the people of Blaenau Gwent, and it must be spelled out that, had it not been for the setting up of the WDA, this development which gives us new hope for the future could not have come about. I pay sincere tribute to my right hon. and learned Friend and his ministerial colleagues who have always put Blaenau Gwent, because of its special problems, at the top of their priority list.

I turn now to another aspect of the Ebbw Vale problem. Because the life of the slabbing mill at Ebbw Vale has been extended to 1978, the timing of the closure of Abercarn works has been extended to coincide with that date. After the contribution which Abercarn has made to the steel industry over 75 years, I very much hope that the British Steel Corporation will appreciate that it has a clear obligation to assist in finding alternative jobs there. The present works is on a 10-acre site which has the unique advantage of rail link facilities. In these circumstances, the BSC must lose no time in working out a strategy for the development of the site.

Our problems in Gwent are so intense and so concentrated that special measures are called for to deal with them. In my view, we need more co-operation, too, between our local authorities and better co-ordination of their efforts. The situation is so grave that I believe that we need a job supremo for Wales and a development corporation for the Heads of the Valleys.

The unemployment figures speak for themselves: in Abertillery 840 unemployed; in Brynmawr 438; in Ebbw Vale 1,010; in Tredegar 700—representing an average of 9.8 per cent. In Newbridge there are 499 people out of work—[Interruption.] There are 13,000 out of work in Gwent, representing a county average of 7.4 per cent. We have had our misfortunes locally this year. The Abertillery factory of J. Compton, Sons and Webb Limited was closed, with a loss of 73 jobs. George Hensher and Co. of Newbridge reduced its work force by 60.

Of course, the picture is not all black. There has been a drop in the number of those out of work in Abertillery and Newbridge during the last 12 months. The Welsh Development Agency has obtained approval recently for a 1,000 sq. metre advance factory to be construc- ted at the Penyfan industrial estate, which will bring a total of three advance units on that estate.

In terms of coal production, Gwent has achieved two productivity records in the last financial year. Miners at Oakdale, Markham, Bargoed, Britannia and North Celynen collieries produced a combined total of 1.2 million tons, the highest group total in the South Wales coalfield.

No one underestimates the difficulties facing us in Gwent, and no one, save, unhappily, so it seems, the hon. Member for Pembroke, believes that these problems can be overcome overnight. [Interruption.] It is clear that, without the measures taken by this Government, the situation would be far more grave, and we should always bear that in the front of our minds. We are moving in the right direction, and finally, I believe, we shall succeed.

1.3 p.m.

Mr. Dafydd Wigley (Caernarvon)

I add our welcome to the hon. Member for Rhondda (Mr. Jones), the Undersecretary of State, on his return to the Government Front Bench. We are all pleased to see him in his place and we are only sorry that he comes back to a situation as dismal as has been outlined in the debate so far. Indeed, it has been a dismal story, typified, perhaps, by the bad temper seen in the exchanges between the two Front Benches at the opening of the debate, with Peter blaming Paul and Paul blaming Peter for the present state of affairs. It is clear that Governments of every colour have failed to meet the economic and social problems of Wales. The situation that we have had outlined so far is almost as dismal as the picture presented in the Welsh Digest of Statistics recently published, which itself is a chronicle of the failure of a system of government.

I do not apologise for concentrating my remarks on the circumstances relevant to economic development and job provision in Wales, since I and my party believe them to be fundamental to the future of Wales.

Mr. Jeffrey Thomas

In view of the astonishing scenes taking place in the Strangers Gallery and the behaviour of people speaking the Welsh language, will the hon. Gentleman take this opportunity to condemn behaviour of that kind?

Mr. Wigley

I was not aware that the Strangers Gallery was part of this Chamber, or that reference was normally made to it.

Mr. Deputy Speaker (Mr. Oscar Murton)

Order. What occurs in the Strangers Gallery ought not to be referred to in debate.

Mr. Wigley

I shall therefore continue on the vital question of providing jobs and economic development in Wales, which we on the Plaid Cymru Bench believe to be fundamental. What has been done so far is inadequate. As a party, we believe that there is need to answer that question because on the answer depends the future of our communities in all parts of Wales. The future of our language and of our culture depends on the availability of work and the ability of people of Welsh and non-Welsh speaking parts of Wales to remain in their communities and to develop and propagate the culture which they have inherited. The key to the future of so many things that we hold to be of value in Wales lies in securing an answer to our economic problems, and Government after Government, of all parties, have failed to produce it.

The Secretary of State's speech was a pathetic chronicle of failure. He could do no more than catalogue anonymous possibilities of future growth, of a tenuous and totally unconvincing nature. He made virtually no reference to North Wales, mid-Wales or West Wales, and when he did produce one instance in respect of Gwynedd, that was merely an instance of possible future development against the number of instances already publicly known of companies closing down or running down and making people unemployed.

The situation is, indeed, pathetic, and it is ironic that the last straw at which the Secretary of State clutches is possible vague promises from the private sector. That is, surely, ironic against the background of the debate today and of our debates on the Welsh Development Agency last year.

The Secretary of State said that there were no rescue cases now under consideration. I find that extremely disturb- ing when we know of so many companies in Wales now in a difficult position and needing to be considered for rescue. I have one in my constituency which has been approaching the WDA. Presumably, it has been turned down if there are none under consideration. That will be greeted with dismay by people in my constituency and elsewhere in Wales who know that there are no industrial rescue proposals going forward.

The Secretary of State spoke of the WDA swinging into action and putting its stamp on to ongoing activities. We need more than a "stamp on ongoing activities". We must ensure that there are developments and new initiatives but these have not taken place. What are the new contributions which the WDA has made? I realise that it is early days yet for the WDA, but we are still looking for positive advance in this direction, not just the putting of a new stamp on ongoing activities. We understand that there are 100 inquiries "shortly to have active consideration". We are glad that they are to have active rather than passive consideration, but what we want to see is jobs coming out of these efforts to all parts of Wales, and they have not been forthcoming so far.

This is against the background of 80,000 unemployed in Wales, and a drop in the index of industrial production which is staggering. There has been reference to the figures for the first quarter of 1976 compared to the situation in 1974, the year of the three-day working week. In the first quarter of 1976, of the 21 sectors in Wales 16 had a lower production rate than in the year of the three-day working week. This is a reflection of our failure so far. Only five sectors were higher than they were in 1974.

Those figures underline the magnitude of the problem facing the WDA. What is the Agency doing about it? We have seen very little direct initiative in setting up public industry or joint enterprises, and this compares sadly with the situation in Northern Ireland, where a similar agency is setting up factories by public initiative. I hope that we shall see much more in that direction from the Welsh Development Agency. Many people saw this as one of the strong arguments for the Agency when it was first contemplated, but so far we have seen nothing. Do the Government intend to take such initiatives? I hope that the Minister will tell us when he winds up.

At a time when 60 per cent. of the gross national product is in the public sector, why is it not possible to divert work in the public sector to areas that so badly need it? We have heard of areas in all parts of Wales, in Gwynedd, in Dyfed and in Gwent, which need such initiatives, but the Agency, which was projected as a body which would fill the avenues of empty advance factories throughout Wales, has done nothing, and we have even more empty advance factories now as companies have closed.

The tragic state of affairs in Courtaulds underlines what I am saying. I want an assurance from the Government that they are not now contemplating on a United Kingdom level assisting Courtaulds with one new centralised factory to take work from the factories which are being closed in Merthyr Tydfil and Hirwaun. If that were to happen it would be an indictment of Government policy and would underline the uncertainty that in the Courtaulds situation, for example, it is the Welsh Development Agency or the NEB that has responsibility. That is what we were saying last year when the Agency was being set up. I hope that we shall have some clarification.

What are the guidelines that the Government have given the Agency? Apparently no economic plan is forthcoming for Wales. There appears to be no plan of action to which the Agency can work. How much longer can the Agency go ahead without such a plan? I shall quote from the guidelines that have been issued to the Agency. Paragraph 2 states that the Agency will be expected to build up a capacity to assess priorities over the whole range of its activities and to relate these, where appropriate, to a coherent strategy for the fulfilment of its statutory purposes. I should like to hear more about the coherent strategy that the Government have evolved in association with the Agency. If there is a strategy, it does not appear to have worked so far. If there is no strategy, how can the Agency be expected to do its work in the centre of a total vacuum?

Paragraph 3 states that the Agency must play a major part in the framing of its policies and initiatives; and these will have to be closely co-ordinated with those of the Government". That underlines the need for a framework for the Agency that has not been forthcoming.

Apart from the need for a framework, I must ask the Government what machinery has been set up so far for monitoring the Agency's activities and progress. That is an important function, to which much reference was made in the debates that took place last year. Will a report be presented to Parliament on the activities of the Agency?

I suggest that it would be a good idea to set up a Select Committee so that Members could ask questions directly to those who head the Agency, [n that way Members could determine whether the Agency is taking the necessary initiatives.

Mr. Nicholas Edwards

I welcome the hon. Gentleman's support for what has been Conservative Policy for a long time.

Mr. Wigley

I appreciate that there is Conservative policy on all sorts of matters and that there has been for a long time. However, it is unfortunate that when the Conservative Party was in government there were not too many Select Committees set up to undertake the work that I suggest a Select Committee could carry out. That is an initiative that is needed. It would be a good thing for people in all parties to have an opportunity to follow up such matters.

There is a need for very close monitoring. Paragraph 6 of the guidelines states that The need for operating freedom must be met within a framework of arrangements for accountability to Parliament". What accountability is there to be for this Chamber in relation to these matters?

I believe that there is a requirement for the Agency to set up its own investment budget. Has an investment budget been drawn up for next year? If so, what are the priorities within it and what is the strategy? What is the long-term strategy that is required to be set up according to paragraph 9, which states that Discussion on the Agency's plans each year will provide the Secretary of State with an opportunity to consider the Agency's long-term investment programme and annual operating plans. These are matters on which Members should have information, because they are very important to development in Wales.

In the nine or 10 months of the Agency's existence, how many instances have there been of acquisition of share capital? This is information which no doubt the Secretary of State has, because he is required to be kept informed of the acquisition of share capital, certainly over a threshhold level. What guidelines has he given the Agency in relation to the adequate return on capital employed—a matter that is referred to in paragraph 24? If there is a need for an adequate return on capital employed, does that mean that the return will have gone up with the increase in the base rate of lending this year? Is that one of the factors that is making progress so slow in setting up new industry?

What directive has the Secretary of State given to the Agency to provide assistance to companies in financial or managerial difficulties? In saying these things I am not blaming the Agency in any way for the steps that may not have been taken so far. These are early days. The Agency has been recruiting people and it has been having difficulty in getting the right team. It has been accumulating its team, but it will never succeed unless it has a strategy. It will not produce the answers unless we have a economic development plan for Wales. I should have thought that such a plan would appeal to the Government and to Labour Members.

In this context, are the Government satisfied with co-ordination between the Agency and the Welsh Office, in that the Welsh Office now has responsibility for Section 7 powers under the Industry Act? In my constituency there have been inquiries from a company that is thinking of coming into the area. There were considerable delays, as some of the inquiries involved the Agency and others involved the Welsh Office. Such delays can be detrimental to attracting com- panies to Wales. There is a need not only to speed up the procedure but for flexibility, particularly in terms of the requirement for profitability within the first two years. Many of the small acorns may not be able to offer profitability in the first two or three years, but over the years they may well grow to answer our employment needs.

The question of the rôle of the Welsh Office and the Agency and the need for greater involvement in planning and coordinating raises the question of the capability of the Welsh Office to handle the work load. I am sure that many hon. Members will have had the same experience as myself over recent months and years, of delay in answers to correspondence. I understand that the Welsh Office has a large work load and has to work within the same constraints on staff as does every other Government Department.

However, there have been some significant delays. It strikes me that the Welsh Office needs strengthening not only in the number of staff at its disposal but at ministerial level. We have one Secretary of State and two Under-Secretaries of State, compared with six persons at ministerial level in Scottish Office—namely, a Secretary of State, two Ministers of State and three Under-Secretaries of State. We have the same number of people in the Government team at the Welsh Office as in 1969, yet since that year the staff in the Welsh Office has increased from 500 to 1,500. I refer to Table 4.08 of the Digest of Welsh Statistics. I suggest that there is urgent need for the appointment of a Minister of State for the Welsh Office. That can be done by promoting one of the incumbents now doing the job as an Undersecretary of State or by transferring one of the Welsh Members at that level in another Department.

In concluding, there are one or two specific isues to which I must refer. In terms of the planning function, there is a need for a long-term strategy. That need can be seen in my constituency, where there are one or two major schemes, such as the CEGB pump storage scheme in Llanberis. I pay tribute to the work that has been done by Mr. Iorwerth Ellis in running the CEGB side of the scheme at Llanberis, but what happens when that comes to an end? In the case of other capital programmes set up to deal with unemployment problems, we have seen that when they come to an end there is a vacuum. I put it to the Minister that the A55, which is the next priority in Wales after the M4, should have priority given to starting from the west as well as the east. We know that there is a problem in the middle, namely, the Colcon Crossing, and if we have to wait for the A55 to start from the east and to progress westwards over the Colcon Crossing we shall be waiting until kingdom come to see the job completed.

There is also a need to ask whether more consideration should be given to other capital projects that would help when the CEGB scheme comes to an end. There is also a need for these schemes to maximise employment for local people.

Another aspect of planning is the policy of job location within the public sector. In my constituency we have an instance of the Welsh National Water Development Authority centralising its function in Gwynedd and moving jobs eastwards, from Caernarvon to Bangor. That may only be a matter of moving jobs 15 miles, but when people working in the offices at Dinas and Caernarvon are already travelling 20 or 30 miles, from the Lleyn peninsula, to go the extra 15 miles is a disincentive. It is impractical for them and may well have a serious effect. This decision appears to have been taken by bureaucrats, contrary to the wishes of those who are members of the authority.

I ask the Secretary of State to investigate what is happening in relation to the offices, and to bear in mind the fact that appointments come up next year. I underline that this is a good reason, along with many others, for a water authority to be answerable to an elected body in Wales. We hope that that will be the case within 18 months or two years when the Assembly comes.

The Job Creation Programme is one that I welcome very much. I realise that it has warts, but it is a step in the right direction. I congratulate those responsible for the work done in the office in Cardiff, especially Mr. Ron Aston. I am also impressed by the initiative of local government officers, often taking on responsibilities which are not directly theirs to get these programmes under way.

We in Gwynedd are very pleased that the county leads the league tables in this matter and that the Arfon District Council and the Aberconway District Council head the district council league table in Wales.

But what happens after 30th September next year? The Government should announce soon what will happen, otherwise local authorities will not have the programmes rolling for that date to continue this work, if, as looks likely, the unemployment problem is still with us. We need to extend the scheme and make it more flexible, and also to make more provision for supervisory responsibility to be provided under the Job Creation Programme. There is room here for integrated manpower planning and the programme could be the first small tentative step towards such an approach to unemployment problems.

When over 80,000 people are unemployed and we need 7,000 or 8,000 more houses a year, it is ridiculous that we cannot bring the two problems together and let one solve the other. Likewise, in my constituency, hundreds of people are standing idle while the centre of the city of Caernarvon is decaying because we are not getting on with the inner ring road scheme.

I do not apologise for having concentrated on jobs because they are vital to solving all our other problems. I reiterate the need for an economic development programme hi Wales. I say again what I have said many times before, that if it cannot be done from this place, that only underlines the need for an Assembly with these responsibilities in Cardiff.

Several Hon. Members rose—

Mr. Deputy Speaker

Order. Before I call the next speaker, I remind the House of what Mr. Speaker said about the amount of time available for this debate and his hope that no hon. Member would speak for longer than 12 minutes.

1.22 p.m.

Mr. Leo Abse (Pontypool)

I am sure that the whole House understood the reasons for the Secretary of State concentrating his own attention and that of Wales on our industrial problems. That should indeed be our sense of priorities. Our concern must inevitably be that we do everything we can to assist in the conquest of inflation and to increase our productivity. It is only by such means that we can overcome the difficulties which afflict not only the Principality but Britain and a great portion of the Western world.

If we are to conquer inflation and to mobilise the efforts of all our people in Wales, if we are to ask them for sacrifices—as we must, since it is inevitable that the nation cannot go on living beyond its means—it is essential that by example, not only by talk, we show that in the policies we pursue we are mindful ever of the need for economy and the need to examine all our machinery of government so as to show that we are not self-indulgent and extravagant ourselves.

Although we are discussing industrial problems, the media insist upon holding a debate upon devolution; therefore, in the time I have to speak, it will be wise to consider the cost of the suggestion to set up a Cardiff Assembly.

Mr. Wigley

Again?

Mr. Abse

I am convinced that, if we examine this proposal, we shall see how bad an example it would set to the whole of Wales when we are asking local authorities to accept cuts and our people to accept a diminution in their living standards.

When it was announced in the White Paper that a Cardiff Assembly would be established, I said at the time that the costs were grossly underestimated. I said that they would be at least twice those originally prognosticated. In that White Paper, less than a year ago, we were told that the capital costs would be £1.2 million. By April, the cost was already beginning to mount. Then the Leader of the House said that the cost would be between £1 million and £2 million, which I presume we all understood to mean about £1½ million.

The latest announcement is of an estimate of £2.8 million—about 2½ times the original estimate. On the way, the Secretary of State has told us that £25,000 has been wasted because of the abortive attempt to acquire the Temple of Peace.

All that money will be spent for a 10-year lease. No commercial firm would contemplate such an exercise. Spending millions on a 10-year lease is an extravagant phenomenon. I hope that we shall be told before the devolution debates how much will be paid for the buildings per square foot. So far as I can see, the only group who can possibly benefit are the property developers of Cardiff, who already have acres of space they cannot get rid of and now find that they have hooked the Government into a pledge to spend nearly £3 million on a 10-year lease for what is generally regarded in Cardiff as an utter white elephant.

Surely it is time that we knew something of the running costs of the Assembly. If we have more than doubled the capital costs, what will happen to the White Paper figure for running costs? That figure was £12 million, but on what basis was it made? We now know that it is intended that there will be about 80 members at Cardiff. How much will they receive? The Secretary of State should know. The original White Paper said that he would declare how much the salaried Cardiff men should have.

Mr. Wigley

How much does the hon. Member want?

Mr. Abse

Under this proposal, more than half the work we now do will be transferred. I assume that the Secretary of State contemplates reducing his salary by half so as to make the appropriate economy to pay the salaried men of Cardiff. I presume that our Undersecretaries will willingly make similar sacrifices since they, too, will want to ensure that costs are not increased.

The Under-Secretary of State for Wales (Mr. Alec Jones)

And my hon. Friend.

Mr. Abse

I am not prepared to make such a sacrifice. I do not want this proposal. I am prepared to take on the burden of work here, to do the job my constituents expect me to do. I do not want it done by some Cardiff Assembly men.

We are entitled to know how much they will be paid. We cannot know how much they will pay themselves. All Wales should understand that the White Paper makes it clear that after the Secretary of State has decided the salary of these people—whether £4,000, £5,000 or £6,000—they will be able to vote themselves whatever they like. Such is the confidence of Plaid Cymru in all the people of Wales, which they have been expressing on the Order Paper, that I am sure that they have no doubt that the Cardiff Assembly men will act with extraordinary restraint. That is not a judgment which I, or, I believe, the people of Wales can share.

What about allowances? The White Paper also says that all the Cardiff Assembly men will receive allowances. What allowances? If we are to give them all this work, they will need allowances for secretarial and research assistance. Will the Secretary of State say what is included in the figure of £12 million—what basis of salary, and what allowances?

I want to know, too, about the mini-Ministers whom it is intended to create at the Cardiff Assembly. We know from the White Paper that there are to be executive members on each committee. Will these new mini-Ministers have maxi-salaries? It is a reasonable assumption that there will be a differential between them and ordinary Assembly members. We are entitled to ask the Secretary of State: upon what is the estimate of £12 million based? We are entitled to ask that in view of the fact that the capital costs of the Assembly at Cardiff have already escalated in a manner to be expected of a Concorde, not of such a building.

By how much does the estimate rise when account is taken of the extra civil servants as Kilbrandon recommended and as Plaid Cymru want? There are not to be 1,500 civil servants: that would be the number if shared with Whitehall. But apparently Plaid Cymru wants Wales to have its own civil servants. I do not doubt that the Assembly would want its own civil servants. There is no question of there being 1,500 civil servants shared with Whitehall. So we are entitled to ask what the costs would be if all these extra civil servants, far more than the original suggestion of 1,500 came under the purview of the Cardiff Assembly.

I presume that Plaid Cymru would insist that there should be extra pay, weighting and promotional prospects for those civil servants who are Welsh-speaking. So the cumulative amount would soar far higher than £12 million. I do not doubt at all that the Assembly would soon need to take advantage of the right to make a surcharge—a prospect which is open to the Assembly in the supplementary White Paper. The people of Wales can expect to have an incubus in the Assembly. From a beginning of, say, £12 million a year, the people of Wales may well be faced with double that amount.

It is clear, for example, that there will be great expenditure on buying expertise which, as the White Paper coyly points out, is now provided by London based Departments. That will be a new field for pickings, for some in Wales, when all this expertise will have to be brought unnecessarily yet again.

What I am asking the Secretary of State is this. In view of the chastening experience in relation to capital costs, which we know have doubled, upon what does he base his estimate now for the running costs of this white elephant down at the Cardiff Exchange? It is not only a question of what it would cost to set up. What would be the cost of the largesse which these 80 salaried men would be in a position to dole out and to increase? It is known that at present £300 million is expended by 70 public bodies in Wales to which the Secretary of State and other Ministers nominate more than 1,000 members. The Secretary of State knows all about that. He spoke about it when he was interviewed last year by The Times. Many of that 1,000 will receive salaries and almost all will certainly receive allowances.

I do not doubt that there will be many more appointments, above the 1,000, now that the Welsh Development Agency, to the consternation of all industry in Wales, is to be placed under the Welsh Assembly. It will be the Welsh Assembly men who will have the right to nominate people to paid positions on, for example, the Welsh Development Agency and the Countryside Commission; and no doubt a new right will come into existence to nominate people to the University Grants Committee. I am not surprised that Plaid Cymru supports and defends all these suggestions so enthusiastically.

There may be too few passengers on the new Swansea to Paddington Inter- City expresses, but there will be a packed gravy train steaming out of the Cardiff City Exchange, and most of Wales knows that no carriages will be fuller than the first-class coaches marked "For Welsh speakers only". Plaid Cymru wants to impose on and dictate to Wales what it does not want.

Mr. D. E. Thomas (Merioneth)

Will the hon. Member tell us on what he bases the view that Welsh speakers would have priority in the Welsh Assembly, and will he also ensure that he comes within his allotted time to repeat the allegations about bribery and corruption?

Mr. Abse

I base that on what is happening in Gwynedd and what is known to be happening throughout the English-speaking areas of Wales.

Mr. Thomas

What is happening in Gwynedd?

Mr. Abse

Demonstrations of the character we have witnessed today. What Plaid Cymru really wants is to let Wales decide everything except its own destiny, a destiny which is inextricably linked with the United Kingdom, a destiny informed by an international spirit free from the convulsive chauvinism and extremism of Plaid Cymru.

I hope Wales will have the opportunity to express its opposition to the Assembly—to the gravy train—and to the possibility that those who are pushing this will have it imposed on Wales. The people of Wales are understanding this clearly and expressing it in every opinion poll. The Secretary of State says that he has been consulting the people. I should have thought that the easiest way for him to consult would be for him to conduct another opinion poll, although he should have no doubt about a reputable poll like Marplan which has already shown overwhelmingly that the people of Wales do not want any change in their constitutional structure.

On Monday I asked the Secretary of State to confirm what had appeared in the lead story in The Times that morning indicating that there was to be a referendum. My right hon. and learned Friend gave me this curious reply: I have no knowledge at all of the statement in this morning's edition of The Times."—[Official Report, 1st November 1976; Vol. 918. c. 948.] That would not be the Secretary of State's normal habit. I am sure he is an early riser. Does he mean that he has no knowledge of the contents? Has The Times suddenly and irresponsibly created a story; or could it be that within Government circles there is a growing intention that the people of Wales are to be consulted? The overwhelming majority of the Welsh people have spoken and said that they want a referendum.

I hope that the Secretary of State for Wales will show wisdom. After all, he has shown elasticity at other times. He has shown himself not to be absolutely didactic and dogmatic on issues of great importance. I do not in any way resent that he should take more pragmatic attitudes or that he should be more sensitive to views or change his opinions. It is becoming abundantly clear that Wales wants a referendum. It is equally becoming abundantly clear that in that referendum Wales would indicate that it does not want an Assembly. Is my right hon. and learned Friend going to resist that?

I tell my right hon. and learned Friend now that we want a united Labour movement. We want a movement which will be able in these difficult times to go forward in the coming year together. We could all accept whatever Wales decided. If Wales decided to have devolution I would submit to it and recommend that everybody submitted to it. My constituency party, the Labour group on my local council and the Gwent County Council want a referendum and they do not want devolution. They should have the right to express their view.

The Secretary of State should put a clause in the Bill which makes it clear that, whatever its shape, it is subject to the will of the people of Wales. The Secretary of State has the opportunity to unite all who are behind him. He would then be praised by everyone: if he stubbornly resists, there will be acrimony. Hon. Members such as I will not support the Government even if there is a six-line Whip in proposals for devolution which bars the people of Wales from expressing their opinion. I hope that he will seize the opportunity and recognise the wisdom of what I have said. It will be a cause of no reproach if he grasps the nettle.

Everyone realises that the Secretary of State has to battle with complex and difficult industrial problems and we know how difficult it will be for the people to accept the sacrifices that are necessary to overcome these difficulties. I hope that the Secretary of State will try to take along a united Wales. He has the opportunity and he will be a foolish man if he does not take advantage of it.

1.42 p.m.

Mr. Ian Grist (Cardiff, North)

After such a splendid contribution, should this miserable Government survive an early election, I look forward to hearing the hon. Member for Pontypool (Mr. Abse) often and at considerable length. I hope that we shall see each other across the Chamber many times if an election does not intervene.

There has never been a Welsh day in the House when the economy has been in so shattered a state or when the outlook has been so unutterably gloomy. Wherever one looks there is reason for disquiet or worse. The Secretary of State reminds me of Shelley's Ozymandias, on the base of whose sneering face was written, 'Look on my works ye mighty and despair!' Nothing beside remains. That is the position over which the Secretary of State and his right hon. and hon. Friends have presided for nearly three years in Wales. What is more nauseating about their performance is their total lack of contrition for the wrongs that they have done. It might be forgivable, at least it would be more honest, if they were publicly to admit that the policies which they offered to the electorate in 1964 were at best wholly misleading and at worst grossly deceitful. At least such an admission would win points for repentance. It would do little to help the thousands of school leavers or to help the 3,000 redundant shop workers in Wales—a total which is more than all the jobs which the Government claim will be created. It will do little to help redundant steel workers, construction workers and the rest who litter South Wales.

An admission would at least be something. But no, today we have had the usual—I was going to say "smug", but it is better to say "uneasy"—performance from the Secretary of State. He said that he would give us "a flavour" of what was going on in the industrial scene. I did not like the way in which he made the claim that unemployment was falling. We all know that the wholly unemployed figure—the real figure—was rising at the last count. That was the flavour of the Secretary of State's speech.

The Secretary of State claimed that some firms expected to increase recruitment but even in the worst days some firms increase recruits. The Secretary of State knows that because of various Acts, such as the Employment Protection Act, most firms prefer to increase production by means of increasing overtime rather than recruitment because it is so expensive to take on workers and they cannot be sure whether they can get rid of them later. There has been a cutback in training which will cause difficulties in the future when the economy picks up, because we shall be faced with a lack of skills. Even today, some firms cannot find sufficient skilled labour.

I do not intend to take up too much time. Most of the arguments have been made brilliantly and tellingly by my hon. Friend the Member for Pembroke (Mr. Edwards). But I would say that Wales is paying heavily for the way in which the English electorate swallowed the promises and knuckled under to the threats of the Labour Party and their trade union allies in 1974. The Labour Party slogan was "Back to Work with Labour", in February; in October the claim was 8.4 per cent. What a deceitful way to gain power. The hon. and learned Member for Abertillery (Mr. Thomas) said that Britain had to face the oil crisis. But so did the rest of the world. But few places tried to borrow foreign money in order to buy domestic political popularity. That is what this Government did.

In a Parliamentary Answer on 29th October, at column 391 of Hansard, it was revealed that the rise in unit labour costs in the United Kingdom in 1973 was 8.3 per cent. In 1974 it was 20.9 per cent. and in 1975, 33.1 per cent. That was the cost of Labour's electoral and party profligacy. Even they know that the game has now to stop.

But even now the game cannot quite end unless the Government cut their own expenditure more severely than they have so far dared to tell the people. I think that the Government are nerving themselves to do that. If expenditure is not cut, there will be no profits, no savings and no drop in interest rates. There will, therefore, be no confidence for businesses and individuals to invest in new plant and machinery, as the recent CBI survey indicates. The Government continue to call for higher investment while making that investment less and less profitable.

Why in heaven's name did the Government lump a further burden of £60 million on Welsh industry in July? The answer is simple. That seemed the easiest political step to take. The Government felt that no one—that is, very few of the ordinary electorate—would notice it and then, when industry failed to invest, they could talk about the failure of capitalism. That leads to the excuse of extending State power by channeling more taxpayers' funds and foreign borrowings to the National Enterprise Board and the Welsh Development Agency.

I am not saying that this betrays a deeply laid Socialist plot—although it may. I suspect that in many respects it just happened through sheer bumbling. Next year we can look to unemployment in Wales reaching about 100,000 and inflation of between 15 per cent. and 20 per cent.

The construction industry—where orders fell by 15 per cent. between June and August this year—is in complete disarray and in many cases it has been almost destroyed. In my constituency there is a crowning example. Crown offices in Cathays Park are being built to house more unproductive civil servants.

Next year rentpayers and ratepayers will notice a sharp rise in their payments. At the same time, they will find that the services of the local authorities deteriorate. Those thousands of my constituents whose homes are on oil-fired district heating will notice a sharp rise in their costs because of the rise in the price of oil and the fall in the value of the pound.

Industrialists in Wales who heeded the Government's call for new investment in the early part of the year—some of them have put in hand that investment—will find themselves severely squeezed by the new interest rates. Because the home market will be falling next year, as real incomes fall and the foreign markets fail to expand as people thought they would a year ago, some of those firms will go to the wall. Those buying their houses will find a sharp contraction in their spendable money. City and county halls will experience greater and greater difficulty in meeting the standards expected of them.

Some cutback after the oil crisis was inevitable, but not this. There is far, far worse to come until the right action is taken. How much easier it would have been if the Government had been honest with people from the start, or even now, when at last they are two-thirds the way to saying the right things.

Let the Government now denounce, and get their trade union allies to denounce, the restrictive practices in industry which contribute so heavily to the low return that our investment so often earns compared with that of our competitors. Let us have a statement from the Secretary of State on what he thinks about absenteeism in the steel and coal industries and elsewhere.

Let the Government now say that they will restore differentials in pay and taxation, so that thrift, hard work and skills become worth exercising. Let them drop their divisive, time-wasting and money-consuming proposals for an unwanted Welsh Assembly. Let them allow those firms which can make real after-tax and after-inflation profits in fact do so, and applaud them for it. Let them urge those firms on and not sneer at them and tax them heavily, which is the way in which they usually treat industrial successes.

Let the Government do all those things. If they cannot, let them get out and make way for those who can.

1.52 p.m.

Mr. Walter Padley (Ogmore)

The hon. Member for Cardiff, North (Mr. Grist) used to be a constituent of mine. The recipes that he and his party advocate for dealing with the economic problems of Wales and of Britain as a whole will be absolutely rejected by all my present constituents. The massive cuts in public expenditure for which the hon. Gentleman calls would almost double unemployment, rather than solve the unemployment problem.

In response to Mr. Speaker's plea for brief speeches, I shall confine myself to two issues. I am glad that the future of the steel industry in Wales has had such a dominant place in this debate. Despite the gloom and doom merchants of the Tory party, including the hon. Gentleman, there is a bright economic future for Wales and the rest of Britain, given the application of bold Socialist measures of public ownership and economic planning. But it is essential to the future of Wales that the steel industry is in good shape as the recovery comes.

My right hon. and learned Friend the Secretary of State for Wales represents Port Talbot. Ogmore is next to the Aberavon constituency, and several thousand of my constituents work in the Port Talbot Works. Virtually all the coking coal that goes into the Abbey Steelworks at Port Talbot is dug at the pits in my constituency. Therefore, along with my hon. Friend the Member for Gower (Mr. Davies), who represents the tinplate end of the industry, I have the most direct Back-Bench interest in the expansion of steel production at Port Talbot.

It has been generally accepted—certainly in the 10-year strategy agreed by everyone on both sides of industry and by my party in Government and Opposition—that the future of an efficient British and Welsh steel industry depends on the development of large, efficient coastal plants. Because of the foresight of previous Labour Governments, the situation at Port Talbot is second to none in the United Kingdom or even in Europe. The late Hugh Dalton took the decision a long time ago to site the Abbey Steelworks where it is. It was built largely with public capital. The Labour Government of the 1960s authorised the building of the £20 million harbour at Port Talbot, capable of taking the 100,000-ton vessels that bring in iron ore. Therefore, Port Talbot has all the necessary qualifications to be doubled in size in accordance with the 1973 strategy.

In addition to the natural advantages, we now have the agreement, voluntarily arrived at, that manning at Port Talbot shall be at the level of 500 tonnes per man per year, if the full scheme is carried through. Only on that basis will Britain and Wales have a viable steel industry.

I cautiously welcome the statement my right hon. Friend the Secretary of State for Industry made before the Summer Recess, when £350 million was made available for investment at Port Talbot. But that figure—£50 million for coke ovens, £50 million for continuous castings and £250 million for a new hot strip mill—depends in part on the decisions of the British Steel Corporation and ultimately the Government.

Like my hon. Friend the Member for Gower, who is a member of the West Wales Steel Development Committee, I have the closest contact with the Works Council at Port Talbot. The chairman and assistant secretary are constituents of mine and are active workers on my behalf during General Elections. We strongly urge the BSC to take up the full offer of £350 million for development at Port Talbot. An investment of that size by the central Government is not to be sneezed at, even by Plaid Cymru Members when they talk about independence for Wales.

Mr. Donald Anderson (Swansea, East)

Where are they?

Mr. Padley

To be fair, two of them have been here for most of the debate. Doubtless they went away for a bite to eat, as I did a few minutes ago.

Mr. D. E. Thomas rose——

Mr. Speaker

I should tell the House that I invited the hon. Member for Merioneth (Mr. Thomas) to come and have a word with me, and that is why he was not in his place.

Mr. Padley

As one who has been in this House for 27 years, I know that such things happen. I referred to Plaid Cymru, but I did not refer to the absence of its Members.

I wish to emphasise that an offer of £350 million investment at Port Talbot is a substantial amount, which would be impossible if Wales were independent as Plaid Cymru wish it to be. As my hon. Friend the Member for Gower said, the new hot strip mill is essential if the quality of products at Trostre and Velindre are to be maintained. From the standpoint of Wales it is absolutely essential that the British Steel Corporation should take up the offer of £250 million.

I note the information given to me by my close friends who are leaders of the Works Council at Port Talbot. The Corporation doubt whether without a doubling of steel-making capacity at Port Talbot an investment of £250 million on a new hot mill would be economically desirable or indeed possible. I gather that it has been calculated that it might add £20 per tonne to the price of steel produced if there is to be an 8 per cent. return on capital, which the Government expect. That would make it a high-cost plant and uncompetitive in the steel market. I know that I am preaching to the converted when I say these things to my right hon. and learned Friend, the Secretary of State for Wales, since Port Talbot is part of his constituency, but if the £250 million is to be taken up, it must follow as a matter of logic that there should be a doubling of steel production capacity at Port Talbot as well.

In the period before the establishment of the Abbey Works at Port Talbot, a large number of small works were closed down and social problems were caused. There is now an agreement on manning which will create in my part of Mid-Glamorgan a serious employment problem, even if the Abbey Works are doubled in terms of steelmaking from 3 million to 6 million tons a year. The Government in the next few months should announce their plans for expansion not only at the finishing end. If they do not do so in terms of investment in steelmaking capacity, the prospect for the 1980s will not embrace a figure of 11,000 or 12,000 employees at the Abbey Works. If it is to be competitive in world markets, and if there is to be an output figure of 500 tonnes per man per year, the employment prospects could drop to a figure of 4,000 or 5,000 if steel-making capacity were not doubled.

Although there are social problems at Shotton which cannot be forgotten, in pleading the case for Mid-Glamorgan and West Wales there is an equally important social argument as well as economic and technical arguments. Since the miners in my constituency dig so much of the coking coal which is consumed by the steel industry at Port Talbot, this is an important matter in the mining communities whose workers I represent. I ask the Secretary of State for Wales to renew his efforts to ensure that when the Government come to a final decision—I hope by the end of this year—Port Talbot will be genuinely doubled in size in steelmaking terms.

We have heard reference in this debate to the priorities at the Morriston Hospital, and on Monday my hon. Friend the Member for Wrexham (Mr. Ellis) referred to the priorities at the Wrexham Hospital. It is possible to go into competition on these matters, but I should place on record that the case for a new Bridgend and General District Hospital has been widely recognised since 1966, and since 1973 the hospital has been placed by the Welsh Office and by successive Governments in the budget for 1977–78. I hope that the Secretary of State for Wales will listen to the special pleadings of all who represent such constituencies, but I hope he will remember that in regard to the Bridgend and District General Hospital it is a question not of advocating a new case but of re-affirming a case which has been stated and proved and which therefore should receive priority treatment which it deserves on its merits.

2.5 p.m.

Mr. Geraint Morgan (Denbigh)

Despite the eloquent contribution by the hon. Member for Pontypool (Mr. Abse) and the fact that I, too, am a strong supporter of a referendum on the issue of a Welsh Assembly, I shall not be tempted in this debate to go into that subject. I imagine that we shall have plenty of opportunity to discuss that matter in the next parliamentary Session, whenever that begins.

It was important for the Secretary of State, in opening the debate, to concentrate on the Welsh economy. Inevitably, he had to be selective, and I shall be even more selective because the time at my disposal is so much more limited.

Inasmuch as the transport debate scheduled for yesterday vanished, for procedural reasons, into thin air, I think it important that I say something about the subject of communications, which was touched upon by the right hon. and learned Gentleman the Secretary of State for Wales. I suppose that I am stating the obvious when I say that good road and rail communications are essential to safeguard the economy of any country or region. The lack of good communications not only has an adverse effect on the attraction of new industry; but it carries with it the threat that existing industries may choose to move out of the area, particularly to places such as the new towns, where substantial sums of money have been spent on highway infrastructure.

I wish first to deal with the subject of highways. Earlier this year the Secretary of State announced a completion of the review of all outstanding trunk road schemes in the Principality. The revised programme showed that almost total priority was to be given to completing the M4 motorway across South Wales and the A55 coastal road across North Wales. I do not basically disagree with this priority. My hon. Friend the Member for Flint, West (Sir A. Meyer) and I have frequently sought to emphasise that the A55 has for far too long been a scandal and a disgrace. It has to be observed that all the planned improvements to our North Wales roads—the A55, the A5 and the others—will not bring us a single yard of motorway. We are not cribbing on that score, but the fact that that is so strengthens our claim that Government action in, and for the benefit of, North Wales should not be limited to long-delayed and much-needed improvements on the A55.

I feel entitled to call for such action despite the present economic difficulties, indeed in a sense because of them, for four main reasons. First, although—and this must be said in fairness to the Government—spending on road construction and maintenance in Wales has probably suffered less from public expenditure constraints than has been the case in any other region, the fact is that the lion's share of this has been expended and continues to be expended on the M4. Many authorities have felt for some time—and I agree with them—that the M4 should be divorced from the rest of the Welsh roads budget because of its status as a vital part of the national transport network.

Secondly, the whole of North Wales has been practically denuded of railway transport. In my constituency the Beeching Plan did its worst over 10 years ago. The general state of public transport is very poor indeed, despite laudible attempts by local authorities to improve it. I refer particularly in this connection to the inauguration, just over a month ago, of the first ever community bus service in Wales—indeed, only the second such service to be organised in the whole of the United Kingdom. This was in western Clwyd, in the areas of Cerrig-y-Drudion, Llangwm and Llanfihangel Grlyn Myfyr.

A recent report by the British Road Federation points out that Wales has one of the highest car ownership levels in Britain—70 per cent. of all households in some areas, as compared with an average of about 55 per cent. for the whole of Great Britain. I would like to be able to think that this was an indication of comparative Welsh affluence. Regrettably, that is not the case. It merely underlines the skeletal nature of our public transport system, such as still exists.

Thirdly, much could be achieved by better co-ordination of road schemes running across the border into England. At present there is no adequate coordination of road construction that would give quicker access to North Wales from the English motorway network. There is a pressing need for more formal arrangements whereby the Department of the Environment, the Welsh Office and the representatives of the Welsh counties concerned could get together and agree priorities and programmes. There is an unhappy tendency at present for some of the English counties to be quite satisfied with the good road that stops just short of the Welsh border.

Fourthly, much could be achieved by a more intelligent spreading of the funds available. The A5 can be considered as an example. There has been a considerable waste of time and money planning a Llangollen bypass, which very few local people want, and may oppose. The establishment of a line for this would only have the effect of sterilising for years development inside Llangollen town, since there is no prospect of such a bypass being built in the foreseeable future. As against that, there is only one projected improvement on that important highway along the whole of its route through the county of Clwyd.

On the question of road improvements generally I have some questions to pose to the Under-Secretary. May I say that I very much welcome the hon. Gentleman back to the House after his illness. I do not expect him to answer these questions today. Perhaps he will do so in the usual way, by correspondence. The main questions that I wish to pose are these. First of all, will he give an undertaking to expedite the dualling of the A55 to a high standard in North Wales? Presumably he has that in mind anyway. Will he, in addition, give an estimated date for the completion of that work? Very much bound up with this, will the Minister let me know when the Secretary of State expects to reach a final decision with regard to the vexed question of the Expressway route?

Over eight long years have passed since I first raised this matter in a Welsh debate. A most distinguished member of this House, then Secretary of State for Wales, kindly agreed to investigate local opinion on this matter. In answer to a recent question the right hon. and learned Gentleman told me that he has to consider seven volumes of reports from the inspector who conducted a long inquiry into this matter. I commiserate with him. I know that he will bear in mind, however, that more than seven years have passed while this has been hanging over the inhabitants of the towns along the coast. It is most important that this matter should be resolved as soon as possible.

Can the Minister also inform the House what proposals, if any, exist for the dualling of the A5 from Chirk to the junction of the M6 motorway at Gailey? I appreciate that these are English improvements, but they are of considerable importance in improving traffic conditions in and out of Wales.

More than once in these debates I have lamented the fact that there is still no respectable trunk road between North and South Wales, and I regret that a vital link in the chain of improvements planned for the A470, the completion of the dual carriageway north of Aberystwyth, is not now due to start until 1982. What I particularly want to remind the Minister of today—I do not think that I need direct his attention to it, because he must be aware of it—is the appalling state of the rail services between North and South Wales. While I am about it, I would like him to give a firm undertaking that there will be no further tampering with such rail services as are now left to us in North Wales. I shall return to that in a moment. Let me first say a word about the north and south services.

I do not think that anyone with experience of them will deny that they are badly in need of improvement, in respect of both travelling time and facilities. Journeys from places like Shrewsbury to Aberystwyth and Shrewsbury to Swansea take as long as, if not longer than, many Inter-City services. There seems to be a marked inferiority in the quality of Welsh as compared with English rolling stock. There is all too often a complete lack of the simplest catering facilities.

Dealing with the remaining North Wales lines, and particularly the coast line, I must impress upon the Minister the real fear that exists about the future of that railway artery along the coast, the closure of which would totally wreck the economy of Gwynedd and Clwyd. I cannot seriously believe that the Government would begin to consider permitting such a closure, but the fear is there, and no doubt it has been fostered and given increase by British Rail's proposal to cut the services on it with effect from May 1977, which is naturally seen as the thin edge of the wedge.

There should not be any talk of closure or even restriction of services on this line. Instead, urgent attention should be given to its modernisation. British Rail promised long ago that improved rolling stock would be introduced on the Crewe-Holyhead stretch of this line. This has yet to materialise. The Government should regard the implementation of this promise as a high priority in their railway planning.

I have to be more selective than was the Secretary of State. I want to make a short reference to agricultural problems and I can draw attention to only one aspect of agriculture in the time available. In the same Welsh debate that took place about a year ago, I said that what concerned my farmers more than anything else was the problem of the green pound. The situation in that respect is infinitely more serious than it was then. There had then been a series of four revaluations by the Government, and I give them credit for this. These reduced the gap to a comparatively bridgeable one of 7½ per cent. But the misfortunes of our currency have now made it a yawning gulf of 45 per cent.

All reasonable people must accept that political and other considerations make anything like a total closure of the gap impracticable. Indeed, a violent revaluation, even were it possible, would not benefit some aspects of Welsh agriculture. For example, the incomes of many hill farmers derive essentially from three sales: store lambs, breeding ewes, and store cattle. From then until the next sales, the only effective revaluation would be the harmful one of an increase in feedingstuff prices.

What I have said is not intended to discourage the Secretary of State from giving the most urgent attention to this problem, for some significant revaluation there must be if the industry is not to go under. What I am saying is intended to be constructive. I am urging a combination of a realistic revaluation of the green pound, on the one hand, and subsidy adjustments as temporary remedies, at any rate during the remainder of the transition period, on the other.

I could not agree with the Secretary of State when he spoke glowingly of Government assistance to agriculture in what has now come to be known as the "drought package", produced by the Minister of Agriculture, Fisheries and Food about a month or so ago. In that respect, he was unduly complacent. May I give an example of what I have in mind and what the Government have failed to do? They recently rejected a proposal by the National Farmers' Union for headage payments for milk producers as an additional means of assisting them to overcome the effects of the drought—that is, if the guaranted price could not be raised sufficiently, and it was not raised sufficiently.

In fact, the increase of 2p a gallon for producers during the winter months, which formed part of the drought package, will not come anywhere near meeting the effects of the drought, coupled, as it is, with the relentless and continuous increase in the cost of feeding stuffs which has gone on uninterruptedly for over three years. Indeed, the high cost of winter feed will undoubtedly mean that many farmers will be forced to sell dairy cows they might otherwise have retained, and this will put a further brake on the hopes of expansion in the milk sector expressed in "Food From Our Own Resources". I am sure that the Secretary of State will bear in mind that milk production is the cornerstone of our agricultural economy in Wales.

Finally, I turn from the drought to flooding. The Secretary of State will, I am sure, be aware of the devastation which recently occurred in many parts of North Wales as a result of the sudden floods. He will also be aware that I have been in touch with his Department regarding the damage in one particular village, Llanfair Talhaiarn. The tragedy is that these visitations of nature have recurred with painful regularity, and I have been dismayed by the lack of action by the Welsh Office—not only under this Government, let me add—after such flooding occurred.

In the instance of the village which I have mentioned, there is plainly an urgent need for rechannelling of a stream running through it from the mountains and for an examination of a series of weirs in the main river on which it stands. Action has been taken with regard to this purely because of the praiseworthy assumption of responsibility on the spot by the chief executive of the Colwyn Borough Council, Mr. Geoffrey Edwards. But for that, I dare say that the matter would have been allowed to drop, as it was after an earlier serious flood in that village five years ago. The sources of the trouble were known then, but no action was taken.

The matter of flood prevention is assuredly one in which the Welsh Office should interest itself and take a lead. I should like to be assured that the Secretary of State will, through his Department, make a thorough study of the problems of those towns and villages which have been regularly afflicted by flooding in the past 10 to 20 years.

As I have said, I do not expect replies to all the queries I have raised, save perhaps in the most general terms. I believe, however, that these are important issues which are of great concern to the people of North Wales. Therefore, they merit the immediate attention of the Welsh Office.

2.24 p.m.

Mr. Donald Anderson (Swansea, East)

A cynical observer of the Welsh scene today might say that there were two main areas of debate—jobs and devolution. Devolution is the concern of the politicians and the media; jobs, prices and the economy are the more immediate and pressing concern of our people.

In Wales, unemployment is very deep in our collective consciousness. We are not suffering from the level of unemployment of my father's generation, but still it is scandalously high, and, although the impact of unemployment on the unemployed person and his family has been softened by the welfare provision won, in particular, by the post-war Labour Government, it remains true that an unemployed man is not a whole man. There is something lost about him. We must ask ourselves whether in Britain, and in Wales in particular, we can ever anticipate returning to the levels of employment which we enjoyed in the 1950s and 1960s or whether there are trends in society which, without substantial modifications to existing policies, will prevent us from returning to those high levels of employment.

What are the best projections that one can make? The immediate future is bleak, because there are substantial factors militating against a dramatic reduction in unemployment in the immediate future. First, an increase in productivity and greater investment which is called for by the Government often mean a reduction in the number of jobs available. Secondly, there is evidence of substantial spare capacity in Welsh industry. Thirdly, the legislative protection for workers which has been properly introduced by the present Government and their predecessors means that industrialists are more reluctant to hire people because it is more difficult to fire them.

We are in a period of public sector restraint. Some of the major additions to total employment in Wales in the past few years have been made in such public sector areas as the Driving and Vehicle Licensing Centre, in my constituency, and in Government employment in the Cardiff area. At a time of public sector restraint, we shall not in the immediate future have that sort of addition to our total employment.

Finally, there is the decline in a whole range of our basic industries and such service industries as bus transport and the rail system. The Manpower Services Commission, in its document entitled "Towards a comprehensive manpower policy", published this week, concludes that even on the most optimistic projections and assessments, unemployment in the United Kingdom will remain at historically high levels until at least 1978–79. There are demographic trends which militate against a substantial diminution, particularly the fact that in future there will be an increase in the labour supply at a time when there are these weighty factors against job creation. Therefore, many more jobs will need to be created at a time when it will be increasingly difficult to create them.

This problem is felt increasingly acutely in Wales because of our over-dependence on basic industries. It is reflected in West Glamorgan. In the past few months there have been many thudding blows to the people in that area and their representatives, as redundancies have been declared. Only on Saturday, Struels, the warehousing concern in my constituency, as a result of a bad property speculation by the parent company, announced that it is to lay off people in Swansea, as it did earlier in Cardiff. There is also the situation at the British Steel Corporation at Landore and the 300 projected redundancies among the busmen in Dyfed and West Glamorgan.

My right hon. Friend the Secretary of State mentioned the light at the end of the tunnel. Perhaps my eyesight is not as strong as his. I can see but very darkly indeed over the next few years. There is little, save some expansion at Alcoa and some new retail outlets for Debenhams, to make a contribution to relief of our jobless problems. Against this sombre background, what policies are the Government prepared to take to maintain and increase jobs? There are three major contributions which the Government could make. They could endeavour to buttress existing jobs; they could seek to improve the infrastructure so that when the hoped-for improvement comes, these attractions are available; and they could radically rethink ways in which the jobs could be shared and more jobs made available to the increasing work force.

When one thinks about buttressing existing jobs in the West Glamorgan area, the uncertainty hanging over the DVLC in my constituency immediately comes to mind. The more speedily that problem is resolved the better. Port Talbot was mentioned in cogent speeches by my hon. Friend the Member for Gower (Mr. Davies) and my hon. Friend the Member for Ogmore (Mr. Padley) and I do not intend to go over that again, save to join with them in urging the British Steel Corporation to accept the "bird in hand" offer of £350 million as a start for the investment to come. I do not think that there is a conflict between Shotton and Port Talbot. In Wales we have strong memories about the Llanwern—Ravenscraig dilemma and the way in which that was resolved in the past.

My hon. Friends the Members for Neath (Mr. Coleman) and Gower joined me in Swansea two weeks ago to attend a rally of 300 busmen who are threatened by redundancies. The local offshoot of the National Bus Company, South Wales Transport, says that unless it sacks 300 men over the next financial year its deficit will rise from a projected £1.2 million to £1.6 million. Effectively, it will save £400,000 gross by sacking 300 men. Surely it is within the province of the Government to see the net effect of this, if the men are to be provided with social security benefits to compensate them. The Government could give some measure of assistance to the company to ensure the retention of these 300 jobs, and then the total effect on public expenditure would be nil. We have been met by a series of buck-passing operations by both the county and the Government.

Another example of this is the GEC factory at Hirwaun. It has put up a strong case for temporary protection against low-cost imports. Generally, I am against protectionism, because invariably it increases the cost of goods to our own consumers. But in this instance there is a strong case, because there is evidence that overseas suppliers are trying to kill off sections of our economy. The indications are that they will increase their prices at considerable disadvantage to our economy and ruin job prospects for many people. I hope that the Government will agree that this GEC factory should be given some measure of temporary job protection.

I commend the Secretary of State for giving priority to the M4 motorway and the 31 miles of this road that will be opened next year. My right hon. Friend has fought tenaciously for this priority, which will bring great benefit to the whole economy of West Wales.

There is the question of a face lift for Wales, which was referred to by my hon. Friend the Member for Gower, who spoke of the Morriston hospital and the obsolescence of so many public structures in West Glamorgan. This sort of thing is a deterrent to people coming into the county, and this is an area in which money is urgently needed. There is a need to compensate Wales for the historical sacrifices that it has suffered for the United Kingdom economy as a whole. There is a need for greater public investment in Wales, particularly in derelict land. I am pleased that the Welsh Development Agency is looking urgently at this problem, under the energetic direction of Mr. Ian Gray. There is no better man to spearhead the agency.

On the planning side, we must ensure that industry is linked around existing heavy industry and is ready for any improvement in the future.

There is a long-term problem in the case of jobs. If there are to be fewer jobs to distribute in the future, we must examine the way in which we can best assist every individual by keeping younger people from the labour market for a longer period and extending their education; by the continuation of vocational preparation; and by increasing cooperation between education and industrial services as suggested by my right hon. Friend the Prime Minister in his recent speech. We could have shorter working hours, less overtime and early retirement. The miners in Wales have at last woken up to the fact that they are less well off than their Continental counterparts, in terms of retirement. We must ensure that the jobs that do exist are distributed more fairly around the total population.

The Government should examine all areas of policy to ensure that they do not inhibit total development. They must ensure that they do not hinder greater mobility of the population.

Earlier, I mentioned the two matters of employment and devolution. Only a few weeks ago it appeared that the governmental juggernaut of devolution was rolling ahead remorselessly over public opinion, and that this would take priority over every other issue in the next Session of Parliament. Then, last Monday, there was a report in The Times which said that the Government were coming round to the view that there should be a referendum and that the people of Wales and Scotland should be consulted. Monday's leak, whether or not it is disavowed by the Government, makes it clear that demands for a referendum have come from highly placed sources. This matter, having been floated in The Times, is now public knowledge, and obviously the Government are seriously considering a referendum. The chances are that the Government will yield graciously to overwhelming and widespread demands for a referendum instead of being hustled into devolution, resulting in a long war of attrition in this House during the next Session. The result of the latter course would be a veritable legislative Passchendaele. Unless the Government accept public opinion, which overwhelmingly wants a referendum, and makes a gracious concession, the result will be a hard-fought fight, in which the Government will be forced eventually to hold a referendum by cross-party co-operation.

If the Government were now graciously to accept the case for a referendum, and were to agree to incorporate that provision into the Bill, so that the Bill would not become law without the approval of the people of Scotland and Wales, the sceptics—certainly I and, I anticipate, some of my friends—would go at least halfway to meeting them on the issue. That would be bound to make us seriously reconsider our position on Second Reading, and would lead in general to a far more constructive approach by us in the next Session's debates.

I appeal to the Government to make a gesture of reconciliation about a referendum. If that gesture comes it will certainly be met by myself and, I expect, by my friends who feel deeply about the matter.

2.41 p.m.

Sir Anthony Meyer (Flint, West)

The Secretary of State should have taken a leaf out of the book of the hon. Member for Swansea, East (Mr. Anderson) in terms of the honesty and candour with which he spoke.

I do not want to consider who is to blame for the appalling situation in which Wales now finds itself, and the still grimmer future that the people face over the next few years. It does not matter who is to blame. The important thing is to start doing something about the situation here and now. The first thing is to admit just how bad things are, as the hon. Member for Swansea, East has just done, and not to delude ourselves with any false hopes.

It would be wonderful if last month's slight drop in unemployment showed a real downward trend, or if the other few items of good news from the last 48 hours were part of an upward movement of the economy. However, there is precious little reason to suppose that that is the case, and there are too many reasons to suppose that the unemployment figure will go somewhat higher still, will stay higher for a very long time, and that much rougher economic weather lies ahead.

There was no sign of any improvement in North Wales. The headline in the Liverpool Daily Post of 27th October stated: Jobless—no joy for North Wales". There was an increase of 144 in the number of unemployed and reduction of 100 in the number of vacancies. This is small stuff compared with what is in store, compared to the announced closure of Courtaulds' Castle Works in Flint and compared to the job losses to come from the British Steel Corporation at Shotton.

It will not do to say that Shotton is all right until 1981. The absence of a decision now to invest in modernising the open-hearth furnaces there is tantamount to a decision to phase out steel-making. It is a question not of deferring a decision on Shotton, but of taking a decision to put additional money in.

In North-East Wales our worst fears have been confirmed. On 6th August 1975 I wrote to the Secretary of State explaining the extreme fragility of the Deeside economy. I said that my worry was that there might be a sudden increase in unemployment as the BSC, Hawkers and Courtaulds started to lay off workers simultaneously. By that time it would be too late to apply any of the usual regional incentives, such as the granting of full development area status, since such remedies took more than a year to have any effect.

More than a year has now gone by, a year in which we have seen Courtaulds' labour troubles and its lamentable failure to see and prepare for changes in the demand for its products which had been clear to all, a year in which the future of Hawkers has become more doubtful than ever because of the steadily approaching threat of nationalisation, a year in which uncertainty still hangs over the heads of Shotton steel workers. In that year the Government have done precisely nothing to prepare for a tragedy which all could see coming, except to spend public money building advance factories which today stand empty or are occupied by half-a-dozen workers whiling away the day making clay models.

The Government failed to do the one thing they could have done, which was to give the area full development area status such as is enjoyed—if that is the right word—by all the surrounding areas. I do not have much faith in the positive advantages of assisted area status. I would rather have first-class road communications. Anyone can see, however, the undoubted disadvantages of not having development area status when everywhere else around has it.

It was only a Conservative Government who afforded any help to the Deeside area by giving it intermediate status. They did not wait until it was too late. The Secretary of State has. If he gives full development area status before the month is out—as he surely now must—he will do so in the knowledge that it will not now undo the harm that has been done. It can only palliate a still further loss of jobs which must be expected.

The sorry state of affairs in North-East Wales, which used to be an area of relatively low unemployment, is due in part to some factors which are still outside the Government's control. Nevertheless, a substantial cause, as it is a substantial cause of the economic distress throughout the country, comes from the Government's failure to be frank with the people, to tell them that they must lower their expectations to match their achievements. It comes from the Government's failure to act soon or decisively enough.

As my hon. Friend the Member for Pembroke (Mr. Edwards) pointed out repeatedly, the Government and the Secretary of State have led people to expect an improvement which could not possibly materialise. The right hon. and learned Gentleman was at it again today. They have postponed the sacrifices which people have been willing to accept. Because of this repeated double failure of the past two and a half years, the sacrifices now demanded are much greater and the chances of recovery much more problematical and much slower. If the Government had been open and courageous in 1974 the people of Britain, at the price of a mere standstill in their living standards for a year or two, could have laid the foundations for steady expansion.

By 1975 the situation had been allowed to worsen to the point at which it became necessary to impose an actual drop in living standards. Even so it would have been possible to shield the least well-off from the hardships imposed on the rest of us. Now it is no longer possible to do even that. Now, as in 1931, the Government, though they will not have the courage to attempt it, must not only sharply lower the standards of the social services, they must also cut the cash benefits on social security and unemployment. They must do so, if only by the cowardly way of letting inflation do the job for them.

Before the Secretary of State rejects this assertion, let him look at the Written Answer to my hon. Friend the Member for Norfolk, North (Mr. Howell) by the Secretary of State for Social Services on 15th October at Column 245 of the Official Report. It shows the net spending power of people in work and out of work. Let him also take into consideration the tax refunds which are available to people on short-term national insurance benefit as set out in the Written Answer to my hon. Friend on that day at Column 244. To save time let me give just two comparisons. A married man earning £45 a week with one small child would have a weekly spending power of £30.77 in work. But out of work he is 50p a week better off at £31.24. That does not include a tax rebate of £9.35. In other words, he is £10 a week better off not working.

The discrepancy is even more glaring for those on lower wages. A man earning £25 a week—and I regret that there are such people in North Wales—who has three children gets £39 a week in work with FIS and so on, but £49 out of work. In addition he draws another £11 tax refund. This incentive not to work is clearly less for those on higher incomes, but it is there up to and beyond wages of £60 a week. In North-East Wales these are typical wage levels. In all this I have not mentioned travel to work expenses or redundancy payments.

That is the sort of mess that Government policy and reliance on the much-vaunted social contract have got us into and it will be almost impossible to get out of it.

It is not pleasant for me to have to say this, but it will not be easy to get jobs for the Courtaulds workers to be laid off in January if most of them will be better off by not working, taking into account the figures I have just quoted and redundancy payments and the cost of travelling to work. A large number of Courtaulds workers fall into the categories I have described. It is no comfort to read in the Liverpool Daily Post that Shotton has a new, streamlined Jobcentre. It would be much nicer to read that the Government have a serious intention of tackling unemployment. If they have, they must either cut unemployment benefit or reduce the tax on incomes. But they lack the courage to do the first and the money to do the second.

In the memorable words of my right hon. Friend the Member for Sidcup (Mr. Heath), we have reached the end of the road. But it was the wrong road, and we must go back and start again. Wales needs new measures and new men. The best service the Secertary of State could now render to the people of Wales would be to join his fellow Ministers and resign to make way for an Administration which will tell the people the truth and lay on them the sacrifices which they are ready to bear and thus sow the seeds of a slow recovery.

If, despite yesterday's massive rejection of the Government by the electorate, this is not to be, should not the Secretary of State consider whether there is a personal contribution which he could make?

The right hon. and learned Gentleman took up his great office with high intentions, but he must surely wonder whether he has lived up to them, whether he has not been a little too quick to respond to criticism with abuse—as we saw again today—a little too pat in his excuses and too narrowly partisan to set the new tone of unity and reconciliation which our people are longing to hear.

Even within the ranks of the Secretary of State's own discredited party, there are hon. Members, one of whom was sitting beside him just a moment ago, who would evoke a wider response from the people and from this side of the House if they appealed for a united effort for national recovery. I would certainly respond to such a lead.

2.53 p.m.

Mr. Michael Roberts (Cardiff, North-West)

The hon. Member for Swansea. East (Mr. Anderson) referred to the way in which the Secretary of State had stuck tenaciously to the construction of the M4 in South Wales. I also appreciate the way in which this important lifeline for South Wales is being developed under this Government as it was under the last Conservative Government.

However, I wish to draw the attention of the Secretary of State to an aspect which affects the whole of South Glamorgan. While this lifeline is being constructed and we see the wonderful link to the West and to London, we do not believe that there are sufficient interchanges to allow Cardiff, Barry and, indeed, the whole area to take advantage of the lifeline.

I know that the Secretary of State works within a limited budget. At a time when we are having to accept cuts in public expenditure, there is no question of my saying that we must have interchanges immediately. I know that the right hon. and learned Gentleman appreciates that they take years to prepare and plan, but if Cardiff was given hope that, when the resources were available, the necessary interchanges to the East and West would be provided, the area would look at its economic future with much greater hope.

The hon. Member for Pontypool (Mr. Abse) asked whether his right hon. and learned Friend got up early in the morning to read The Times. There was a certain amount of speculation about that. I do so regularly and I read this morning that the Secretary of State was celebrating his 45th birthday. We wish him many happy returns, but not in his present office.

The hon. Member for Pontypool also referred to the latest Marplan poll and made the legitimate point that the people of Wales had responded to this splendid, reputable poll, which was well conducted throughout the Principality. The authenticity and validity of the poll were borne out by the results in Walsall, North and Workington yesterday. I want the Secretary of State to know that even those of us who have opposed referenda in the past recognise that there must be some way in which the voice of the people of Wales can be heard. Their voice must be heard.

It is interesting to see in the Marplan poll the derisory number who want devolution and set that against the constant propaganda in the last three or four years in the media in Wales. The Western Mail, the national daily newspaper, has devoted the whole of its centre pages today to an article on devolution, but I am sure that not many people in Wales will read it.

During one of the 1974 General Elections, the BBC had an hour's programme for the electors of Wales. Every question was on the issue of devolution, as if the people of Wales were profoundly concerned about that and nothing else. As everyone who keeps in contact with his electors knows, devolution is not a burning issue. That is why we must demand that a way be found to allow the voice of the people of Wales to be heard on this important matter.

I was pleased that the Secretary of State spoke about education—there were few of his remarks with which I could not agree—and I thank him for giving me a copy of his speech at Colwyn Bay.

It is high time the Secretary of State began to take a keen interest in the quality of education in Wales. I know that the right hon. and learned Gentleman must be loyal to the Prime Minister, but when he said that his right hon. Friend had initiated a debate on standards, I wondered what we had all been talking about for many years. Standards in education have been the central theme of speakers from this side of the House in education debates. Yet we are told that, when the Prime Minister makes a few remarks in Oxford, he is initiating a debate.

Let us be clear about the role of the Prime Minister and about that of the Secretary of State, who made his speech in Colwyn Bay. They are late gatherers in the vineyard. They are none the less welcome for that. But it is high time that they said something about it. They should have said it long ago.

About a fortnight ago, I asked for some statistics about truancy in South Glamorgan. I received a reply from the Under-Secretary to the effect that those statistics were not available. It is true that he provided me with general statistics for the whole of Wales. It is also true that I can quite easily discover how many children in South Glamorgan are absenting themselves from school. But I make the point because it shows that, at the moment, people do not have their fingers on the pulse of education throughout South Wales, and it is high time that they did.

I fear that in Wales there is great concern about education standards and about truancy. Many well-informed people believe that the figures issued are an underestimate of the true numbers missing from our secondary schools at 3.30 on a Friday afternoon, for instance. There is concern about growing illiteracy. There is a suspicion, which I hope is not proved to be a reality, that there is a decline of standards in our secondary schools.

What frightens so many people is that they are not convinced that those who are responsible for educating our children and for administering education in the Principality themselves know the facts. One of the reasons is that they have not initiated inquiries to find out what is going on. That is worrying parents all over the Principality, and we must set their fears at rest.

I am the first to recognise that great work is being done by teachers in the comprehensive and secondary schools in Wales. Now we have to think of how we can best make our comprehensive schools work. In that connection, I wish to make one or two suggestions.

When my right hon. Friend the Leader of the Opposition was Secretary of State for Education and Science, she was one of the first to see the advantage of smaller comprehensive schools. In my view, it was a major contribution to making our comprehensive schools work more effectively. I know that the money is not available at the moment and, therefore, I do not ask for greater public expenditure in this connection. But I hope that the Secretary of State will look forward to a position where schools are becoming fewer in number because of the decline in the population and take advantage of that situation to have smaller schools, rather than to amalgamate schools to save the construction of new buildings in, for example, new council developments and new suburban areas. I hope that the Government will regard this as a priority when the necessary resources become available.

Then I ask the Secretary of State to think very hard about the quality of some of our schools in those tough urban areas where perhaps the range of opportunity is not the same as it would be in other communities and to ask himself whether comprehensive schools serve the community as effectively as they should. I put it to the right hon. and learned Gentleman in this simple form. He went to the school which I myself would have attended had I not moved to South Wales, Ardwyn. He then moved to the University College of Wales, subsequently to Cambridge and then to The Hague. Can he believe that someone today entering a comprehensive school in a tough urban area at the age of 11 has the same opportunities to make that sort of climb, of which he took full advantage? If the answer is "No"—even if there is a suspicion that the answer is "No"—it is time for Ministers to look very carefully at the situation and to ask themselves what they can do to improve comprehensive education.

Far too much of the idealism and concern of members of the Government party for education has been channelled into arguments about social engineering and arguments about structure. They have for years ignored the problems of quality in education, and our children have suffered as a result.

Therefore, I conclude by asking for a most critical review of how comprehensive education is working, not because I am opposed to comprehensive education—I worked in a comprehensive school; I was headmaster of one at one time—but because I want to ensure that the system we shall have to use for the next 15 to 20 years at least will be the system which gives our children the maximum advantage.

3.5 p.m.

Mr. D. E. Thomas (Merioneth)

I shall not be drawn by the hon. Member for Cardiff, North-West (Mr. Roberts) to take up the education issues that he raised, although I certainly join him in welcoming the initiative taken by the Secretary of of State in his Colwyn Bay speech, stressing the need for a technically and scientifically orientated curriculum in our schools in Wales.

I had intended to speak on the whole area of social policy, which has so far been neglected in the debate, apart from some references to housing. I am concerned that the House is not giving adequate scrutiny to the health and personal social services functions of the Welsh Office. We have not had a Welsh Grand Committee debate on these aspects of the social services during my time in the House, and it is high time that we raised the issue and had a wide-ranging debate on it. However, in view of the time, I shall not concentrate on that, but I was so struck by the air of false optimism in the Secretary of State's opening speech that I felt obliged to reply in the same sort of personal way.

Throughout the period during which the right hon. and learned Gentleman has been in office, my experience as a constituency Member of Parliament has been one of living in a very different Wales—perhaps even a different world—from the one which the Secretary of State seems to inhabit, commuting as he does between Blackheath and Llandysul.

The Secretary of State paid a State visit to my constituency in April 1974, perhaps not unrelated to the result of the election the previous month, and, no doubt, in anticipation of a succeeding election. He called a meeting, which I was glad to be able to attend, at which he pledged his Government's priorities. They were, as we heard him repeat in the House, jobs and homes. The people of Wales judge the Secretary of State, the Welsh Office and the present Administration on their performance in that area of policy now, and will judge them whenever we have a General Election. There may be odd swings to third parties in certain regions of England, but there can be no doubt where the political swing will be in the valleys and industrial areas of South Wales when this Government are judged on their economic and social record.

I return now to the Secretary of State's visit to Blaenau Ffestiniog. He spoke of the deep problems of the area, including its employment problems, and said how similar they were to those of Glyncorrwg, in his own constituency. At that time we discussed, in particular, the empty 50,00 sq. ft. advance factory in Blaenau Ffestiniog. I do not apologise for referring to that factory yet again, as I have so often done in questions, at meetings and on deputations, as well as by correspondence, because what causes me most anxiety in my constituency is that the factory is still empty. True, it has at last been refurbished, and we are grateful for that, but it is one thing to get in the decorators and quite another to bring in the producers.

I ask the Under Secretary of State—1 know that he is equally concerned—when he last discussed with the Welsh Development Agency the question of setting up its own publicly-owned subsidiaries to operate in our empty advance factories. I realise that he will say that this is a matter for the WDA, but he should meet the WDA and raise the matter with it. In the Financial Times last month we were told that the Northern Ireland Development Agency has set up a wholly-owned subsidiary to manufacture bicycles in Derry. Those of us who were concerned with the attempt by a private entrepreneur to establish a bicycle factory at Blaenau Ffestiniog read that piece of news with a great sense of irony.

The marketing work and the development project for the factory was done by the Northern Ireland Development Agency. That is the sort of work that we have been calling on the Welsh Development Agency to do since it was set up. I know that there have been difficulties about the recruitment of staff, but if the Agency can employ outside consultants to scrutinise the books of individual industrialists it could, on the same basis, utilise the expertise of outside consultants to design public enterprise projects to be established in the sort of factory to which I have referred.

Whatever the right hon. and learned Gentleman may say about the number of jobs created and about the light at the end of his tunnel, I am afraid that the tunnel that I keep looking into is the long British Rail tunnel out of Blaenau Ffestiniog towards Llandudno Junction. The light at the end of that tunnel is a great deal further away than the light at the end of the tunnel frequented by the right hon. and learned Gentleman.

The Secretary of State's remarks about the jobs created must be judged against job shortfall in both Gwynedd and Clwyd. I have the dubious honour of representing a bit of both counties. In fact, it is not an honour, it is an onerous burden. We should have heard more of the onerous burden facing the right hon. and learned Gentleman and less of the complacency which was so noteworthy in his opening remarks. It is an onerous burden these days to try to relieve the anxieties of our people who are facing unemployment. We should be reflecting those anxieties and not mouthing general platitudes and cant about devolution from Labour Members with the Benches three-quarters empty.

Mr. Ifor Davies

Where is the hon. Member for Carmarthen (Mr. Evans)?

Mr. Thomas

My hon. Friend is involved in a major constituency meeting. If two thirds of every other parliamentary party were present the Benches would be somewhat fuller.

The anxieties of our people must be reflected in our debates. Not only is the factory at Blaenau Ffestiniog untenanted; the two Government factories at Dolgellau are untenanted. The nursery units at Bala are untenanted and, last but not least, we have had the closure of two creameries, one at Rhydymain, because of low milk production in the area and the Government's policy in securing returns for milk producers. More recently, we have had 70 redundancies at Corwen Creamery.

I know that the Secretary of State is scheduled to pay a visit to Corwen on 30th November, when he is due to open the de-luxe cowshed that has been built by Lord Newborough. Before the Secretary of State puts on his Wellingtons to open the de-luxe cowshed, I hope that he will take the trouble and time to go across the road to visit the creamery and to talk to those who have been made redundant. Those people are as worthy of his time as Lord Newborough.

The creamery has been closed by the CWS. As the milk products director put it to me the other week, it has been put in mothballs because of the position of the United Kingdom cheese market, because we are taking imports from European Community countries and because the percentage of the domestic market being taken by British producers is down to 60 per cent. In my view, part of the reason for the difficulties is that Wales does not have a milk marketing board. A marketing board could decide priorities in terms of manufacture as opposed to bottle production. These are anxieties that we must reflect in response to the complacency of the Secretary of State when he talks about an alleged upturn and makes various hopeful comments based on factors that his officials have been scratching everywhere for all over Wales.

An issue related to the economic crisis is housing. There are deepening anxieties about the housing crisis, an issue that was so aptly stressed by the hon. Member for Pembroke (Mr. Edwards). Will the Undersecretary of State confirm that 60 per cent. of the block allocations that are to be given to Welsh counties next year has already been committed? Will he confirm that the new building, the improvements, the acquisitions from the private sector and the building land acquisitions are already committed to the tune of 60 per cent.?

The Secretary of State was not prepared earlier—he has not been prepared throughout his term of office—to give us any figures about job shortfall and to compare the Government's performance with that shortfall. Similarly, I am told by the Under-Secretary, the hon. Member for Rhondda (Mr. Jones), who I know is deeply interested in housing issues and intelligent about these matters, that he and his officials cannot calculate the housing shortage in Wales. He told me in a parliamentary answer last week that this is such a general term that it cannot be defined.

The Plaid Cymru Research Group, in a memorandum to the Secretary of State earlier this year, proposed that the real shortfall in Wales amounted to the need for 25,000 new units per year for the next seven years. The Secretary of State wrote me a nice long letter rebutting that figure which he said he did not accept, but refusing to give any alternative figure.

So on the jobs front we face a failure to give us the figures of the jobs shortfall, despite the county structure plans. In Clwyd, for example, the Economic Review published last month came up with a figure of 50,000 by 1981. A similar study has been undertaken in Gwynedd. Athough local authorities have figures relating not only to job shortfall but also to housing waiting lists and housing conditions, although we have the House Condition Survey and another is being prepared, it appears that the Government cannot come up with a single figure of the real homes needs in Wales.

Therefore, when the Secretary of State says that jobs and homes are his priorities, what he means is that those priorities are open-ended, that he has no target to them and that he cannot be judged on his failure to meet a target. But he will be judged by his failure to meet the target which we who stare the real facts of Wales in the face know is necessary.

It would be wrong if I were not to refer in passing to devolution. I say in passing because I am concerned about the real issues facing the people of Wales. I do not intend spending my time writing long, tedious articles in the Western Mail alleging that bribery and corruption will be increased, that there will be more opportunities for all forms of gravy trains, whether high-speed or not, driving around Wales after devolution.

I am concerned about the real issues, about jobs, homes and the powers of the Assembly. That is what the Welsh people are concerned about. Opinion polls have shown that they are concerned especially about the powers of the Assembly. One produced earlier this year showed that 70 per cent. of the respondents wanted the same level of power for the Welsh Assembly as the Scottish Assembly is to have.

We must be concerned about the relationship between devolution, the powers of Assembly, and the issues that we have been debating today. Those issues include the role of the Assembly in making housing allocations among different districts and its role in arguing with the Treasury in London about how much Welsh housing will get—whether it is to be £20 million or £30 million or, what I would judge to be nearer the real need, £80 million extra. That is the role of the Assembly—as the spearhead in demanding economic justice for the people of Wales.

We have had today what will be one of the last Welsh affairs debates at Westminster. By this time next year, the Welsh Devolution Bill will be on the statute book and the Assembly will be established de facto.

Mr. Abse

Will the hon. Gentleman reaffirm what I understand is the policy of his party—that he is deeply anxious, as we all are, that there should be a referendum, putting the Bill which he apparently wishes to support before the people of Wales? If he does reaffirm that, such a referendum is held, is he not being more than sanguine in assuming that by this time next year such a Bill will be on the statute book?

Mr. Thomas

I am grateful for that constructive contribution. I endorse entirely what the hon. Gentleman says and repeat the position of my party, that we strongly favour a referendum. I should love nothing more than spending three weeks campaigning on the issues of self-government and economic power for the Assembly. Given that kind of referendum campaign, I am confident that I should be on the winning side this time, not as I was in the last referendum.

It is not this House which will talk about so-called "Welsh affairs". That title has always amused me. I do not see why we should be discussing extramarital relationships in Wales. What I am concerned about is that we have an annual——

Mr. John Morris

Puerile.

Mr. Thomas

The Secretary of State says that my remark was puerile. This debate, and his contribution to it, have been more puerile than anything I have said. We have had annual complacent debates on Welsh affairs in the House and in Welsh Grand Committee. Welsh affairs will disappear from the curriculum and timetable of Westminster and become the permanent preoccupation of the salaried Assembly men about whom the hon. Member for Pontypool (Mr. Abse) is so worried. The priorities and policies of Wales will then be determined by the elected representatives of the Welsh people in their own Assembly in Cardiff.

3.20 p.m.

Mr. Wyn Roberts (Conway)

I add my voice to those who have protested against this Welsh debate being held on a Friday. I suspect that the right hon. and learned Gentleman joins us in regretting that the debate is being held today, because it is his birthday. I, too, congratulate him and wish him many happy returns.

I wish I had more upon which to congratulate the Secretary of State but, alas, his speech was one of the thinnest that I have heard from that Dispatch Box.

It is customary for the Opposition to wind up a Welsh affairs debate by reiterating the main charges against the Government. It is equally customary by now for the Minister who follows sedulously to avoid answering those charges. I confidently predict that we shall get no worthwhile answers today. What we are likely to get from the Minister, when the Welsh economy is in a perilous condition and the people of Wales are as deeply anxious for their future as they have ever been since the war, are some constituency points probably intended to help nervous Labour Members. Of course he may do better than that. We sincerely hope so. What we will not get is a proper assessment of the problems facing us in Wales and realistic policies to solve them.

Whatever happens, I hope that the Minister will not end his speech as the Secretary of State did in the Welsh Grand Committee on 21st January with the statement that he was confident that we are now planning and preparing for the future, and we are taking every possible step to ensure that the Welsh economy flourishes and prospers."—[Official Report, Welsh Grand Committee, 21st January 1976; c. 98.] The Secretary of State's peroration today was not so confident. Now, 11 months later, we are not talking about prosperity; we are talking about stopping the desperately serious decline that has taken place over the past two and a half years and that threatens to quicken its pace in the months ahead and fling us headlong into the worst disaster we have known since the early 1930s.

Most of the grievances that we have heard about in this debate and those that fill our mail these days, ranging from the inadequacy of the mobility allowance for the disabled to the threat to occupational pensioners retiring early and a variety of cut-backs in central and local government services, in transport services, and so on, stem from the insufficiency of resources to meet our needs.

It is incredible that there should be this inadequacy of resources when one considers the increases in taxation and Government borrowing over the past two and a half years. Income tax on the average family has doubled. One pound in every £5 spent by the Government is borrowed, but still needs cannot be met. Something is very wrong somewhere and we all know, or should know, what it is. What has gone wrong is that public expenditure has grown in real terms by 20 per cent. over the past three years while our economic growth has been at the rate of 2 per cent.

Those are the present Prime Minister's figures, and I do not argue with them. There are other figures—Treasury figures—which show that public expenditure per capita has doubled since 1973–74. The point is that public expenditure has grown much faster than the economy. We say that it was wrong to allow it to do so. Public expenditure takes more than 60 per cent. of the national income and the political implications were pointed out by the right hon. Member for Birmingham, Stechford (Mr. Jenkins) in his Anglesey speech in January of this year. He rightly implied—I quote from The Times—that when 60 per cent. of national income is consumed by public expenditure then, as he put it— We are close to one of the frontiers of social democracy. In other words, the end of the mixed economy is in sight and the advent of the State-controlled economy is near.

Some hon. Members opposite—and there are not many of them in the Chamber—favour any advance towards what I would call the whole-hog Socialist State. They do not realise that such an advance would mean even more savage cuts in Government spending and a sharper reduction in the standard of living in the long term than if we reduced the proportion of national income consumed by public expenditure from 60 per cent. to a more modest and tolerable level to preserve the mixed economy. A mixed economy is worth preserving because if it is properly run with effective incentives to work and invest it is historically far more resilient and produces a higher standard of living than an economy which is wholly State controlled. Those who have visited and studied Eastern Europe will know that to be true.

Of course, the debate on the issue continues within the Labour Party and when the Government say they are borrowing money to borrow time I suspect that they mean time to win the debate. If the recent defeat of the Government's policy at the National Executive of the Labour Party is any guide, the Government have a long way to go before they win that debate if they ever do. Meanwhile, we are slipping towards a full-blown Socialist State.

Wales is more dependent on the public sector than the rest of Britain in the sense that, because of coal and steel a high proportion of the population is engaged in the public sector. Identifiable public expenditure in Wales, excluding such major items as capital expenditure by the British Steel Corporation, subsidies to nationalised industries and defence spending, amounts to about half our domestic income. We are therefore vulnerable to cuts in public spending. It would be fair to say that we are excessively and dangerously dependent upon the public sector. When public expenditure cuts are proposed, there will be a sharper outcry in Wales. Arguments are adduced for more public spending in Wales, for the maintenance of present spending levels or at least smaller cuts than those proposed for other parts of the United Kingdom that have higher per capita expenditure on housing, for instance.

Plaid Cymru's charge, in the Western Mail's economic review of 26th October, that Welsh councils have been allocated far less than 5 per cent. of total local government spending in Great Britain is a dubious allegation. Welsh local authorities received 7.5 per cent. of the first late support grant distribution for 1976–77 to England and Wales compared with her population share of 5.6 per cent. Similarly she received 7.1 per cent. of the transport supplementary grant. Taking both those grants, the grant to Wales in 1976–77 is 22 per cent. higher than it would have been if it was calculated on a straight population basis. My figures are from the Association of County Councils.

If we are to make special pleas, let us at least get the facts right. How Plaid Cymru reconciles its cries for more money from the Treasury with its cry for separatism I shall never understand unless what it really wants is satellite status.

All the argument about cuts in spending beg the question why they have to be made at all. The Welsh TUC, arguing for the slow growth of the economy, says: On this view, it is not public expenditure that has grown too fast but the economy that has grown too slowly. I would put it another way. Public expenditure has grown too fast and the economy has grown too slowly to sustain it. One cannot blame the public sector or the private sector particularly. The fact is that, as the hon. Member for Caernarvon (Mr. Wigley) pointed out, and as the index of production shows, production is still well below 1974 levels.

Where the Government's strategy has gone wrong is that they thought they could wait for an upturn in the economy before making any significant cuts in public expenditure. The upturn has not come, and we are now borrowing our way into the lean years of public expenditure cuts with our industrial production still below that of the three-day working week.

Why has the upturn not taken place? The Prime Minister gave the answer weeks ago when he said that it would be difficult to finance the public sector borrowing requirement and economic growth at the same time. Why he did nothing about it, I shall never know. Possibly it was too late. It was this difficulty that caused the expansion of the money supply, the fall in the value of sterling and the consequential action that had to be taken on interest rates. The full effect of that 2 per cent. rise in interest rates has yet to be felt in employment and investment, but it is bound to be severe. It is estimated that it will add another 100,000 to unemployment in the United Kingdom as a whole. If we had our share of that 100,000 we would lose nearly 6,000 jobs.

The effect of the fall in the value of the pound, also, has yet to be felt in prices. I am told that the fall since mid-August is likely to add at least 3.7 per cent. to the retail price index. Therefore, it can be seen that the effect of the fall in the value of the pound will be severe, too. Looming ahead also are the actions that the Chancellor of the Exchequer is likely to take to secure the IMF loan. His mini-Budget cannot be long delayed, now that the by-elections are over. Then there are the likely increases in oil prices.

I dread to think what the January unemployment figures for Wales will be and how the social contract, which, in his message to the electors in the by-elections, the Prime Minister called the basis for a sustained recovery, will look early next year. The prospect is grim in the extreme.

In April, the employers' national insurance contribution will be increased, taking another £60 million out of industry in Wales—money that might otherwise have gone into investment, into the creation and preservation of jobs. Small businesses, on which we are also very dependent in Wales, will be hit yet again. Only this week the Western Mail reported that 3,000 shop workers in South Wales alone had lost their jobs in the past year, and that more job losses were expected in 1977.

Against this alarmingly sombre background of deterioration and decline, under a Government who have manifestly failed to take the right crucial decisions at the right time, the House will be asked to consider the Government's devolution proposals, which will be largely irrelevant to the economic blizzard raging in Wales and elsewhere early next year. All the areas of government to be devolved will be areas where money is bound to be scarce. Therefore, it will appear to the Welsh people, quite rightly, that devolution is an attempt to deflect criticism from Whitehall to Cardiff and to put Wales out in the cold at the mercy of the wild men who will seek power over her in her weakness.

I hope that there will be time to talk about devolution at a later date, although, judging by next week's guillotine motion, one can never be sure about time under this Government. They are becoming increasingly intolerant of democratic processes. I am not surprised, because the more wrong they are, the less opportunity they wish to give to others to say so and to point out the error of their ways.

I wish to say a few words about education in Wales. Judging by some of the facts which are coming to light, we need to debate education in Wales even more than education in the rest of Britain. There was a time when we thought that a Welsh education was superior to any other. We must now look to our laurels. The situation is far more serious than the Secretary of State for Wales indicated this morning. I am told that absenteeism is running at twice the rate of that in England. I understand that 31 per cent. of our children who leave school in Wales have neither O-level nor CSE passes, compared with a figure of 20 per cent. in England. We have a poor pupil-teacher ratio, and low spending on books and materials. These are unpleasant and disturbing facts, which cause much concern to parents.

Are we spending too much on administrators, educational advisers, and the like, at the expense of teachers? I ask that question in view of the recommendations of the Soulbury Committee regarding the increases in advisers' salaries—increases which shocked my authority of Gwynedd and myself.

Mr. Ifor Davies rose——

Mr. Roberts

I am sorry, but the time left to me to complete my remarks is extremely short.

There is not equality of opportunity of education in Wales, especially at the higher levels. The discretionary grants vary. I understand that Dyfed County Council is now proposing to set discretionary grants at a maximum of £320 and proposes not to pay student union fees. These facts pose the question whether available resources are being properly applied. There is hardly any sphere of life today in Wales where people are satisfied. They are disillusioned with politicians, as the hon. Member for Cardigan (Mr. Howells) said. I doubt whether they would be less disillusioned if they read the Early-Day Motion, tabled by his hon. Friends, proposing the closure of the Swansea licensing centre.

The people of Wales have had enough of the present situation and cannot wait to get rid of this Government. Last night's results at Workington and Walsall would be repeated if by-elections were held in Wales. Ask the young people who are still waiting for houses. Ask the council tenants who are waiting for repairs. Ask the out-of-work teachers, the construction workers, and all the rest who are unemployed. Ask the trade unionists whose jobs are threatened. Ask the small business men who are threatened with bankruptcy or who are already bankrupt. Those people have only one question for us in Opposition: "When will you get rid of this Government?" The longer the Government delay in going to the country the more disillusioned people will become with the Government, the Labour Party and with Socialism. I am not surprised that the Prime Minister has talked of riots in the streets. He may see them himself if he remains in office.

The Secretary of State for Wales and his colleagues in the Welsh Office are the victims of worse blunders in the Government—a Government of which they are a part. Politically, I am sorry for them, yet when one thinks of the irrelevant policies which they have pursued, apparently in all seriousness and with a view to some blithe future in the Secretary of State's imagination, while the Welsh economy has been going steadily downhill under their very noses, and when one thinks of the constant efforts of Ministers to disguise the truth by juggling the figures and seeking to lull us all into a false sense of security, with large doses of worthless and insincere optimism, one's pity turns into sour indignation at their curious naivety and the slightly grubby complacency that underlies it all.

3.40 p.m.

The Under-Secretary of State for Wales (Mr. Alec Jones)

First I sincerely thank the hon. Member for Pembroke (Mr. Edwards) and other hon. Members who have welcomed my return to duties in today's debate. I understand the point made by my hon. Friend the Member for Gower (Mr. Davies)—that Friday was not exactly the most attractive day from the point of view of Welsh Members. I assure him that that point has been taken on board. As one who thought, not so long ago, that he would never have the opportunity, of addressing this House again, it is a pleasure to speak in a Welsh debate, be it Friday, Thursday, Wednesday, Tuesday or Monday.

There are so many detailed constituency points which have been brought up that the only way I could have hoped to deal with them would be by rising to my feet at half-past three. The hon. Member for Conway (Mr. Roberts) and I agreed that that would be unfairly to curtail the debate. I will try to deal by letter with many of the points that have been raised. I must say, too, that it is not my intention to deal with devolution. I am sure that all of the interesting contributions which we have heard from both sides today will be heard in greater detail in the weeks to come.

I take the point made by the hon. Member for Merioneth (Mr. Thomas) about the need to debate health and personal social services. This might well be a suitable subject for the Welsh Grand Committee. It is something we could consider.

I do not agree that my right hon. and learned Friend painted too optimistic a view of the economic and industrial problems facing Wales. I think he gave us a realistic appraisal—certainly not one that was too optimistic. He was right to draw our attention to the things which are going well. I have gone through the debates which we have had in the past two years and I see that my right hon. and learned Friend has constantly warned the House, and Welsh Members in particular, of the serious nature of our economic problems and how the Welsh economy has been hit by the world recession in the same way as the economy of the United Kingdom.

I understand the criticisms made by Plaid Cymru Members. I suggest that the remedy which they offer, of separating the economy of the United Kingdom, is not calculated to solve our problems but will intensify the difficulties facing the people of Wales.

The hon. Member for Pembroke, with his usual charming vitriol, said that the Secretary of State had been somewhat selective. He accused my right hon. and learned Friend of being so selective about the economy that he had referred only to the bright spots and had conveniently overlooked the black spots. In support of this accusation he drew on the commentary of the Welsh Industrial Development Advisory Board, talking about a 40 per cent. decline in applications in respect of expansion projects and so on. The fact is that my right hon. and learned Friend said that there had been a decline in the number of applications for assistance in comparison with earlier years. He was perfectly open and honest.

I believe that the accusation of the hon. Member for Pembroke is quite unjustified. Indeed, one may level a charge against him of being selective. He took a few figures out of the Board's report. I quote what it said on page 23: However, there are some bright spots. In particular the manufacturing sector in Wales has so far weathered the recession with comparatively few closures and, despite the drop in manufacturing activity, there was still a movement of new industry into Wales. The Board are encouraged by the fact that the restructuring and diversification of the manufacturing sector has been advanced, even in these more difficult times. I am not saying that everything in the garden is lovely, but it is unfair to suggest that my right hon. Friend was selective when, in fact, he had pointed out the difficulties.

On 4th December 1974, in the Welsh Grand Committee, the hon. Member for Pembroke warned of the storm which was already on us and how it was gathering intensity. He said: This is not just an economic problem. We are in what is, undoubtedly, the worst world-wide economic situation since the 1930s … "—[Official Report, Welsh Grand Committee, 4th December 1974; c. 18.] If that is true, I ask the hon. Gentleman to reflect whether it is even moderately fair to attribute all our economic ills to the actions of the present Government. If he tempered his criticism with a little modesty and accepted, on behalf of his party, some of the blame and recognised the facts there would be a reduction in the quantity and volume of his criticism but a considerable improvement in its quality.

The question of advance factories has been referred to briefly. I am willing to give figures, but time is a problem. [Interruption.] I have given the hon. Gentleman all the answers. There was no selection. The dilemma that we face about advance factories is this: should we wait until we have a prospective industrialist before we start building, knowing that if we do so there will be a delay of one or two years and sometimes longer? Is it not more sensible to say, "We shall build factories in advance of the need so that when an industrialist wants a factory he will not be kept waiting but will be able to move into production, creating jobs much sooner than would be the case if he had to wait for the factory to be built"?

We should like to be able to fill all the factories as soon as they are completed, but life is not like that. It has been accepted by successive Governments that it is right, proper and wise to build factories in advance of need.

The hon. Member for Flint, West (Sir A. Meyer) said that the Government had done nothing for Deeside. I understand the great anger felt in that part of the country, particularly about the news we have heard in the last week or two from Courtaulds. The hon. Gentleman referred to the question of development area status. The question of extending the areas covered by development area status is under continuous review. The problem has been made worse by the fact that Courtaulds, a private company, gave no real notice of its intention. It is difficult to attack the Government for not having done much when they were given no prior notice of the intention to close the factory in the area.

The hon. Member for Caernarvon (Mr. Wigley) and a few other hon. Members spoke about the Welsh Development Agency. He said that he did not blame the Agency too much, but his words led me to think the opposite. Certainly he did not pay tribute to it. First, the Agency had to take on—and it has done it without a hitch—the ongoing work of the Estates Corporation and the Welsh Office Derelict Land Unit. It had the problem of recruiting senior staff who were obliged to give notice to their previous employment. I was asked whether the Welsh Development Agency would submit reports. The answer is yes, it will do so, and the reports will be presented to this House. They will provide the House with an opportunity to assess the performance of the Agency.

I was also asked about monitoring. My right hon. Friend the Secretary of State attaches great importance to this, and detailed arrangements are being worked out between the Welsh Office and the Agency. Relations between the two bodies have been established at various levels. My right hon. and learned Friend has regular meetings with the Chairman and the Chief Executive of the Agency to review progress and to discuss any difficulties which may have arisen.

Certainly there are guidelines for the Agency on the derelict land function, on the investment function, and on the factory rebuilding function, as well as a financial memorandum. Next year's investment budget is currently being discussed with the Agency as part of the settlement of the Estimates for the whole of the Agency's activities. We must recognise that the Agency is still a very young institution and is still in the process of developing, but it has already shown that it can be a great help to Wales.

I was delighted, as are the people of Blaenau Gwent, to hear that the Agency is helping over Rassau. I know the importance which local people attach to Rassau, and certainly they are suffering from the curse of unemployment. I was staggered by the suggestion from hon. Members opposite that when the Agency announced that it was taking over this responsibility for development, 2,000 jobs should be created overnight.

I welcome the many references made in this debate to housing. I also welcome the criticism. The basic fact is that we are not able to spend as much on housing as the local authorities and as some hon. Members, including myself would wish. Last year we had to restrain public spending on improvement work and mortgage lending. Now we find that we cannot allow such a major element of public expenditure as new house building to remain uncontrolled. However, I think that we are entitled to put the figures in perspective.

The Conservative Government issued a White Paper in November 1973 Cmnd 5519 indicating how much they proposed to spend on housing in Wales for certain periods. Their provision for this year was £104 million, whereas this year we have provided not £104 million but £183 million—both figures at 1975 survey prices to ensure that I am being fair to them—an increase of £79 million or 76 per cent. over the Tory provision. I might add that that Tory provision was made before we had the worst of the oil price increase, the worst of the world recession and the confrontation with the miners, so that in these circumstances it is hardly credible that we have attained the figure which I have just given. Our figure of £183 million includes the extra £30 million which my right hon. Friend announced in Welsh Grand Committee. As for the July measures, there has been no cut in the provision made by the Government for public expenditure on housing in Wales. On the contrary, we have provided an extra £20 million for new building next year. This added provision represents our recognition of the special housing needs of Wales.

The hon. Member for Pembroke seemed to think that my right hon. and learned Friend had been somewhat unfair, that he should have sat back and refused the extra £20 million or £30 million. But my right hon. and learned Friend has a responsibility towards the people of Wales, and on housing he was right to fight for that increase. Without the increase, many of those whom the hon. Member for Conway suggested were waiting for houses would have had to wait much longer.

I am not trying to pretend that local authorities will not have to restrict their building programmes. To keep even within the increased programme, many district councils will be unable to proceed with all the building schemes they may have planned or contemplated. The effect on individual local authorities will depend on their contractual commitments and the relative size of their planned programmes. That is where the 60–40 argument comes in. No individual local authority has been told that it will have to cut back by 60 per cent. or by any other proportion. We merely say that in the next year local authorities will have to live within the planned programme. But, in spite of that, we expect more than 7,000 local authority houses to be completed next year. That figure is double what the last Conservative Administration achieved.

I was pleased that one of the first jobs I tackled when I returned to duty was to invite local authorities to bid for a further small allocation of finance for the "S.105" schemes, which are improvement schemes and for mortgage lending. It was astonishing to find that 14 local authorities in Wales had made no additional bid for lending, and these included Aberconwy and Dwyfor. Eleven made no additional bid for money for improvement, and these included Merthyr and Merionydd. There may be some explanation or reason for that, and if hon. Gentlemen are aware of it we should like to hear it.

I find it surprising that any council in Wales should be unable to generate and complete small schemes with the best part of six months left in the year, particularly in view of the urgent representations on the shortage of funds made to me by these authorities earlier in the year. I have sought, and will continue to seek, to work with local authorities. I want to ensure that we work together on housing.

The Government's aim for Wales re-remains the same as for the rest of the United Kingdom. We want to build an economy which can sustain full employment, rising standards of living and a better public service. The Government's case is that the economies and restrictions that we have had to impose, distasteful though they may be, are absolutely essential if we are to succeed in our task.

The main feature of the Opposition case seems to be to call for drastic cuts in public expenditure of up to about £10 billion. Although the Conservatives have indicated their support for public expenditure cuts, once more they have failed to tell us where in Wales those cuts would fall. I made a list of the speeches of Conservative Members, and hardly any of them failed to ask for additional spending, whether for dealing with flooding, the roads or the railways. It is nonsense and hypocrisy to ask the Government in specific terms to spend more money, and in general terms to call for a cut in public expenditure. Hon. Gentlemen should indicate exactly where, and when, they would cut.

The hon. Member for Conway concluded by talking about the unemployed teacher and the homeless couple. Of course that is a sorry tale, but if these public expenditure cuts were made to the extent that the hon. Gentleman was demanding these people would be without homes or— —

It being Four o'clock the motion for the Adjournment of the House lapsed, without Question put.