HC Deb 19 July 1978 vol 954 cc670-85

Lords amendment: no. 52 in page 14, leave out lines 29 to 35.

11.15 p.m.

Mr. John Morris

I beg to move, That this House doth disagree with the Lords in the said amendment.

Mr. Speaker

With this we are to take Lords amendments nos. 53, 54, 58, 127, 146, 147, 153, 154, 166, 174, 188 and 190.

Mr. Morris

The position we seek to restore is the object intended through a combination of clause 37 and part IX of schedule 2 of devolving the bodies referred to, namely, the Welsh Development Agency, the Development Board for Rural Wales and the Land Authority for Wales, to the Welsh Assembly, subject to certain safeguards.

The other place sought to exclude these three bodies, and the position is further affected by an amendment standing in the name of the right hon. Member for Cambridgeshire (Mr. Pym), indicating, as I understand it, that the Conservative Opposition are prepared to devolve the Land Authority for Wales but not the WDA and the Development Board for Rural Wales. We adhere to the original position that we proposed in the Bill.

I noted with pleasure the approach of the Opposition in the other place to this problem, even if I did not agree with their conclusions, because my impression from the speeches was that the other place wanted to reserve these three bodies because it approved of how they were operating and because of its appreciation of their success. That cheered me a great deal in reflecting on my approach to the other place's conclusions.

I welcome that approach knowing, as I do, the approach of the Conservatives to the Welsh Development Agency when we set it up. The Conservative Party voted against the Second Reading of the Bill setting it up. We know, too, that a major question mark would hang over the future of the Development Board if the Conservatives came to power. Indeed, I suspect that they have already pronounced sentence of death on it. I am sure that that is also the impression of the hon. and learned Member for Montgomery (Mr. Hooson) and of all Members for Mid-Wales.

I am interested in the new approach, as I understand it, of the Conservatives to the Land Authority for Wales. I had the privilege of replying to the Second Reading debate on the Community Land Bill, under which the Land Authority was set up. It is now an extremely successful body—an impression conveyed in the debates in the other place on these three bodies.

All three bodies have two things in common, and they are very important matters. They deal with matters which have major planning and social content, but at the same time with economic implications. Secondly, they are all of a major concern to people living in Wales. I believe that the clause and the schedule, as originally set out, provided a realistic and coherent devolution of powers to the Assembly without prejudicing the Government's responsibility for economic and other matters with wider United Kingdom implications.

The Welsh Development Agency has wide environmental powers and operates closely with other powers to be devolved —for example, planning, new towns and the countryside. I believe that it is right that those powers should be devolved. But in regard to industry-related functions I want to make it quite clear that the agency will operate under guidelines which will ensure that the interests of other parts of the United Kingdom are fully protected. The guidelines are under the control of this House. They are not devolved. They are subject to annulment by this House if it so wills. The WDA would have to make its annual report to the Secretary of State on the matters covered by the guidelines, and that report would have to be laid before Parliament. I believe that in this way we ensure that we have realistic devolution and a safeguarding of economic and wider considerations by the control that is exercised through the guidelines.

The Development Board for Rural Wales would operate in a similar way. The board has certain powers with regard to social development which are akin to the powers exercised by new town devel- opment corporations and by local authorities. The absurd result of the amendment carried in the other place is that the Assembly will not have powers with regard to the board but will have powers of a similar nature when they are exercised by other bodies. I am sure that the House will agree that this is an absurd conclusion, whatever the merits of restraint on one side or the other.

I do not think that there is much that I need say about the Land Authority for Wales, as I understand that the Opposition would now seek to allow the Land Authority to be devolved. This body was praised in the other place for its efficiency, for its popularity, and even for its profitability. The Opposition in the Lords were asked whether the test of approving the devolution of a body were whether it was no good and that, if no good, it should be devolved. When that question was put, the reply was in the affirmative. I hope that this change of heart in regard to the Land Authority does not indicate that the Opposition have ceased to regard the Land Authority as being efficient.

Our submission to the House is that all three bodies should be dealt with together and on the same basis. They will work closely with other bodies with similar powers, in the environmental and social field, there will be the necessary guidelines and reservations to protect the general interest, and Parliament, through its control of the guidelines, will have control on that side of their responsibilities.

Mr. Wyn Roberts (Conway)

I begin by saying to the right hon. and learned Gentleman the Secretary of State that his statement that the Development Board for Rural Wales is under sentence of death from the Conservative Opposition is unmitigated rubbish, and he knows it.

Mr. John Morris

I am sure that all hon. Members with an interest in Mid-Wales will welcome very much this change of heart, this belated conversion, because I know of the uncertainty and chaos which have been caused in Mid-Wales by the statements of the hon. Member for Pembroke (Mr. Edwards). The change of heart will be welcomed very much indeed. I thank the hon. Member very much.

Mr. Roberts

The only chaos is in the right hon. and learned Gentleman's mind. I ask him to read again precisely what my hon. Friend the Member for Pembroke (Mr. Edwards) said on this subject in the Welsh Grand Committee.

I have always thought that one of the less facile arguments for devolution was that it would enable the Secretary of State to concentrate his attention on the problems of the Welsh economy. I cannot say that it was one of the more impressive arguments for devolution, because none of them has been very impressive. Not one has survived even the tender pressures which are all that we have been able to subject them to under the guillotine procedure. Every one of them has a flaw and should have been rejected, along with this measure, to which they and other considerations have given birth.

But there was a superficial attraction in the argument that the Secretary of State should be freed to devote himself heart and soul to resuscitating and regenerating the Welsh economy, especially in view of the new responsibilities undertaken by the right hon. and learned Gentleman in this sphere. But after yesterday's announcement of the unemployment figures, now up to 98,000 in Wales compared with the 38,000 when this Government came into office four years ago, I am not sure that there is any attraction in the argument that the Secretary of State should be relieved in any way, except totally by his resignation, because the more he concentrates his attention on any sphere of government the worse the situation appears to become.

There is a biblical verse commonly seen in school gymnasiums which reads something as follows: "Whatsoever thy hand findest to do, do it with thy might". I think that the Secretary of State has it inscribed somewhere in the Welsh Office, and as a result we have had some mighty high unemployment figures, mighty low housing figures and a mighty bad government record overall in Wales.

But, alas, all this is hardly helping my case against the devolution to the Assembly of responsibility for the Welsh Development Agency and the Development Board for Rural Wales and for the reten- tion of control of these bodies by the right hon. and learned Gentleman. However, if we detach the present incumbent of the office of Secretary of State from the office itself, a matter which cannot be long delayed, my argument makes better sense.

I believe that the Government saw this point fairly clearly in the early stages, when they were emphasising the need for economic as well as political unity in the United Kingdom. In "Our Changing Democracy: Devolution to Scotland and Wales", Cmnd 6348, the Government were keen to keep their hold on the agency, but some time between the publication of that document in November 1975 and the publication of the supplementary statement, Cmnd 6585, in August 1976 there was a change of mind, which is summed up in paragraph 39 of the latter document as follows: The Government have decided that responsibility for the Welsh Development Agency should not be divided, as paragraph 251 of Cmnd 6348 envisaged, but should be transferred to the Welsh Assembly". The full story of the Government's conversion is well told in Mr John Osborne's book "Creative Conflict", which, along with the Bill, should be compulsory reading for all those intending to vote in the referendum. It is not so much a story of conversion as one of abject submission to the labour and trade union moguls in South Wales, who clearly intend to cast the WDA as a prodigal younger brother of the National Enterprise Board.

It is true that the Welsh Development Agency is currently operating satisfactorily. My hon. Friend the Member for Pembroke has not been averse to giving the agency credit when credit is due. So far, the agency has operated on sound, commercial principles, as we advised during our discussions of the Welsh Development Agency Act, and we are anxious that it should continue to do so. But we are also aware that there could be a change of policy if the agency is taken over by the Assembly and the Labour Party caucus which is likely to run it, and that it could become an instrument for extending State ownership of industry and for strengthening the socialist grip on the Welsh economy.

11.30 p.m.

We believe that there is more chance of that happening under the Assembly than there is while the agency is under the control of the Secretary of State. That is why we support the Lords amendments, which are designed to ensure that the agency and the Development Board for Rural Wales remain under his control. That is the crux of this debate. Of course, the Government will argue that they have the power to issue guidelines—we have heard the argument already—under clause 37, as to the exercise by the Assembly of its powers with respect to the functions of those bodies.

It is laid down in subsection (3) that the Assembly shall exercise its powers so as to give effect to those guidelines. But will those guidelines give the Government of the day sufficient control over these bodies, bearing in mind that these bodies can be subsumed by the Assembly under Clause 60? One thing is clear—that the control exercised through the guidelines will be more tenuous than the direct control exercisable by the Secretary of State under the present system. There will thus be a weakening of control by central government in this key economic and industrial area, where we would all agree major initiatives will have to be taken in the years ahead if the Welsh economy is to recover and prosper. The abdication of control by the Secretary of State is, we believe, a grave error of judgment and one which we shall all regret.

Our position on this was very clearly stated by my hon. Friend the Member for Pembroke on 3rd May, when he said: We believe that it is wrong that these bodies should be subject to extermination by the Assembly. They should remain responsible to the Secretary of State and, through him, to this Parliament. Economic and industrial power should remain with the United Kingdom Government, and the provisions of Clause 60 in relation to the WDA and the DBRW are incompatible with that concept. It would be gravely damaging to the United Kingdom economy and to the economy of Wales if within these islands we were to have increasingly powerful independent Governments competing with each other for limited resources and for the available jobs."— [Official Report, 3rd May 1978; Vol. 949, c. 326.] In their darkest heart of hearts, the Government know that we are right on this, but they have allowed themselves to be pressurised by their supporters in Wales, who took the view—and I quote from the Labour Party's Executive Committee's memorandum of June 1975—that The economic powers of the Assembly are essential to its effectiveness and its credibility I can understand that the credibility of the Assembly matters a great deal to the Labour Party in its attempt to outflank the nationalists, real and imagined. But there are other things which matter more. The health and well-being of the Welsh economy matters more. And who is better equipped to secure recovery in that area, in so far as it can be engineered and achieved by the Welsh Development Agency and the Development Board for Rural Wales? Is it the unknown Executive Committee of an untried Assembly or the Secretary of State and the Welsh Office, with their experience and close connection with central government departments and their organs?

Mr. Gwynfor Evans (Carmarthen)

I have been listening with great interest to the hon. Member's almost euphoric admiration for the Secretary of State, but I recall the time when his party opposed the setting up of this office. When did his conversion take place?

Mr. Roberts

I do not think that the hon. Member could have been listening to the earlier part of my speech, when I was talking about the right hon. and learned Gentleman's grave responsibility for the record unemployment figures that came out yesterday. It is because we believe that the Government have a sneaking sympathy with our view that we have concentrated on the Welsh Development Agency and the Development Board for Rural Wales and left aside, through our amendment to Lords amendment no. 54, the Land Authority for Wales, which we do not regard as being in quite the same category as the other two bodies in relation to the Welsh economy. The Land Authority we regard as primarily serving housing needs, although it is also concerned with the acquisition of land for other kinds of development. Nevertheless, the agency and the development board have their own land acquisition powers and can operate independently in this respect.

We hope that at this eleventh hour the Government will give serious thought to the possibility of returning to their original thinking on this subject. The WDA and the DBRW are functioning properly, and they have made a resonable start. We see no benefit resulting from the change proposed by the Government under the Bill; quite the opposite. We see the danger of a wrongheaded regional policy being pursued through these bodies—a policy that might be at variance and in conflict with the national strategy, and this could result only in the creation of unnecessary problems and difficulties.

This is a formidable group of amendments, but the difference between us and the Government is clear. We believe that the WDA and the DBRW should be untouched by the Bill, because, first, there is a danger of creating a schizophrenic economic approach to the problems of Wales, secondly, the WDA, under the control of a Socialist Assembly, is likely to pursue different policies, more concerned with the advancement of State ownership and control than with assisting in the recovery of the Welsh economy, and, thirdly, the record of the WDA and the DBRW to date is in most respects commendable. Why change what is working reasonable well?

Finally, the Bill provides for the dissolution of the WDA and the DBRW under certain conditions. Curiously, the Scottish Assembly has no similar power to disband the Scottish Development Agency. The two bodies of ours could be replaced by Assemblymen, not necessarily equipped with the requisite knowledge and expertise, and with sectional and particular interests to promote.

For these significant reasons I ask my hon. Friends to support Lords amendment no. 52.

Mr. Torn Ellis

I have tried very hard to follow the thrust of the hon. Member's argument. It seemed to me that he was basing his whole case on the argument that Welsh economic policy, in so far as it has existed over the past 40 years—ever since we first had depressed areas, just before the war—has been determined by central Government. Since Welsh comparative economic history has been anything but satisfactory with this central direction, does not the hon. Member think that the whole of his case is built on rather shaky foundations?

Mr. Roberts

Certainly I do not agree with that view. The choice that we are facing now is whether we have an econo- mic and industrial policy which has the full support and resources of central Government, or whether we devolve economic powers to those two bodies which are ultimately dependent for their resources upon this place. It is very clear that by devolving this power to Wales we are weakening the ability of these bodies to achieve the recovery that is needed now.

Mr. Kinnock

If I did not know that we have had such a lousy summer that it is impossible, I would think that the hon. Member for Conway (Mr. Roberts) was suffering from heat stroke. He seems to have seen a mirage called "the extension of socialism in Wales" under the auspices of the Welsh Development Agency.

I know that the hon. Gentleman, together with some of his hon. Friends, believes that we already live in some kind of proletarian socialist workers' republic. I suppose that it assists their electioneering, or at least gives them a little more energy for the fight—with or without an election—in order to delude themselves with the idea that we have had significant advances in socialism. Of course it helps with the analysis that the hon. Member has given of the propositions before us tonight to pretend to himself that trade union moguls, as he called them, have got my right hon. Friends around the throat and have choked a concession on the Welsh Development Agency out of them, which now goes into this Cardiff-based Kremlin —the Welsh Assembly.

The hon. Gentleman brought me very close to actually agreeing with my right hon. Friends, but fortunately my hon. Friend the Member for Wrexham (Mr. Ellis) came to my rescue. He restored my perspective which had been so badly distorted by the hon. Member for Conway. My hon Friend the Member for Wrexham got up, and as the true decentralist that he is, put the blame for the economic difficulties of Wales—the horrific 98,500 unemployed and the threats to our future economic efficiency and even survival—at the door of centralisation.

It would have been helpful if my hon. Friend and Members from Plaid Cymru had gone to Bonn in the last couple of days and informed Mr. Fukuda, Herr Schmidt, President Giscard d'Estaing, President Carter and our own dear Prime Minister that the problems afflicting the Western world—trade, inflation and unemployment—were not the consequence of any great economic holocaust that had struck us. It was simply that all these economies were over-centralised. As long as we had some bureaucratic shake-out and some decision-making closer to the people, that 20 million dole queue in the West could be dramatically shortened.

Essentially the proposition that the Welsh Development Agency goes to the Welsh Assembly is all part of that total misconception of the nature of our economic illness in the West, as it is specifically and horrifically applied to Wales. It is because I do not accept that thesis that the location of economic decision-making or the location of economic and industrial sponsorship bodies has made any significant contribution to the kind of difficulties we face that I must oppose the view of my right lion. Friends on the question of the WDA.

The economic survival of Wales, and many other parts of the United Kingdom, depends now, and will depend even more in the foreseeable future, on access to large amounts of public finance for the purpose of maintaining and improving the general business and social environment and for the sponsorship and inspiration of new industrial development.

11.45 p.m.

I do not expect Conservative Members, especially since their further conversion to the religion of inequality, to agree with that point of view. But the fact is that Wales is now afloat on public expenditure and would be a greater and more and industrial desert were it not for public assistance, sponsorship and aid of various kinds.

One of my basic reasons for opposing the kind of devolution proposed by my right hon. Friend is that I think it puts in jeopardy the flow of funds we require and the access that we can democratically insist on having under the present system involving a United Kingdom with a centrally controlled Exchequer and with a Parliament that is ultimately responsible in the way in which expenditure takes place.

I believe that the allocation of the powers of the Welsh Development Agency to a Welsh Assembly would significantly jeopardise the possibilities of obtaining the kind of money needed by the agency either to engage in major industrial development—as I would like to see it doing much more—or what is of equal importance, as the means of priming small industrial and commercial enterprises, which it should do to a much greater extent. Anything that puts such development in jeopardy is unacceptable and retrograde in the development of the Welsh economy.

It is also the fact, as my right hon. Friends must know from their frequent contacts with personnel in the Welsh Development Agency, that the people in the agency, whatever their technical role—whether they be engineers, managers or accountants, many of them rooted in the Labour movement and all having invested a great deal of talent and interest in the future of the Welsh economy—do not in the overwhelming majority want to be part of a devolved structure. They recognise that such a move would be unfortunate in seeking to bring greater prosperity to the Welsh economy.

Those personnel do not want to be divided off, demarcated, split away from or made different from the general mainstream of this part of the industrial strategy as conceived and developed by my right hon. Friends in the Government. The original conception of the National Enterprise Board and the Welsh and Scottish Development Agencies was somewhat different and rather more progressive, generous and demanding than that which we now have. But we hope that in the fullness of time we shall return to the original propositions and powers laid down in the Labour Party manifesto in 1974 and in the 1975 White Paper "Our Changing Democracy".

It is not the fact that the Welsh Development Agency can extend, in the words of the hon. Member for Conway, the socialist grip on the Welsh economy. If there were the vaguest possibility of that occurring it would do much more than see doubt in my mind. It might make me the most enthusiastic devolutionist of them all, since it might have been an opportunity to shelter the Welsh people from the worst extremes of the recession and give us a basis from which to develop our economy.

We are far from having that, and the possibility of that occurring is even further postponed and disabled by the Government's proposition to award authority over the development agency to the Assembly and jeopardising its possibilities, the finance it needs and the skills it needs to mobilise for the future development of the Welsh economy.

For those reasons I regret that once again I shall have to agree with the Dennis Canavan fan club along the corridor and associate myself with the general view of their Lordships. It is a matter of extreme regret for me, but the development of the Welsh economy is of such importance that it cannot be left at risk.

Mr. Wigley

I challenge several of the assertions of the hon. Member for Bedwellty (Mr. Kinnock). First, I challenge the assertion that anything like a majority of those working for the Welsh Development Agency are grass roots Labour Party people. I also challenge the assertion that a majority of those working for the agency would give any positive opinion against the agency being associated with the Assembly.

The hon. Member referred to the separation of the agency from the mainstream of centralised Government. The agency came into existence because these functions have been set up in Wales under a different umbrella from the NEB in England and the SDA in Scotland in recognition of the differences that exist between those countries.

I challenge, too, the hon. Gentleman's assertion that centralisation has led to an improvement of our economic circumstances. The reality is that countries such as Sweden, Norway and Switzerland have unemployment rates of 2 per cent compared with Wales' 9 per cent. That leaves the question at least to be begged.

The real question we are facing is the influence that is to be placed on the development of the WDA. I would have expected the hon. Member for Bedwellty to agree with me that the most important question is how the agency will use its power and the extent to which it will have an interventionalist role. How will it ensure that there is development in the areas where laissez-faire capitalism has failed to solve the economic problems of Wales? Are we more likely to have the emphasis on the sort of programme that the hon. Gentleman and many of his colleagues would like to see when for at least half the time, we shall probably have a Conservative Government in London? Are we not more likely to have influence in that direction when we have an Assembly in which the overwhelming majority of Members will not be from the Conservative Party?

I think that the hon. Member for Bedwellty will agree that in its first two or three years the development agency has not so far taken the sort of initiatives that we had hoped for in this direction. There is work to be done in the rural parts of Wales and in the industrial valleys. Yet we see that the agency is backing only winners, and the High Street banks in Cardiff accept the risk evaluation of the agency as a guideline for their investment. The agency is not taking initiatives in the direction that was foreseen.

I suggest that there is much more hope of seeing the WDA taking a radical approach towards the problems of generating work in Wales if it has the influence of an Assembly which is not dominated by the Conservative Party than if, for at least a large part of the time, the agency is dominated by a Conservative Government here. When there is a Conservative Government here, the Assembly will have an opportunity to show the type of radical approach that is needed to get the policies we want—despite the heavy hand of a centralism from Westminster in a laissez-faire direction.

Whatever the attitude of the hon. Member for Bedwellty towards other aspects of devolution, he and his colleagues are making a very great mistake if they would rather hand over control of the development agency to the Conservative Front Bench than to the people of Wales.

Mr. Ioan Evans

rose—

Mr. Deputy Speaker

Order. May I remind the hon. Member for Aberdare (Mr. Evans) that the Minister wants a couple of minutes before midnight for his reply.

Mr. Evans

I shall be brief, Mr. Deputy Speaker. We understand the hon. Member for Caernarvon (Mr. Wigley) wanting to hand everything over to the Assembly. He disagrees with my hon. Friend the Member for Bedwellty (Mr. Kinnock) because my hon. Friend believes in the economic unity of the people of these islands. The three Plaid Cymru Members are committed—as they reiterated last weekend—to independence and a separate Wales. They want to get everything possible thrown into the lap of the Welsh Assembly.

I want the Government to reconsider the amendment. When we set up the Welsh Development Agency, the Development Board for Rural Wales and the Land Authority for Wales there was nothing said about transferring them to the Assembly. Is it the wish of the three bodies that they be transferred to the Assembly? Their answer to that question might help us in reaching a conclusion.

The three bodies have done a tremendous job. Although the Opposition were opposed to the Welsh Development Agency in the first place, they now recognise the grand job that it has done. In the short time that it has been in existence it has fully justified itself. The $64,000 question that we must ask ourselves is "What is to be the block grant going from this place to the Assembly?" It is clear that there will be increasing demands.

The Welsh Development Agency has done a tremendous job. It played a part in attracting Ford to Wales against corn-petition from Germany and other European countries. It has access to the Treasury. Is that access to be cut off? Is it to be given access to the block grant instead? I hope that the Government will reconsider these matters and accept the amendment. It is a reasonable amendment that has come from another place.

Mr. John Morris

With the leave of the House, I seek to reply to the debate.

It seems that there are two clear divisions. First, the hon. Member for Conway (Mr. Roberts) believes that we are going too far in furthering socialism. He believes that there will be a socialist grip on the Welsh economy. That is a fear that seems to permeate the Opposition.

My hon. Friend the Member for Bedwellty (Mr. Kinnock) believes that our proposals have been too limited. He claims that as a result of demarcation there would be an arrest of the flow of funds to the Welsh Development Agency. I can assure him that there is no such problem.

Tonight I am basking in the congratulations to the agency, to the Development Board for Rural Wales and to the Land Authority for Wales. We set up the three bodies. We are extremely pleased to be able to record that fact. We shall use the commendable record of all three bodies time after time. The deathbed repentance of the Opposition will be used from one end of Wales to the other.

The hon. Member for Conway seemed to throw cold water on the guidelines. The Welsh Development Agency already operates on guidelines. That is how it operates. The guidelines are and will be subject to the annulment of either House of Parliament. Both Houses will be able to monitor their effect. The agency and the other bodies will have to make their annual reports to Parliament on the operations of any activities under the guidelines. The safeguards are there. They are present and they are working. There have been congratulations from the Opposition Benches on the effectiveness of the three bodies.

We are transferring basically the bodies' social responsibilities and ensuring at one and the same time that wider national considerations are protected because of the operation of the existing guidelines and any future guidelines that Parliament seeks to impose.

In all the circumstances I ask the House to reject the proposal of the other place and to return to the original proposal of this place. I believe that we have put forward the right way to approach the problems to protect the wider national interest on the one hand, and at the same time ensured that in the areas where we can devolve properly with safety for wider national considerations we avoid any danger of one part of the country outbidding the other. That interest is fully protected.

Question put, That this House doth disagree with the Lords in the said amendment:—

The House divided: Ayes 285, Noes 280.

[For Division List No. 294 see c. 749]

Question accordingly agreed to.

It being after midnight, Mr. DEPUTY SPEAK ER proceeded, pursuant to the Order yesterday, to put forthwith the Questions necessary for the disposal of the Business to be concluded at midnight.

Lords amendments nos. 53 and 54 disagreed to.

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