WALES (ECONOMIC SITUATION)

HC Deb 22 June 1978 vol 952 cc807-50

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

7.55 p.m.

Mr. Dafydd Wigley (Caernarvon)

I am glad of the opportunity to raise a subject which has been a theme in previous debates on Welsh Days, in Welsh Grand Committees and, indeed, in debates on the economy in general over the past four years and longer. In opening the debate, my mind goes back to the very first week after the March 1974 General Election. On that occasion I remember that there was an opportunity to debate the economic problems facing Wales. The fact which at that time stared everyone in the face was the failure of successive Governments to bring forward a pattern of balanced economic development in Wales.

I remember speakers who had just joined the Government Benches understandably criticising the previous Conservative Administration for its failures in this direction, as well as the tragic economic developments of the last few weeks of 1973 and the first two months of 1974. At that time, hon. Members of all parties were looking forward to a way of working ourselves out of the economic mess into which we had got ourselves. In doing so, we wanted to ensure that it was not just a search for a boom which would bring benefits to the South-East of England and the Midlands. We also wanted a pattern which would ensure that Wales did not retain the same sort of economic blackspots that it had suffered in the 1920s and 1930s and, to a lesser extent, since the war. Examples of that pattern also, no doubt, existed in other parts of the United Kingdom. There were areas which had suffered because of the changing economic patterns over the last century, the rundown of major industries and the failure to ensure that in their place were developed balanced economic opportunities.

I initiate this debate not because the economy is an end in itself but because, unless we get the economic circumstances in Wales right, there is no prospect of ensuring the survival of our communities. The possible loss of communities—as we have seen happen in the Heads of the Valleys in Glamorgan and Gwent and the old slate quarrying villages of Gwynedd—means that we also lose our culture, language and everything else which is dear to us. Therefore, the objective of obtaining balanced economic development in Wales is one which is a service to the community as a whole and not an end in itself. But unless we get that balance in development, we shall continue to see declining villages, schools being closed, young people leaving, an ageing population, an increase in the pressure on the social services which that leads to, and the decaying of the whole fabric of a community.

I am sure that hon. Members of all parties will accept as an objective the need to ensure that there is as reasonable an opportunity as possible for the maximum number of people to have adequate job opportunities, and a future within their own community. Since 1925, Wales has seen the collapse of the coal industry as the major employer. At that time, 225,000 people were employed in the Welsh coal industry. That figure is now about 35,000. In one generation that represents an astronomical decline.

A decline of similar proportions is now taking place in the steel industry. which is another major industry in Wales. As steel plants close, so again—as in the history of the coal industry—whole communities can be written off. We know the fear that has been experienced in places such as Ebbw Vale and Shotton because the people know that when these industries end there is a very great doubt about the ongoing viability of their communities.

It is not only in terms of manufacturing industry that we see these problems facing us. We see them also in the agricultural sector and the rundown that there has been in agricultural employment. As a species, the farm labourer has almost gone out of existence. The figures are minuscule compared with what they were only just after the war. With this, we have also seen the amalgamation of farms into large units and the purchase of farms by institutional investors and people from outside Wales, and even from outside Britain, which have themselves led to difficulties facing young people going into agriculture, leading to a position which has aggravated rural depopulation.

The industries which have grown in the wake of the decline of the old industries have been scattered and sporadic and they have not in themselves brought a full answer to our problems. Since the war we have seen successive Governments trying, by various policies—development areas, special areas and the rest of it—to induce growth from outside and to transfuse industrial activity from sectors outside Wales. In some areas this has succeeded to some extent, but I do not think that anyone will deny that it has been patchy.

We have seen some firms move into Wales and succeed. Perhaps I should declare my own past interest, having worked at one time for Hoover, at Merthyr Tydfil. When I was there, the company employed about 5,000 people. Now, in an expansion plan, it is hoped to increase that to 7,500. That is one of the instances of a major modern manufacturing concern coming into Wales and succeeding. But many of the branch factories which have come into Wales have come merely in order to get the grants available to them and, sadly, we all know of examples of those which, after a few years, have packed up and left.

A characteristic of those which have succeeded and stayed—I include amongst them even the largest, the Hoovers of this world—is that, being branch factories and manufacturing plants, they cannot give a balance of employment opportunities. They have not succeeded in ensuring that jobs are available for management staff, office staff and technical staff at the Welsh level. Very often these jobs are at head office level and outside Wales, so that the job opportunities in many of the Welsh plants have been stilted and geared towards factory floor employment and very often without as great a proportion of the technical and commercial opportunities that would arise in the company as a whole throughout the United Kingdom.

Where we have succeeded in getting development, we have not always had the right development. But, sadly, there are many more areas which have not had any development. I think of my own constituency and the failure that there has been to fill the empty advance factories standing there. We accept that advance factories are useful in themselves. They make it easier to attract develop- ments when the economy is improving. But advance factories standing empty for a long period can become a depressant upon a community. People start to think—especially people from outside—"Why is it that these factories are standing empty with no one coming in?" So far, we have failed to get a structure of policy which has led to the filling of these factories as well as the construction of them.

There are reasons for this, and we have laboured those reasons in the past, but it is right to underline them again. The development of the infrastructure is fundamental. The M4 in Glamorgan has been developed, and we have seen in the case of the Ford project at Bridgend how the infrastructure in terms of road and rail communications can play a vital part in locating a major plant. Unfortunately, in many other parts of Wales—this is true of the counties of Gwynedd, Clwyd and in Mid-Wales—we have not had this type of modern road network which is so essential for manufacturing industry. I know of companies which have thought of setting up in my own constituency but which have felt that the communications have not been adequate.

It is not only road communications which are important, and at a time when we have 90,000 people out of work one would have thought that there was a good case for pressing ahead even faster with the development of road communications —I think of the A55 and the A5 in North Wales. Increasingly important is air communications. Only this week, I had a letter from an electronics company in America interested in the possibility of developing in Gwynedd, having links with the University College of Bangor which had led the company to consider Gwynedd as a location. But one of the prime considerations was the availability of air connections with Gwynedd.

As we know, although there has been a welcome development of an air link from Hawarden down to Cardiff airport in the last few months, with connections through to international flights from Brussels, there has not been any development of air links through to the more westerly parts of Wales. We would do well to look at locations such as Valley, in Anglesey, Llandwrog, in my own constituency, Llanbedr in Merioneth, down in Pembroke and in Swansea, as possibilities for an integrated air service which could link through to Cardiff and to Brussels for international flights. That is an important consideration in the development of industry.

The other sector of industry that we have seen developing at a very fast rate in the past two decades in my part of Wales, in Gwynedd and in Dyfed, has been the tourist industry. However, that industry is perhaps an example which underlines the imbalance in our economy and the need for engendering balanced economic development. For climatic reasons, unfortunately, the season in Wales is relatively short—two or three months. We have a period between the middle or end of May and the first week in September when all the tourist sector has to make the money which will keep it going for the rest of the year. We have an economy working at 200 per cent. capacity for a few weeks in the summer and at 10 per cent. capacity for the rest of the year. This is a classic definition of a state of dis-economy. We have an industry, with all the investment that it entails, working for a short period in excess of its capacity but for most of the time way down below capacity.

In the tourist industry itself we have seen some developments at the least beneficial end of the industry which have soaked up and saturated the tourist market in Wales and yet have not brought as great a return as one would have hoped. The hope always is to see the maximisation of the type of tourism which brings the most revenue that will stay in Wales. Perhaps the day trippers are the sector which brings in least in this way. We have heard of the people who fill their car with petrol and bring their sandwiches with them leave their litter and drive home having spent virtually nothing.

In looking at the development of tourism as one of the inputs into the economy, we must consider not only the extension of the season but the balance between various parts of the tourist sector, not least the international sector.

Tied in with all this, looking especially at the replacement of jobs and the need for manufacturing industry, we must face the reality that there are many fewer footloose supranational companies now than there were 10 years ago. The pattern has changed. I cannot help feeling that we must look in the future to the possibility of putting more emphasis on encouraging young people who have the talent and who have the ideas to develop those ideas themselves in their localities. This means not only having the right incentives and the right assistance available to them through the agencies that we have, but also engendering the right approach, especially in our education sector.

We want to make sure that we do not develop the brightest of our people to a state where they leave college or university, perhaps at the age of 21, feeling that they must go into a secure job and to be reluctant to take a risk. These are the people who can be planting the acorns which will grow into the big trees of employment in the future.

That has not happened sufficiently in Wales in the past, for a number of reasons. One is security of employment, which is totally understandable, given the Welsh background. Another is the experience that these people have in their own areas, and of course we have not had the background and experience in industry in the way that we might have had in an area such as Birmingham. We need a new emphasis in this direction to give young people the motivation to go out and start enterprises for themselves. If they succeed, the companies which they found will grow, will develop job opportunities, and will, optimistically, persist in the future and not be the type which close down at the first ill wind of economic recession.

Finally, I draw attention to the role of the various agencies in this question of getting a balanced economic growth in Wales—particularly the Welsh Development Agency and the Development Board for Rural Wales. These two bodies were set up with the very ambitious objectives of cracking the problems that we face. To some extent they have made a good start. In the more limited time that it has been in existence the rural board has achieved more than the WDA.

We are worried that the Welsh Development Agency and the rural board are to some extent working in a vacuum. I do not apologise for underlining once again that unless these agencies have guidelines in terms of quantifiable objectives and a strategy for reaching those objectives, geographically and sectorally determined, we will not get the maximum benefits that we could out of these agencies. In a nutshell, we need an economic plan for Wales.

More and more bodies have been pressing for this. The Council of the Principality, the report on "Overseas Investment in Wales", and a number of influential individuals have also pressed for such a plan. Some of these individuals have not previously accepted the case for the plan, but in the last six months they have admitted that the case for it is now unanswerable.

Unless we do get this movement, we shall continue to have the imbalance of the past. In the dying days of this Parliament—perhaps this is the last debate we shall have on economic development in Wales—I hope that we shall see the end of argument against a background of rejecting this type of economic approach. I hope that in the new winds of a new Parliament at least we shall have an opportunity of moving forward with a new approach.

Mr. D. E. Thomas (Merioneth)

Before my hon. Friend leaves this salient point will he comment on the fact that county councils in Wales now undertake far more economic planning and long-term projections of job needs than the Welsh Office? Does he agree that in the structure plans of each county there are projections based on population and current job opportunities, and projections for job shortfall? There are no national projections. Will my hon. Friend urge the Minister to tell us, when he replies to the debate, whether it is now the intention of the Welsh Office to use the data in the structure plans to produce at least a job shortfall calculation for Wales as a whole?

Mr. Wigley

I am grateful to my hon. Friend for bringing in that point. Although we have seen development plans for every part of Wales, with quantified figures—some more questionable than others—of the number of jobs needed in each area, it strikes us devastatingly that one cannot have county development plans in isolation. For example, take the comparison between Gwynedd and Clwyd. It is true that there is an interface between these two counties. The same thing must he true of the interface between Mid-Glamorgan, South Glamorgan and perhaps even West Glamorgan. The roads cross the county borders and there is a mutual travel-to-work area. To take these countries in isolation is not good enough. They are woven together. Therefore there must be an overall package—an all-Wales development plan.

I can see the Secretary of State smiling and I have no doubt that he is thinking that an all-Wales development plan has interfaces outside Wales as a whole. Of course it does. In the present context of United Kingdom economic development, and within the economic development of the EEC, we must consider how to divert more towards the infrastructure in Wales.

Unless we have it right at the Welsh level we shall lose the opportunities of the agencies that have been set up in Wales. Therefore, if it is not already in the manifesto of the Labour Party for the next election, I suggest that the Government should consider writing in an economic plan for Wales now. This could be one of the best bits of good news that we have had for a long time for overcoming the problem of unbalanced development in the economy of Wales.

8.15 p.m.

Mr. Donald Anderson (Swansea, East)

The hon. Member for Caernarvon (Mr. Wigley) has opened this debate in a lucid and relatively non-controversial way. However, I must admit that I am still rather confused about his concept of balance in the Welsh economy. We clearly cannot see Wales as a self-contained entity and look at the balance between North Wales and South Wales, for example. Certainly one can see an interface between mid-Glamorgan and West Glamorgan, but for the life of me I cannot see such an interface between the structure plans of Clwyd and West Glamorgan.

The hon. Member conceded that in the United Kingdom context there must be a considerable degree of interdependence, as has been heavily underlined by the recent Ireson and Tomkins study of input and output relativities between Wales and the rest of the United Kingdom. If, for example, we are thinking of a balance between the manufacturing sector and the service sector in Wales, what sort of criteria do we employ to decide on the model that we have in mind? This is the sort of difficulty involved in talking of a balance within the Welsh context.

There are, of course, many negative elements which the Government will be ready to concede, particularly in unemployment. But there are also a number of positive elements which I hope to stress.

During the last 15 years we have seen what a number of economic commentators have described as a second industrial devolution in Wales. There have ben a series of major revolutions in the coal industry, in our farm structure and in transport. Now we are in the middle of a revolution in metal manufacturing, particularly in the steel industry. The restructuring of Ebbw Vale and East Moors —decisions where the Secretary of State took a personal lead in mobilising the total resources of Government to meet the major problems of these twin areas—is an example of this.

In 1950 more than 50 per cent. of our industrial employment was in the coal and steel sectors. Now more than two-thirds of our industrial employment is in sectors other than coal and steel. The losses in coal and steel account for almost all the job losses in Wales. Yet since 1965, it is fair to say, the rate of decline of industrial employment has been lower in Wales.

Obviously we need new investment, but we need it at a most difficult time. If we ask where the new investment will come from we are told that there is no footloose private industry, particularly that which is labour intensive. A Ford investment comes once in a generation, and we have had that in Wales. There are no additional major plans for decentralisation of Government Departments in Wales. We face a time of increase in the labour supply, partly because there are more women in the labour market and partly because of the increase in the number of school leavers.

We might argue that the very success of the Government's regional policy in Wales in the past decade has led to the new concentration on inner-city problems elsewhere. If one goes to Battersea, for example, one sees a hole where the Morganite factory was which has since moved to my constituency. Part of the imbalance in the employment structure of Birmingham and London has been caused by the relative success of our regional policies in the past.

There has been a considerable amount of diversification leading to a healthier balance within Welsh industry, and all the objective commentators accept that the Welsh economy is being adjusted in the right direction—towards the formation of an increasingly modern, diverse and resilient manufacturing base.

Many of the greatest technological changes have come about relatively recently. One thinks of the aluminium investment at Anglesey, by BP at Baglan Bay, as well as the Amoco investment at Milford Haven. As an example of the change in the Welsh economy, I would point to the fact that whereas 120,000 men were employed in the mining industry just after the war, now 30,000 men are employed in NCB mines in Wales and today more people are employed in manufacturing firms in Wales with links with the United States than are employed in coal mining. What gives confidence for the future is the fact that 50,000 people are now employed by more than 500 firms which have moved new capacity into Wales or completed new operations since 1966. Since 1974 under the Labour Government over 140 manufacturing plants have opened in Wales, employing 8,500 people.

I turn to consider the question of balance and the position as it affects small industry in Wales. I accept the psychological incubus to which the hon. Member for Caernarvon drew attention in our search for security at all costs and the relative lack of development of local entrepreneurial skills. I hope that he hon. Gentleman will accept the new climate of encouragement of small industries under the Labour Government, particularly the new boost given in the April Budget. As a further example, the great majority of units in the Welsh Development Agency advance factory programme are of 5,000 sq. ft. or less. Indeed, in Portmadoc, Llandovery and Caernarvon the units are as small as 1,500 sq. ft. Local authorities are now taking a much greater lead in developing their own industrial units for small industries.

Only this week the Welsh Development Agency announced a new counselling service which will be of considerable importance to small industry. Such industry may have expertise in a defined sector, but professionalism in marketing and other areas may be desperately needed. I hope that the Welsh Development Agency will also encourage "missionary work" among our major employers to find opportunities for local small industry which may be in the immediate vicinity. Thus, there is a move in the right direction towards a balance of activity.

I speak within a context of severe world difficulties, with increasing competition from the "threshold" countries such as Korea and Taiwan. For example, it is thought that we should consider moving away from the production of bulk steel—because, owing to labour costs, we are likely in that area to be subject to increasing competition from Third World countries—towards specialist steels. One might say that the loss of steel jobs in Wales is less than might have been expected, given the gap between capacity and demand and the relatively low productivity of our United Kingdom steel manufacturing plants compared with our major competitors. If we have in mind the loss of £30 million in the Welsh coalfields in the past year, the same argument might apply to coal.

Let me refer to one factor which was not referred to by the hon. Member for Caernarvon. There is the move towards a greater balance in the fact of a continuing increase in the number of job opportunities for women in Wales. Although I concede that we started from a low base, the female activity rate in Wales is moving increasingly closer to the national average. There has been an important improvement in the substructure for future expansion.

We are making Wales more attractive because of the accepted success of the Derelict Land Unit, now absorbed in the Welsh Development Agency. We are making Wales more accessible. The hon. Gentleman mentioned the M4 and the coming improvements in the A5. He could also have mentioned in the same context the high-speed train which in travel terms has brought Wales so much closer to London.

Wales was the first area to receive the high-speed train service. Furthermore, there is evidence of new investment throughout Mid-Wales. There appears to be no township without its new factory and there are now more industrial employees in that area than there are farmers.

Let me deal with the Plan for Wales. Do we need such a plan? It is certainly academically respectable to argue in favour of such a plan. I am rather sceptical of the concept of a total Welsh plan and I favour much more the idea of knitting together the structure plans. For example, in the three Glamorgans and Gwent the Secretary of State has appointed a single inspector to seek to iron out the inconsistencies and contradictions that might otherwise appear.

Mr. D. E. Thomas

I appreciate the hon. Gentleman's anxiety to defend the official Welsh Office line on economic planning, but he is questioning the validity of all-Wales economic planning. What are his views on the regional economic plans which have been developed in England?

Mr. Anderson

If there is a real region economically, I believe such plans may be well-founded. But I said earlier that there was no interface between, say, the economy of Clwyd and that of West Glamorgan, but there is a necessary interface between West Glamorgan and Gwent, though not contiguous, as part of industrial South Wales. The economic regions will not be constrained by artificial political frontiers. The economy of Mid-Wales is very much linked with the industrial Midlands—for example, North Wales with Merseyside. It is nonsensical to think that one can cut Wales aside as a self-contained unit and plan to have a balance between what is happening in North Wales and in South Wales. The reality is that one can and should do so in industrial South Wales.

Although I was accused by the hon. Member for Merioneth (Mr. Thomas) of supporting the Welsh Office line, I believe that my right hon. and learned Friend's approach is more realistic but I also believe that it is not sufficient. Therefore, I hope that he will be bolder and will seek positively to iron out the contradictions. There should be an attempt within a defined economic area, as in industrial South Wales, to plan in a meaningful way. We should have some sort of framework in which coherent locational decisions can be made and we should seek to cluster relatively similar industries within certain areas. For example, metal manufacturing activities could be clustered in the Swansea-Port Talbot complex. Furthermore, this would have relevance in seeking links with the local technical colleges. That is the kind of planning I should like to see and it goes beyond simply seeking to knit together the several structure plans under one planning inspector. We need something bolder in concept than that which is currently envisaged by the Welsh Office, but nothing as grandiose as an overall Welsh plan.

Mr. Wigley

Although the hon. Gentleman says that there is no interface between Clwyd and West Glamorgan, does he accept that the Welsh Development Agency covers the whole of Wales, it has a fund of £100 million to be used in the whole of Wales, and it has to determine priorities between different parts of Wales? Is that not a reason for having a plan to help to determine the priorities?

Mr. Anderson

But the basis of those decisions will be the natural economic regions within Wales and my argument is that the natural economic regions will be, say, industrial South Wales, Mid-Wales and North Wales. That is the essential context of the decisions that will have to be made by the Welsh Development Agency.

This is a difficult period for the Western economies as a whole. There are basic structural problems, low growth, little expectation of major growth in the immediate future, but Wales is well placed. It has a stronger economic base as a result of Government decisions, particularly those made recently. I believe that we have made major strides towards that balance which is the subject of the motion.

8.29 p.m.

Mr. Nicholas Edwards (Pembroke)

I recently came across a speech by a Labour Cabinet Minister which seemed to sum up effectively the Government's present political approach. It presented a vivid scene of the political situation in Britain. The Minister said: Yes, I am pretty sure that we shall have a fine autumn. There will be beautiful autumn tints of happiness in many a home and many people will say with increased conviction 'Labour gets things done'. That has the ring of Sunny Jim and an election about it, but those were the words of Dr. Dalton, speaking to the Labour Party conference in 1946—just about six months before the Government closed two-thirds of British industry at two days notice given on a Friday afternoon in the House as Britain entered the 1947 fuel crisis. Soon there were 2 million people temporarily out of work.

In the light of that experience, perhaps I may be forgiven a little scepticism as I consider the picture that is being painted now and the whole question of economic planning.

Mr. D. E. Thomas

The hon. Gentleman is going back into history. Will he give way?

Mr. Edwards

No, I have hardly started and this is a short debate. It ill becomes Plaid Cymru Members to talk about going back into history, because they seldom get beyond the fifth century in their speeches.

The hon. Member for Caernarvon (Mr. Wigley) gave an amiable and uncontroversial assessment of the Welsh economy and expressed some unexceptionable aspirations, but his speech was singularly short of specific remedies. Indeed, he did not advance one proposal or elaborate on the form that a balanced economy should take until the end of his speech, when he referred to the grand national economic development plan.

I was flabbergasted that the hon. Gentleman did not choose to spell out the details of the sort of economic development plan that Plaid Cymru would present to us or tell us exactly what balance he thought should be provided for the Welsh economy. Of course, Plaid Cymru has done that in the past, and when considering balance in the Welsh economy we are entitled to look at some of Plaid Cymru's past proposals. In 1970, it proposed an economic plan for Wales. Essentially, it set out to calculate the number of jobs that would be needed in Wales and to describe where and in what form they should be provided.

An extraordinary and fundamental weakness of that plan was that nowhere in its 127 pages of analysis and prescription did it stop to consider who might wish to buy the products and services that were to be provided. I found it hard to take seriously a plan which did not consider the market in which the Welsh industry and economy had to operate or the nature of the competition that we faced.

Mr. Wigley

Will the hon. Gentleman give way?

Mr. Edwards

I do not think that in a short debate such as this I should be expected to give way at the end of every second sentence. Many other hon. Members wish to take part in the debate and it would be inconsiderate to the House if I gave way frequently—especially as I have not yet said anything very controversial.

Mr. Wigley

Will the hon. Gentleman give way?

Mr. Edwards

I wish to say more about the Plaid Cymru plan. I shall give way later, so that the hon. Gentleman can have his say.

The plan was unashamedly political rather than economic and, like so many other grandiose plans, it subordinated economic reality to political faith. Nowhere was that more evident than in its total failure to give any weight to the importance of tourism, which the hon. Member for Caernarvon mentioned only briefly. Another example of the subordination of economic and other realities to a political faith has been demonstrated by Plaid Cymru's opposition to the arrival of defence jobs in Cardiff in the last few years.

Another extraordinary feature of the plan was that it sought to argue seriously that it was important to have a detailed and complete road structure within Wales, but it was suggested in at least two parts of the plan that it was doubtful whether it was a good idea to have the M4 from Cardiff to the English border, apparently on the ground that this might allow the English to come in and compete too successfully with the Welsh.

That, too, is not really surprising, because when we turn to the economic paper that Plaid Cymru presented to the Chancellor of the Exchequer in December 1976 we find that it is protectionist in its outlook. It wishes to isolate itself behind tariff barriers in a tightly directed economy. How else could it possibly achieve the detailed and specific distribution of certain industries to certain places that was its prescription back in 1970? For example, there were to be yacht building and marine food processing in Glan Menai, clothing and furniture manufacture in Clwyd, printing and a publishing industry in Aberystwyth, and mechanical handling equipment, metal cans and central heating in the Amman Valley.

Plaid Cymru spelled out in minute detail the sort of jobs that should go to each area. All that was to be achieved by an expensive but inadequately costed combination of roads, industrial parks and State-controlled services, including the national airline to which the hon. Member for Caernarvon referred briefly, and a national development authority that at the end of the day would direct firms and people to its carefully pre-planned locations. There is little in the preparation of such plans that inspires my confidence. In that respect I share the views of the hon. Member for Swansea, East (Mr. Anderson).

The Plaid Cymru plan is based on a series of predictions, the majority of which have been falsified by events. We are bound to ask the exact nature of its plan. Is it a prediction or an aspiration? Is it permissive or is it imperative? Does it matter if it all goes wrong? It is clear that such plans are unscientific and inevitably become political rather than economic documents. In February 1974 would the Labour Party have prepared a plan and written into it the prediction that unemployment in Wales would rise to over 90,000?

Mr. Anderson

Or that Fords might go to Bridgend?

Mr. Edwards

Yes—or that Fords might go to Bridgend? That is so for rather different reasons. There is the impossibility of forecasting that sort of event rather than the political embarrassment of doing so.

Mr. Walter Padley (Ogmore)

rose—

Mr. Edwards

No. I refused to give way to the hon. Member for Caernarvon.

Mr. Padley

The hon. Gentleman referred to my constituency.

Mr. Edwards

I did not refer to the constituency of the hon. Member for Ogmore (Mr. Padley) in any detail. I responded to an intervention made by the hon. Member for Swansea, East.

The effort that goes into the production of such plans is immense, but if a Chancellor is not able to predict events from month to month it is hard to understand how they can be predicted effectively over decades. Plans are launched in a great flurry of enthusiasm, as in 1965, only to be scrapped a year or so later.

Mr. Wigley

The hon. Gentleman has spent a considerable time attacking the document that my party published in 1970. He has not chosen to do so in any detail. It is clear that he has not read more than half the plan. It consisted of 280 pages, and he referred to only 127. Does he accept that in the private sector, which he likes so much, companies produce development plans? Despite the vagaries and uncertainties of the economic world, they find the production of such plans much better than going about their business haphazardly and in a vacuum. They are recognised as being beneficial in industrial and economic terms in the private sector. Surely that benefit can also exist in the public sector.

Mr. Edwards

Such grandiose plans tend to produce political aspirations, which the industrial plan does not. The plan of the factory can be tightly realistic. It is referred to only within a small circle and does not seek to convince or persuade others. The real weakness of planning on this kind of scale is that it is based on the unfounded and alarming assumption that a small group of experts can decide where future successes will arise. The things that follow then become inevitable. Either one drops the whole thing in embarrassed silence when predictions go wrong or one makes them happen. That can be done only in an isolationist, closely directed State, which is likely to be incompatible with economic freedom.

Mr. Cledwyn Hughes (Anglesey)

Will the hon. Gentleman give way?

Mr. Edwards

Well—

Mr. Cledwyn Hughes

It is one of the courtesies of the House. In any event, the hon. Gentleman is making a very long speech for a short debate. He said that the Labour Government produced a plan in 1965 and abandoned it 12 months later. What plan was that? I was responsible for the plan that was published in 1967, which was not abandoned. I am not saying that it was perfect—it was imperfect in many ways—but it originated the M4, which the hon. Gentleman and others said was a reasonable proposal and actually supported. If he is to make these statements, he should get his facts right.

Mr. Edwards

I was referring to the then Mr. George Brown's economic plan. I know that the right hon. Gentleman's plan for Wales was very important, but it was not the only plan produced by the Labour Government at that time. It is an interesting commentary on planning that the right hon. Gentleman has apparently forgotten that grandiose exercise in national planning. A plan as specific in its remedies as Plaid Cymru's must involve direction of labour as well as of companies. I have no reason to believe that that kind of isolationist, directed economy is likely to produce better results than one which is left to free market forces. Indeed, the experience of the twentieth century suggests precisely the opposite.

I do not believe that it is the proper function of Governments—at least in a free society—to impose an exact pattern or to build to a precise blueprint of that kind, and I am sceptical about the outcome.

Goverments can affect the balance in the relationship between the productive and the consuming parts of the economy. In Wales, the Government have the power decisively to affect the balance between a weak private sector and a top-heavy centralised public sector, which, for historic reasons, is concentrated on the declining industries.

Governments, by their policies, can play a large part in deciding whether we are to have a vigorous, innovative, energetic, high-production, high-wage, expanding economy, with the strength to provide improved social benefits, or a rigid, protected, immobile, stagnant, low-production, low-wage economy, providing worse social benefits. The Government, by their policy decisions of the last few months, have shown that they have opted for the latter rather than for the former, and have revealed the stark contrast between what they and the Conservative Party offer to the British electorate.

For two years the Government told us that to cut public expenditure was impossible and that to do so would drive up unemployment. Along came the IMF and forced them to do it, and unemployment began marginally to fall. Last spring, having taken measures that could have put us on the road to recovery, they threw them all away and got the balance wrong by increasing public expenditure again and resisting tax cuts which could have revitalised the economy. The June financial crisis and the fourteenth Budget became inevitable with the decisions on public expenditure earlier in the year.

In simple terms, the Government destroyed confidence in the market and found that they could not borrow. That is where the balance of the Welsh economy is principally wrong at present. It is wrong in terms not of industrial structure but of the relationship of income to expenditure. On top of all the borrowing of recent years, we suddenly had a commitment to increase public spending at more than twice the Chancellor's most optimistic estimate of the growth in the economy, with the market well aware that his previous estimates had proved wildly over-optimistic. Therefore, the confidence of the market collapsed. As a result, we had the credit squeeze and, above all, the increase in the employment tax.

Once again, the wealth-creating part of our society is being squeezed to accommodate the Government's expansionist follies. Once again, on the Chancellor's own admission, the liquidity of our largest companies is being bled when they should be poised for fresh investment. For many small businesses the credit squeeze will be the straw that breaks the camel's back.

I am told that Welsh industry has taken it very badly, that the harshest comments are being made, and that it has had a very bad effect on confidence. The most cautious estimate of the Welsh CBI is that the measure will destroy 3,000 jobs in Wales. That figure would be higher, it says, but for the Welsh over-dependence on public sector employment. But it is as well to remember that the tax applies to public sector jobs too, and I believe that the impact will be greater than the CBI estimates.

It seems incredible that at a time when we are trying to encourage job creation in the regions, the Government should impose an extra tax which will fall most severely on labour-intensive sectors. It is a striking fact that gross expenditure on the special employment and training measures at present being operated will be just over £500 million in the current financial year, while the extra tax is taking £500 million away from industry.

There is growing complacency among the Government about the current unemployment figures. We must be thankful for any improvement, but it would be wrong to imagine that things are getting better for Wales. Unemployment there this June is about 7,000 higher than it was in June last year, and almost 13,000 higher than in June the previous year. Between June and July last year unemployment in Wales jumped by 12,400 as the schoolleavers came on to the register. A jump on a comparable scale this July would put unemployment perilously close to the 100,000 mark. When we take account of redundancies already announced, and the effect of the Chancellor's recent tax on employment, the prospect that that figure will be reached remains horrifyingly real.

The Government claim credit for the success of their emergency measures. They say that they have saved between 50,000 and 60,000 jobs in Wales. But there is a world of difference between temporary employment and genuine long-term jobs. In the present desperate situation, job creation and work experience schemes have an essential and important part to play, just as do analgesics in medicine. Undoubtedly it is also true that the more these schemes can be directed towards preparation for future employment the more valuable they will be. I shall have something to say about that in the Welsh Grand Committee next Wednesday.

In spite of all that, the jobs provided under these schemes remain very much second-best for those involved and they disguise the real scale of unemployment. That remains a black indictment of Labour's economic record in the past few years.

I should have liked to comment on the latest of a long stream of rather unreliable industrial production figures, but apparently the computer has broken down, and the latest statistics that are available take us only up to the end of last year. These figures, which were pretty poor, showed that last year we were producing less than in 1976, that we were producing less than in 1974, in the three-day working week, and substantially less than at the peak of production in 1973.

Since then, I will be told, there has been something of a recovery in consumer spending as the pre-election boom-let gets under way. The CBI in Wales tells me that overall it can detect only a slight upturn. It describes conditions as patchy. It points out that some sectors, notably steel, are still doing badly, and it says that it can detect no long-term optimism. The order books of industry do not stretch very far ahead.

So, after four and half years of Labour Government, there still seems to be no real prospect of a break-out from the era of stagnation, low production and high unemployment that has characterised, and indeed, always characterises, the years of Socialism.

We live in a world in which industry is debilitated by high taxes, made complacent by subsidy and burdened by bureacracy. We live also in a world of rapid change. There is a terrible danger that economic plans will act as a barrier to change, that a particular concept of a balanced economy will stultify, that political pressure will provide the temptation to resist changes which are an essential forerunner of new growth.

The Government's role in all this, in industrial terms, must be to protect people against the too violent impact, in social terms, of change, to provide a developing infrastructure for the future, to provide assistance for those who are setting up or moving, and to do that by reacting flexibly to economic rather than to political demands.

It is because I believe in regional policy in those terms and because I am impressed by the realistic approach of those involved in Wales that I have become a convert—belatedly, I freely admit —to the Development Agency concept, and would pursue regional policies based on it.

Above all, what we must do is to create a general economic climate for high levels of production, high wages and high profits. We believe that that will he done not by Socialist or Plaid Cymru planning but by releasing the energies, enterprise and skill of individuals. We must recreate incentive, allow people to keep more of what they earn, restore differentials, and cut direct taxation at all levels.

The real hope for future jobs in Wales lies not with grandoise plans for a balanced economy but in the hundreds of small and expanding businesses that can react through the market to changing demand and provide a living, flexible and dynamic economy and in Government policies that recognise that it is their prime duty to create the climate in which those developing businesses can succeed. It is that approach that offers the best hope for the Welsh people.

8.52 p.m.

Mr. Ifor Davies (Gower)

The hon. Member for Pembroke (Mr. Edwards) spent a great deal of time talking about planning, even saying that he is a convert to the work of the WDA. I shall follow him in those matters later in my speech

However, I should like to turn straight away to the opening speech of the hon. Member for Caernarvon (Mr. Wigley) and the motion. The hon. Member emphasised the need for a balanced economic order for Wales, but I did not detect in that speech equal emphasis on the need to recognise the dependence of Wales on outside economic forces. There is a need to realise that Wales needs to obtain the fresh industry required to strengthen the basis of future prosperity. Wales must compete not just with the other assisted areas within the United Kingdom but also with the whole of Western Europe and the rest of the Western world.

The fact is that the Welsh economy is today undergoing a transformation as sweeping and far reaching in scope—but much faster in pace—as all the changes that it went through during the industrial revolution. The earlier transformation was from a predominantly agricultural economy to dependence upon a few heavy industries. The first stage was based on the exploitation of limited iron and mineral resources. The second stage arose from a worldwide demand for coal for the rapid development of transport, steel and constructive industries.

At present, Wales is passing through a period of unusually rapid economic change. The changes now in progress are largely from the basic industries to newer industries, such as chemicals and oil refining, aircraft and motors, electronic engineering and electronics.

The increase in adoption of automation is also bringing fresh challenges. The greatest challenge of all, of course, demands planning. It is said that planning means different things to different people. I recall Stafford Cripps referring to planning as …the most potent principle of social cohesion that man possesses—and the most effective means of transforming a community into a just society. That is true, but the essence of planning lies in trying to identify and where possible to quantify the problems and then seeking to work out in the light of the available resources the policies that best promote their solution.

These are the very objectives which have guided the Government in dealing with the Welsh economy. In recent years an economic strategy has been pursued with two overriding aims—first, to reduce inflation and, second, to regenerate industry. The success achieved in the fight against inflation is self-evident and cannot be denied, so I turn to the other priority of regenerating industry.

The most important single feature of the structure of the economy of Wales is the fact that it is the nearest of Britain's peripheral assisted regions to the dual centres of economic and political power, whether by road, rail or air. Our ports supply modernised and specialist facilities for rapid import and export. The acceptance of the Cardiff-Wales Airport as the official airport for Wales and the West gives a further guarantee of its future growth, with an increase in its direct connections with continental centres.

The Welsh ports handle between a quarter and a fifth of all foreign and coastwise traffic passing through British ports. Consequently, the nearness of Wales to market centres provides her with a permanent advantage over peripheral regions. The completion in the near future of the M4 across South Wales —the Secretary of State can rightly take pride in this—together with the highspeed trains, will improve communications in the most significant way.

All this, together with the selective assistance available from the Welsh Office industry division and the increased incentives recently announced for special development areas, presents an impressive array of weapons with which to tackle Welsh economic problems.

Industrially, however, Wales has long been dominated by its heavy industries. Since Wales was more specialised than any other region in coal and steel, so the need for new jobs to replace the rundown in those basic industries has been and remains greater than elsewhere. For example, it is estimated that over the past decade Wales has lost over 80,000 male jobs. Employment in mining has fallen by 52,000 or 55 per cent., in agriculture by 13,000 or 33 per cent. and in metal manufacture by 16,000 or 16 per cent.

The concern about unemployment is not confined to one party. Every hon. Member is disturbed particularly over youth employment, which I gather the Welsh Grand Committee is to debate next week. I welcome this month's figures, which show that unemployment has fallen again. I think that the figure now is 86,534, which means a reduction of about 7,000 since last January—within six months.

A necessary accompaniment of the rundown in labour in the traditional industries is an extensive modernisation programme with substantial investment, but the speed of the rundown in employment in those basic industries has meant that Wales could not possibly have supplied the required number of jobs simply from the extension of smaller industries. In other words, Wales has had to rely heavily on attracting new industries from outside, notably from overseas.

Incidentally, these overseas firms account for the employment of over 60,000 people, or almost twice as many as are employed now in the coal industry. It is fortunate that, in the highly competitive business of attracting overseas firms, Wales has cumulatively acquired an impressive record. I wish that we had heard a bit more about that.

Despite the unfavourable economic environment of the world recession, confidence in Wales as an industrial location has been amply demonstrated. The latest example, of course—there has already been reference to it—is Ford's decision to invest £250 million at Bridgend, in the face of strong international competition from Germany, Spain and Ireland. Moreover, investment on an even greater scale is in process by the oil firms in the constituency of the hon. Member for Pembroke.

It is significant also that four out of the six Japanese manufacturing firms in Britain have chosen to locate themselves in Wales. The new extension by Hoover at Merthyr and the additional investment by Alcoa at Swansea are impressive developments, too.

This overseas investment in Wales is not simply a verbal expression of confidence but is, rather, a practical declaration of faith, and is in direct contrast, if I may say so, to the attitude of some politicians.

After many years when the economic environment in Wales has been on a low key, it is now vital for the confidence shown in Wales by overseas firms to inject itself into the stimulation of indigenous industries. This is the great need now, for one of the most remarkable facts of the past few decades has been that nearly two-thirds of the new jobs in many industries have come from outside Wales.

Although outside investment will continue to play a vital part, it is essential—I agree here with what was said by the hon. Member for Pembroke—to raise the growth rate of indigenous industry, and this applies especially to the smaller firms in Wales. The Welsh Development Agency has a great part to play in this direction in particular by aiming to build on the small and medium-size firms already located in Wales, in addition, of course, to its highly successful achievements in promoting Wales as a location for new industry.

Despite the substantial progress which has been made to achieve a balanced economic order through the diversification of the economy in the Principality, Wales is still very much dependent upon the traditional industries of coal and steel.

The future for coal looks considerably brighter—brighter, indeed, than has been recognised by some hon. Members in the debate—with a £16 million investment in Europe's largest anthracite mine at Bettws, which will give employment to over 500 miners for 25 years. This investment is part of an already agreed programme of £54 million currently being spent by the National Coal Board in Wales.

Neither past nor present economic difficulties should blind us to the promising fact that Wales has an abundant supply of anthracite and coking coal, both of which are becoming increasingly scarce and highly valuable products throughout the world.

It is regrettable that the same promising account cannot be given for the steel industry, which has been caught up in the most savage world recession. Nevertheless, the steel industry remains, and will always remain, the supplier of the lifeblood of all our industrial activities. In this context I take the opportunity of urging upon the Government and the British Steel Corporation—I am confident that I carry with me the Joint Steel Committee of the West Wales area—that there should be no delay in proceeding with the selective investment at Port Talbot as agreed and confirmed by every recent report on the industry. This investment is essential to ensure and sustain the quality of production. Wales still produces virtually all of Britain's tin plate at Trostre and Velindre in my constituency and in Ebbw Vale. Since they are Port Talbot's biggest customers, the quality of production there is a vital factor for the future of these industries in world markets.

There have been encouraging signs of the expansion of our economy in the report from the Central Statistical Office and the Government's economic progress report. The report says: The index of industrial production was over 14 per cent. higher in the first quarter of 1978 than in the previous quarter; that for manufacturing alone was a little over 1 per cent. higher. There are now some signs of resumed growth in the underlying level of industrial production. Given a reasonable expansion of the economy combined with a dynamic attitude within Wales to equal the inspiring faith shown by overseas investors, I am confident that Wales stands on the threshold of a new economic order. I believe that, although our problems are formidable, they can and will be overcome.

9.6 p.m.

Mr. Geraint Howells (Cardigan)

I am sure that all hon. Members will agree that there is a need for a balanced economy in Wales. How do we achieve that? Every political party produces its own plans. We have had such plans for the past 20 or 30 years. Some have been good, others have been bad. Over the years, successive Governments have taken heed of the views of various organisations which have said that they ought to improve the economy of rural Wales, North and South Wales and even Mid-Wales. I confine my remarks to rural Wales. I believe that the Welsh Development Agency has done excellent work in many parts of the country.

Mid-Wales is greatly dependent on agriculture, on the Rural Development Board, the servicing industries and small business men. I am sure that all hon. Members are aware that there are more small businesses and more self-employed people in Mid-Wales than in any other part of Britain. The importance of the small business to the Welsh economy, especially to rural Wales, is great. Perhaps not many hon. Members on the Tory Benches will give the Liberal Party due credit for what it has done in the past 18 months, but the majority of small business men and farmers have said to me that as a result of the Lib-Lab agreement the Liberal Party has done more good in the past 18 months than the two major parties have done in the past 20 years.

The average working wage in Mid-Wales is one of the lowest in the country. Many workers in the servicing industries and in factories there have said that it is not worth working because the social security benefits are higher than the wage packet. What plans has the Minister to improve the average wage of the working man in rural Wales? I confess that times are much better in rural Wales in 1978 than they were in 1938. I remember that my school males in those days had to leave rural Wales to look for work in South Wales, the Midlands and London. Fortunately, today we are able to keep our young people in the rural areas. With the benefits that accrue to them—and perhaps one day the Development Board for Rural Wales and other organisations will be able to help them— they may stay with us in Mid-Wales, improve the economy and stop rural depopulation.

One of the greatest tragedies of Mid-Wales has been the failure over the years to attract enough industry capable of using the potential of the work force. Although I applaud the efforts of the Development Board, as yet it has not the necessary teeth and finance to effect a transformation. But it has done excellent work to date. The number of vacant factories on 1st April 1977 was 36. The number of factories let between 1st April 1977 and 31st March 1978 was 22. That is not a bad record. Factories under negotiation at 31st March 1978 totalled seven. The number of factories still available is seven.

The Development Board says that it now owns 104 factories, of which 44 are in Newtown and 60 are in other Mid-Wales towns. It intends to build another 14 factories in Newtown, four in Rhayader, two in Cardigan, two in Lampeter and a few in Merionethshire and Montgomeryshire.

I wonder whether too many factories are being erected in one town in Mid-Wales, because 44 plus an extra 14 will make a total of 58, while we have only 60 for the rest of Mid-Wales. It is the Liberal Party's wish that more factories should be built in other towns in Mid-Wales in case the tendency increases for people to move from other parts of Mid-Wales to Newtown in Montgomeryshire.

The biggest problem of all in rural Wales and Mid-Wales is communications. Without better roads and rail services we cannot possibly hope to see firms risking money and reputation to set up factories there. We must improve incentives to industrialists. We must use EEC funds. If we could upgrade the road between Shrewsbury and Aberystwyth, that would entice many industrialists to the Welsh coast. I hope that the Minister will repeat the assurance that the railway line —the only one in Mid-Wales—from Aberystwyth to Shrewsbury will remain open for the future development of the economy of rural Wales.

There are many other aspects that I should like to discuss, but because of the shortage of time I will conclude by saying that when we have a Welsh Assembly we shall be able to devote more time to the economy of rural Wales instead of debating the future economy of Wales in this House for two hours now and again, which is not enough. Once we have the Assembly, its Members will get together, and I hope that there will be a great improvement in the economy and that it will be a balanced economy.

9.14 p.m.

Mr. Ioan Evans (Aberdare)

Before the hon. Member for Cardigan (Mr. Howells) spoke, I intended to say what a delight it was to be talking about Welsh affairs without having to talk about the Assembly, and I was going to welcome that as a pleasant change. I applaud Plaid Cymru for choosing to speak about the economy. It appears that Plaid Cymru is now getting its priorities right. There is more concern in Wales about the economy and about jobs than there is talk about the Assembly.

The hon. Member for Caernarvon (Mr. Wigley) has already been complimented on the mild and moderate way in which he presented his case. It was thought that there would be talk about independence for Wales. That is a policy put forward by people who I believe have lost their sense of value. However, we have heard nothing about it in this debate so far. What we have had is a discussion of economic affairs.

The hon. Member for Cardigan referred to advance factories, which was also a point mentioned by the hon. Member for Caernarvon. There is concern when advance factories are empty. I should tell hon. Members that if their constituencies contain advance factories which are not wanted, they would be welcomed in the Valleys. They would be welcome in the Cynon Valley. One of the problems in the past has been that industrialists have come into these areas, but those industries have been lost because advance factories were available in other areas. I therefore appeal to my hon. Friend the Minister to continue the policy of making sure that advance factories are available.

I thought the hon. Member for Caernarvon was rather unfair when he made reference to the Welsh Development Agency and compared it with the Development Board for Rural Wales. They are both new organisations with different tasks. I believe that the Welsh Development Agency has got off to a good start, and it is wrong to compare one with the other. I am sure that we all wish both of them well in the future.

I should like briefly to make special reference to the Valleys of South Wales. Let us not talk about Wales as being an economic unit which can be separate from the rest of Britain. That view has not arisen in the debate, and it is jest as well. But within Wales itself there is concern about the Valleys, which spread from Newport to Llanelli, because there has been a development of the economy in certain parts rather than in others.

As the Minister knows, I joined the Mid-Glamorgan deputation earlier this week when it came to see the Secretary of State and himself. We were courteously received at the Welsh Office. The representatives of the Mid-Glamorgan County Council pointed out—as the Secretary of State is well aware—that the problems of the Mid-Glamorgan county are widespread and include poor quality housing, outdated school buildings, inadequate highways, polluted rivers and high unemployment. In many ways, these are interrelated, especially in the sense that the quality of the environment and infrastructure can be an important factor in influencing the decisions of firms to locate in an area.

However, I should like to concentrate on the difficulties of obtaining employment because in the main the deputation was most concerned about jobs. I believe that the Mid-Glamorgan county has submitted its county structure plan in which priority is given to development in the Valleys. I believe that an important contribution was made by the socioeconomic research group of Ty Toronto which, following its conference in the Year of the Valleys, brought forward a document referring to the Government White Paper produced by the Welsh Office in 1967 entitled "Wales: the Way Ahead". It stated: For both economic and social reasons the Government reject any policy which would assume the disintegration of the substantial valley communities, and they propose instead to seek a solution in an integrated plan of development for South Wales as a whole, recognising the close interlocking of economic and social activity and interdependence of interest between the valleys and the rest of South Wales". The Valleys of South Wales are distinct from the rest of South Wales as an identifiable area, and the Government's policy must continue to be to reinvigorate Valley life and to bring about a renewal of life in the Valley communities.

The statement by those who participated in the Year of the Valleys Conference made three affirmations. They said: First, the situation in the valleys is urgent. It is deteriorating, and this deterioration has inevitable long-term consequences. Secondly, the primary need is to develop a sound economic basis. This demands an explicit up-to-date regional policy for South Wales within which regional planning can operate and of which the participating public is aware. Thirdly, for this purpose the valleys must be recognised as a distinct entity within the region both by the Welsh Office and central Government on the one hand and by the separate valley communities and local authorities on the other. There is a deep concern that the substantial Valley communities could be losing out to the non-Valley parts of the Welsh region. Although obviously we welcome the development of the M4—and my hon. Friends the Members for Gower (Mr. Davies) and Swansea, East (Mr. Anderson) referred to the tremendous achievements by this Government to improve the community—there is a fear now that, unless there is deliberate Government policy, the positive development will shift from the Valleys to the areas along the M4. Obviously we want to see development along the M4. We do not want to argue one area against another. But there is concern in the Valleys that they must get their fair share of what is to be allocated by the Government.

The Valleys have an unusual strength of community feeling, a real sense of belonging, a fine physical and historic setting and a powerful economic motive for making the effort to re-create an urban life based on the highest standards. We have the schools, the churches and the chapels. We now have coming the sports centres. There is a real community life, and we have to ensure that the jobs are brought into these areas which means factories going there.

As well as developing the manufacturing side, there should as well be some provision of jobs in the service industries. We talk about planning, but we find that there are certain areas where there are service jobs. In the Valleys, there has been a complete dependence in the past on the coal industry, and even now there is an imbalance because what development there has been has been in manufacturing jobs. The Government have been moving civil servants down from London into Wales. As well as moving them from one city area to another, why do not we have some office development put into the Heads of the Valleys. Why do not we ask the Welsh Development Agency, as well as building advance factories, to build advance office premises so that the Government can direct service jobs into these areas?

Mid-Glamorgan has the largest area of derelict land. I say again that the Welsh Development Agency has taken up where the Derelict Land Unit left off, and it has done a tremendous job. When derelict land is reclaimed, we should ensure that it is used for the siting of new industries. There is a tendency to take good agricultural land for factory building. Why not use this derelict land?

The record of this Government, which we shall be putting before the country in the forthcoming months, is one of achievement while we have been going through a period of world recession, and it is no use people talking about unemployment without relating it to the unemployment figures of other countries.

There are still tasks which need to be determined, and I hope that greater financial resources will be put at the disposal of the Welsh Development Agency and the rural board so that these matters can be tackled. The real problem concerning the people of Wales is not whether they should have an Assembly. The vast majority of people look upon that as an irrelevance. The real problem is the lack of jobs.

I believe that the Government have started well. Let them ensure that we get back to full employment as soon as possible and continue to demonstrate their concern about the problems of those who live in the Valleys of South Wales

9.25 p.m.

Mr. Gwynfor Evans (Carmarthen)

When we were considering the subject for discussion in this debate, one of the matters that came to mind was the splendid report of the Welsh Language Council. I hope that there will be an opportunity to discuss that very important report. But the subject that we have chosen bears a close relationship to the question of language and culture in Wales. The effect of depopulation and migration, following heavy unemployment, has been disastrous for the Welsh language and culture.

There is another relationship as well. When a culture is thriving and healthy it affects the morale of the people, and this reflects itself in their economic life. I had an example of this a few weeks ago, when I was in the Basque country, where I was deeply impressed by the people's enthusiasm and loyalty for their language and culture. The Basque language is spoken by only 23 per cent. of the people —it is similar to ours in that sense—yet it reflects itself in the economic life of the province in many ways.

It is reflected in the extraordinary complex of the co-operatives—the Mon-dragon complex. I visited a number of these co-operatives, which employ more than 17,000 people. The first one was started as recently as 1956, and in the period of more than 21 years since then not one person has lost a job.

One noticed that in the very sophisticated and highly computerised industries—the main computers are to be found in a beautiful building above the valley of Mondragon—all the notices were bilingual and all the publications of the Mondragon centre were also bilingual. This reflects the value of a healthy culture and the attachment of the culture to the economic life of the people.

Mr. Michael Roberts (Cardiff, North-West)

I appreciate the lion. Member's very important points about the relationship between the economy and the culture of a country. I refer to the publication "The Future for the Welsh Language", where it is suggested that the Welsh language should be built into considerations of economic planning. Is there not something of a dilemma here The publication refers to the monolingual key workers who come into the community and change the nature of it. Is there not a dilemma in developing the economy and protecting the culture of our country?

Mr. Evans

That is the kind of situation that I am trying to illustrate. We have had a great influx of non-Welsh speaking people into our community and we have the difficulty of trying to assimilate them fully. In the report it is suggested that we begin with the children—the three, four and five-year-olds. The report suggests that that is the best way in which to act.

One has to admit that nationalism in a country such as Euzkadi is a great moral power. People seem to approve of nationalism there, as they do in Catalonia, Romania, Hungary, Poland, Latvia, and Lithuania. But for some reason nationalism is derided in Wales. However, if we can release that moral power in Wales it will have a tremendous effect not only on our cultural life but economically.

We therefore approach the subject of a country's balanced economic order as if it were a seamless web, in which action in each part of the life of the country affects every other part.

This argument also applies to the infrastructure of the country, such as with roads. That infrastructure is basically important to any balanced development. For example, in terms of communication the M4 is a great accomplishment, as is the magnificant piece of motorway as far as Abercynon. But if we consider Wales as a national entity, we believe that there should be a spine road through Wales and that the roads running from the middle to the West and to the East, should run from that spine. In that way every part of the country could be developed. In the West, industry suffers because of inadequate roads.

The kind of industry we can expect to be developed in the West must depend on adequate road communications more than is the case in the East. I doubt whether the Ford Motor Company would have come to Bridgend if it were not for the proximity of the M4. Even in highly industrialised parts of Wales, a good road system immensely important.

If we want to develop light industry in the rural West, we must certainly have the right kind of roads. We have been told time and again by industrialists who are trying to operate in the West that the transport problem is their main difficulty. There should be an effort in the West to develop the kind of industries that would use the products of animals and other native materials. There is room, for example, for a canning industry and for all the products one finds in a cow, a sheep or whatever the animal may be. We should be in a position to develop our raw materials in the country, which means in a position to develop our coastal fishing and to use our slate waste in some parts of Wales. We should also use the peat we have in many areas. That kind of industry depends very much on good transport and adequate communications.

I am glad to see that the Development Board for Rural Wales is adopting a more aggressive policy, which is to be commended. I wish that the Welsh Development Agency would pursue an equally aggressive policy in rural parts of Wales. I am glad that the Agency is showing a greater interest in rural Wales, but it is not yet in the position of the Scottish Development Agency, which has invested about £17 million in 30 sophisticated industries and thereby saved 8,000 jobs. It has done so often in cases involving considerable risk. I wish that the WDA would take more risks in its investment.

I believe that central Government could do more than they are doing, because they are major customers in respect of many industries. The Government could use their influence to direct more work towards those parts of Wales which are so lacking in industry.

Local government could also do more in this respect. It is foolish that local government, which uses so much furniture and other products in schools, imports all this material from outside Wales. We should be manufacturing that furniture and other items in Wales. The fact that we are not doing so is part of the reason for our economic imbalance.

I have mentioned roads. I wish also to mention the railways. British Rail made a great mistake in closing the line between Carmarthen and Aberystwyth. When that line existed, one could travel from Swansea to Carmarthen in a matter of hours. It was also possible, in those days, to make a circular journey round Wales. That is not now possible. That line was important to the tourist industry. We should not depend too much on the tourist industry, but it is the fastest grow- ing industry in Wales and will bring in something like £300 million this year.

Evidence of the neglect of our railways is demonstrated by the failure to electrify any of them. I do not apologise for returning to this subject, which I have mentioned more than once. In England, there are 2,350 miles of electrified railway, which accounts for about 40 per cent. of train mileage. Yet England, even with that amount of electrification, is only 17th in the league of countries with electrified railways. Wales has not a single mile of electrified railway.

We have also failed to take advantage of the tremendous asset represented by our Welsh ports. There is certainly room for development there. Even now, they are responsible for 32 per cent. of the profits of the British Transport Docks Board respite the fact that trade in these ports has been declining steadily since 1974.

These ports have advantages which are not found in most ports in the United Kingdom or on the Continent. They have deep water close to the shore, plenty of room for manoeuvrability, they are well placed for world trade, and there is none of the congestion that causes so much trouble in the English Channel. One of those ports should have become a Europort by now. With the right sort of land bridge between the ports and the populous Midlands of England and London, and an Assembly of the sort that the hon. Member for Aberdare (Mr. Evans) does not wish to see, we would have stimulated development among our ports. A person who speaks with great authority on these matters told me recently that if Wales had a Parliament of her own, the ports would really take off.

We have heard that great numbers of people have lost work in agriculture and coal and are losing jobs in steel. It is not always realised that one Welshman in 10 works in the steel industry. It is still immensely important to us and it must see a greater technological mix and a greater mix of products. We must also reduce our dependence on steel and old-fashioned industries generally.

We need plenty of jobs for young Welsh scientists. We have next to nothing for them in Wales. We need jobs for highly technically trained Welshmen. We have no computer industry, and not one Government scientific research centre. It is an extraordinary situation.

Mr. D. E. Thomas

Is my hon. Friend aware that the Institute of Geological Sciences recently relocated its headquarters in Nottingham? The Secretary of State for Education, who is ultimately responsible for the work of the Institute, told me in correspondence that it was not possible for the Institute to be devolved to Wales, even for its Welsh functions, because the geological structure of Wales was linked in with that of England. This has meant that at least 30 top geological jobs have been lost to Wales. Apparently, the geology of Scotland is separate because the IGS is devolved in Scotland.

Mr. Evans

I am grateful for my hon. Friend's intervention.

I draw my remarks to a close to allow the Under-Secretary of State to reply. We have 100,000 fewer jobs for Welsh men in Wales today than we had a decade ago. Wales is the only area in this island which in the past six months has seen a deterioration in employment opportunities. The only comparable area is Northern Ireland, which is outside this island. This is a heavy condemnation of the Government and emphasises the pressing need for greater development inside Wales.

Professor Glyn Davies has said that by the early 1990s we shall need at least 1,500 new manufacturing industries in Wales to cope with the task with which we are faced. That is where the importance of a plan comes into being. I know that the idea of a national plan is rejected by the Government, but I emphasise that it has the enthusiastic support of the Council for the Principality. Even the leader of the Conservatives on the Cardiff City Council has spoken of the need for a strategy for the whole of Wales. The same thinking is found in the support given by the Welsh Council to the Welsh TUC's demand for a Welsh "Neddy". That is an area of immense importance, and precisely the area in which the work of a Welsh Assembly could be shown at its best. It should be in a position to supervise that area with effect.

9.42 p.m.

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

When I first read the terms of the motion—the need for a balanced economic order for Wales—I was not quite sure what Plaid Cymru Members meant. Having listened to the debate, I am not a great deal wiser. What we have, heard in the debate has been rather similar to saying that one is in favour of virtue but not quite sure how to define it or spell it out.

In the past the nationalists have always spoken as if the problems of Wales were unique and could be solved by action in Wales alone. However, I detected a glimmer of hope. I know that my hon. Friend the Member for Gower (Mr. Davies) did not detect the same glimmer. It seems that Plaid Cymru Members have learned something from the experiences of the past few years, which have demonstrated clearly the interdependence of the economies of the developed nations of the world. I hope that they now accept that action in Wales by Wales alone, or in the United Kingdom by the United Kingdom alone, could not solve the problems arising from a generally depressed level of world economic activity. It requires a combined effort from many countries to put us back on the path of higher growth rates.

I cast my mind back to what the nationalists said in their economic plan for Wales of the early 1970s. I assure the nationalists that I have not reread it today. As I recall, the essence of the plan was the assumption that if Wales were a self-governed entity, cast adrift from the rest of the United Kingdom, but not too far adrift, substantial cuts in the defence budget for Wales would make money available, without any increase in taxation, to build up the industrial structure at selected growth centres. There was the assumption that certain specified industries—those with good prospects for expansion—would be located at those centres.

I recall that the nationalists talked of selected growth points—nine main centres and 17 secondary centres. By implication, if there is a concentration of growth in those centres there will be nil growth in other parts of Wales. That would not be acceptable to the hon. Member for Rhondda or to the people of Rhondda. We in Rhondda welcome the development of Llantrisant. I would not want to contemplate a nil growth in that sort of area. Many other areas in Wales were not included as main or secondary centres for growth. There are areas that desperately need growth at this moment.

Mr. Wigley

roseߞ

Mr. Jones

No, I shall not give way. I lost some time and I did not take advantage of an opening speech. I am sure that the hon. Gentleman will take that into account.

I looked at Powys. That great plan of 1970 listed Newtown as a main growth centre. I do not think that we needed a plan. Newtown had already been designated as a new town for that purpose; and it has been a very successful new town. It has a population topping 8,000, 800 new houses and 1,100 new jobs in the Development Board's 44 factories, which are now all let.

What about the rest of Powys? There is not even a secondary growth centre of Llandrindod, Builth or Welshpool. I hope that the people resident there will recall that. But, most important, the plan did not indicate how the growth was to be achieved. One can paint all kinds of castles in the sky, but how does one get the growth that is needed?

Many people make a respectable argument for the direction of labour. But the plan did not say that was how the nationalists would induce growth into those areas. The hon. Member for Caernarvon (Mr. Wigley) said that Plaid Cymru would seek to encourage industrial investment from outside. However, I suspect that direction would not be regarded as encouragement.

The plan went even further than selecting specific spots. It nominated specific industries for those centres. Does that mean that other non-nominated industries would be turned away from those selected spots? Glan Menai was nominated for electronics, yacht building, aluminium and marine food processing. If we had followed that plan, we should have turned down the Rehau plastics factory at Blaenau Ffestiniog.

The plan is not a plan. It is hardly worth the paper on which it is written. Had we adopted and adhered to that kind of plan, the Ford development at Bridgend would not have fitted in, because Bridgend was not designed for that kind of development. I believe that Shoni bob ochor himself must have been the architect of that plan. I suspect that he is very much alive in the nationalist party at this moment.

In the nationalists' plan, Llantrisant is designated as a secondary growth point. But as I read in my local paper and as my hon. Friend the Member for Pontypridd (Mr. John) tells me, the nationalist candidate at Pontypridd is actively opposed to any further industrial development on the most suitable site in that specified secondary growth centre.

I do not wish to spend any more time on what I believe is cloud cuckoo land. The problems affecting Wales are too important for that.

I refute the charge made by the hon. Member for Pembroke (Mr. Edwards) that we are complacent about unemployment. One may criticise or say that the Government should have done something else, but I do not think that it can fairly be said that we have been complacent about unemployment.

Unemployment remains far too highߞthere is no dispute in the House about that—but we are grappling with the problem, and I believe that it will be overcome. However, it would be to mislead the people of Wales if we did not indicate that it is a difficult task and likely to he a long task before it is finally resolved.

In the meantime, the Government have introduced a most wide-ranging set of measures to preserve or to create employment. I am not sure whether the hon. Member for Pembroke is in favour of those measures. I make no apology for the 60,000 jobs saved or created in Wales by these measures or for the £55 million expended in the process. What would those who criticise have done? It is simply not good enough constantly to parrot cry about the need to reduce public expenditure without specifying what services would be cut.

Would he cut the selective financial assistance which has been of such enormous benefit to us in Wales? Would he cut the special help that we have given to the Cardiff and Ebbw Vale steel closure areas? Would the Welsh Development Agency and the Development Board be axed, or has the newly-found support come to their aid? If it were none of those things, would it be the temporary employment or youth employment programmes or schools, hospitals or roads that would be cut?

It is no good arguing for cuts in public expenditure without saying where those cuts are to be made. We are justified in seeking answers to these questions, but as long as the hon. Member for Pembroke goes as far back as 1946 for a quotation from Dalton, I do not believe that we shall get answers from him for dealing with 1978. If Press reports are to be believed, the hon. Member has not made up his mind whether the Government's incentives for industry should be retained. The hon. Member should perhaps have a word with his hon. and learned Friend the Member for Denbigh (Mr. Morgan) or his hon. Friend the Member for Flint, West (Sir A. Meyer). They have been advocating the extension of development area status for parts of their constituencies. If I remember correctly, the hon. Member for Pembroke came with a delegation to see the Minister of State for Industry urging the upgrading of parts of his constituency.

Conservative Members therefore say that cuts and reductions in spending can be made anywhere provided they do not affect their own constituencies. In those cases, the reverse should apply and there should be more public expenditure.

Let us consider the theme of the speeches of the nationalist Members. It was that without some all-embracing detailed blueprint of an economic plan for Wales we shall always remain behind other parts of the United Kingdom and the serious problems will never be overcome. I believe that part of the answer is that the health of the economy in Wales depends on the position in the United Kingdom. Plans for Wales must therefore be kept broad and flexible. They must be kept broad because new developments such as major changes in oil and other commodity prices, or innovations such as micro-miniaturisation of electronic components profoundly change the direction of industrial development.

When the so-called plan was drawn up in 1970 its architects did not envisage a fivefold increase in oil prices. That fact, I believe, justifies my saying that any such plan must be kept flexible.

Mr. D. E. Thomas

rose—

Mr. Jones

I cannot give way. I have indicated that the lack of time, the fact that my speech has been cut short, and the fact that the Government have deliberately chosen to have only one Front Bench speaker, gives us the right to put our case fully now.

Any plan must be flexible, so that central and local Government can respond quickly to problems. The accelerated closures of steelmaking at East Moors and Ebbw Wale Vale could not have been foreseen years ago.

Each part of Wales has its own separate characteristic and special needs. Planning has to be flexible enough to encompass them. I believe that we have the broad framework of objectives to contain inflation and return to full employment. The hon. Member for Caernarvon referred to roads. The roads priorities are clear. They may not be the ones that hon. Members want. They are to proceed with the M4 and to follow that with the A55. As a consolation prize for the hon. Member for Pembroke, let me remind him that whereas 31 miles of motorway were open in Wales last year, there was not even one man digging one hole when we came into office.

The Welsh Development Agency is developing industrial sites at key points or in places of special need, as well as in the community at large. I am glad that even now the sinner repenteth and the hon. Member for Pembroke supports the Welsh Development Agency. The people of Wales, however, should remember that the Agency would not exist if the Conservatives had had their way. It has done considerable work in the construction of new advance factories.

There is a more important factor still. The hon. Member for Caernarvon spoke of empty advance factories. Up to mid-May of this year, 53 factories had been provisionally or formally allocated. That represents 500,000 sq. ft. That would cater for about 2,740 jobs. That is to be compared with 13 factories, 192,000 sq. ft. and 750 jobs in factories that were allocated in the same period last year. This is a significant improvement. Whether one is talking of the work of the Agency or of the Development Board, it is quite clear that the take-up of the factories that we had the foresight to build is now occurring.

Many hon. Members have indicated that part of the problem of evolving and improving the infrastructure is related to the clearance of dereliction. We must take into account the fact that when all the schemes which the WDA is in process of dealing with are completed, at a cost of £36 million, those schemes will have cleared 4,700 acres of derelict land. Whilst we would all want everyone to do more, I do not think that anyone can deny that the WDA has been a success.

Similarly, I believe that the Development Board for Rural Wales is just the same. It started out with 36 factories, as the hon. Member for Cardigan (Mr. Howells) said. Those factories were not let; they were not even subject to any negotiations. But last month, I believe that only seven of them remained empty. The Development Board has published its policy document, after consultation with local authorities. Apart from the factories that have been left, the Development Board has 104,000 sq. ft. of factory space under construction at present, and a further 68,000 sq. ft. is planned.

Time will probably go against me. I think that all hon. Members will have probably received the document from the Development Board showing that those factories are not specifically and solely related to Newtown but are spread outߞCardigan, Lampeter, Tywyn, Brecon, Ystradgynlais, Machynlleth, Welshpool and a number of other places.

I believe that the Development Board, in publishing the policy document and in consulting local authorities, has shown a very good example of practical planning by people on the spot who know local needs and conditions. That is what I want to say about the structure plans and to link this in. I believe that any sort of regional planning must take account of local views. It must not ride roughshod over the views of the people grappling with problems of their own localities. I do not believe that that is a democratic approach to the subject.

What my right hon. and learned Friend seeks to do, instead, is to make use of the structure plans, to use them as building bricks to do what my hon. Friend the Member for Swansea, East (Mr. Anderson) asked for, namely, planning in a meaningful way, so that the planning leads to action. I do not believe that planning on its own is much use at all. As I have said in many other places, the wallpaper and cupboards of council offices throughout the country must be cluttered up with plans. I have certainly seen far too many of them in my own part of the country.

But these structure plans are to be considered in a coherent way, having regard to the interrelationship of one with the other. This is no abrogation of planning but, rather, a recognition of the realities. We can differ as to our attitudes towards planning. Considerable differences have been expressed today in the debate. But there is no substitute for hard work in providing infrastructure and incentives to stimulate new ventures in Wales. This is what my office, the WDA and the Development Board for Rural Wales, and many others, are doing. We are not handing down, as it were, academic blueprints from on high. This is the way to progress towards the more diversified economic structure for Wales which we are all seeking.

My hon. Friend the Member for Swansea, East did pay particular—

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