§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lang.]11.10 pm
§ Mr. Tom Hooson (Brecon and Radnor)
These are deeply worrying times for the people of Mid-Wales. We have fears that the Development Board for Rural Wales is about to be undermined in its widely admired efforts to strengthen the economy and society of the most rural parts of Wales. We fear that the total loss of assisted area status for most of the area will occur from 1 August.
Although a delegation of the Powys county and district councils, Members of Parliament and the DBRW is shortly to be received by the two Secretaries of State concerned, those for Wales and for Industry, the fact that Welsh Office officials are already refusing to meet the DBRW in connection with any industrial projects not initiated prior to 30 April raises the suspicion, which my hon. Friend the Member for Montgomery (Mr. Williams) and I share, that an unfavourable decision has all but been made.
It is most disconcerting to see such evidence of the Welsh Office jumping the gun. I hope that when my hon. Friend the Under-Secretary of State for Wales replies he will undertake to seek the reversal of that administrative decision. Execution before trial comes better from Lewis Carroll's Red Queen than from my right hon. Friend the Secretary of State for Wales.
I have been reading and listening to my right hon. Friend's comments about Mid-Wales with mounting alarm. He has been sedating us for a total loss of regional aid. I want to fasten on to a fallacy that he keeps repeating. I first saw it in a report in the Western Mail on 30 September 1981. He was quoted as saying that the Government would be looking at development area status for Mid-Wales but could do this only in relation to similar policies in neighbouring English counties. He said that in making their review the Government would have to see whether there were any specific measures suited to attracting business into this area.
My right hon. Friend's fallacy is that the review of regional aid should be wholly based on percentage unemployment statistics. Nothing but the will of the two Secretaries of State concerned with the review of the Welsh area requires any such mechanical approach. The correct terms of reference are as quoted in a letter to me dated 12 February 1981 from my hon. Friend the Member for Cardiff, North-West (Mr. Roberts). He said that the review would embraceall the circumstances, actual and expected, including the state of employment and unemployment, population changes, migration and the objectives of regional policies.That is not a formula that absolves the Secretary of State for Wales, who obviously has primary responsibility for protecting the peculiar interests of Wales in dealing with ministerial colleagues, from responsibility for decisions about areas in Wales. In that connection he has very considerable duties towards Mid-Wales.
Gaul was divided into three parts. So is Wales, and a Secretary of State for Wales who failed to minister to the need of the most sparsely populated part of Wales could not sustain his authority as Secretary of State—certainly not with the people of Mid-Wales.
Having established ministerial responsibility, I come to the special characteristics of Mid-Wales. Mid-Wales is by 258 all normal measures a freak area. No one is better aware of how impossible it is to apply normal statistical measures to it than my right hon. Friend when he allocates the rate support grant, particularly to Powys. The freakishness arises directly from the exceptional sparsity of population, which creates many burdens in maintaining a viable society.
Each of the three districts in Powys has an average population of 0.2 persons per hectare—only one-third the level in Gwynedd and Dyfed. The five districts in the area of the Development Board for Rural Wales were deliberately chosen because they stand out as suffering from problems of inadequate population. No English county comes close to these problems—certainly none that is near to Offa's Dyke. The most sparsely populated county in England, Northumberland, has 0.6 persons per hectare.
There is a fashionable American word at the moment—even-handedness. Let us hear no more about even-handed appraisals of Welsh and English areas when we are light years from comparing like with like across the border.
It is precisely because of the peculiar and potentially grave problems of Mid-Wales that special regional bodies, culminating in the DBRW, were established. It is no accident that only one comparable rural area has been recognised by the establishment of a special social and economic agency—the Highlands and Islands Development Board. Most of the Highlands area is due to retain development area status under existing plans, while most of Mid-Wales will lose it. Is there one law for the Scots and another for the Welsh? If there is, what will the Welsh Secretary of State do about it? The factors that justify the special status of the HIDB area are precisely the same as those of Mid-Wales, but so far the Scottish claims have been argued more effectively within the Government.
I want to make another Scottish comparison, since the Government seem determined to make numbers their magical touchstone on this issue. Percentage unemployment is now worse in Mid-Wales than in the Highlands and Islands Development Board area, and the gap is steadily worsening.
In 1979, when the proposed changes in assisted area status were announced, Mid-Wales had lower unemployment statistics than the Highlands—7.1 per cent. versus 9 per cent. By now, not least because the prospective loss of investment incentives has gravely weakened the DBRW's appeal for new employers, the two areas have reversed positions. In 1981 the DBRW area had 12.1 per cent. unemployment, while the Highlands and Islands area had 11.6 per cent. By March 1982 the DBRW stood at 12.9 per cent., against the Highlands' 12 per cent.
There is strong evidence that the DBRW has already been damaged. In his report for 1980–81 the able chairman of the DBRW, Mr. Leslie Morgan, quoted his predecessor's report of the previous year as saying:It will not be easy to maintain momentum at the spanking rate of the first three years. The slow-down of the economy, high interest rates and the impending loss of regional aid over much of Mid-Wales make the task formidable.Mr. Morgan commented:So it has proved to be".He pointed out that theDBRW's responsibilities in reversing a century of decline cannot be accomplished quickly. Obviously, withdrawal of aid after only a limited recovery would be a blow.259 Occupancy rates for DBRW factories show the increasing problems that Mr. Morgan and his colleagues are facing. The board now has 168,000 sq ft of empty space in 18 factories in Powys alone, and has not yet let the 200,000 sq ft vacated by BRD in the constituency of my hon. Friend the Member for Montgomery. Closures and impending closures will leave unoccupied over 200,000 sq ft of the factory floor space built in Powys by the board. The need to provide investment incentives simply to utilise the existing investment in bricks and mortar and to sustain some promising trends must be clear from the statistics.
I have time to cite only some of the points that we wish to develop with Ministers, but I wish to end by trying to be helpful to my right hon. Friend. We need assisted area status not only for all the reasons that I have given or implied but because without it we shall lose our claim to European funds, although not necessarily for section 4 tourism. However, if such a blinkered statistical approach by the Government is inevitable, surely the alternative is to promise us an amendment to the legal powers of the DBRW to enable it to make loans and grants, as the HIDB is allowed to do in Scotland. We in Mid-Wales expect my right hon. Friend the Secretary of State for Wales to serve Mid-Wales just as well as the Secretary of State for Scotland serves his nation.
§ The Under-Secretary of State for Wales (Mr. Wyn Roberts)
My hon. Friend the Member for Brecon and Radnor (Mr. Hooson) has made it abundantly clear why he sought this debate on the Development Board for Rural Wales tonight. He has spoken with some candour, but I know that in this he is motivated only by concern for the welfare of his constituents and of the people of Wales living within the area covered by the development board. I welcome the opportunity to make some comments on his speech and I hope that what I say will put matters into perspective and will serve, to some extent at any rate, to reassure him.
First, I must say that the important issue of assisted area status must be examined in a much wider context. There is a real risk of regarding the granting of any particular level of assisted area status as an instant solution to the problems of an area. It simply is not so. Industrial development in Mid-Wales—as any other area—can only come when national economic circumstances are right and our policies are designed to bring that about.
There is also the need for confidence from investors who see in an area the right sort of environment, potential work force and encouraging local policies which makes places such as Mid-Wales a good place in which to live and work. In this context the activities of the Development Board for Rural Wales are, and will continue to be, very important.
The board can look back on a period of considerable achievement. In 1977 it inherited 104 factories, of which only 32 are vacant. Those factories are already providing 4,750 jobs. In addition, there are 59 factories and six extensions under construction or approved for building. When completed and occupied, board factories will provide opportunities for about 6,600 jobs in Mid-Wales.
The board has an impressive record of factory letting. Before 1977 factories were let at the rate of five a year. 260 Since then the rate has been about one a week. So far in 1982, factories have been allocated at around 10 a month, almost all to new or expanding ventures.
The board has told my right hon. Friend that it wishes to maintain its basic policy, but to extend and diversify its employment-creating activities, with participation by the private sector. He has broadly endorsed this strategy, which requires collaboration with other bodies, and will be important in developing the Mid-Wales economy. Indeed, I am happy to take this opportunity to announce that my right hon. Friend has given approval to the board to commission a major study costing £50,000 of the economic potential for the development of Aberystwyth harbour and its environs. This is a study that is supported by the local authorities and the Wales Tourist Board.
I fully understand the concern and anxiety in Mid-Wales about assisted area status. My right hon. Friend the Secretary of State has received representations from both the Development Board for Rural Wales and Powys county council on this matter. Indeed, my right lion. Friend met Powys county council last summer. It made it clear to him at that time its deep anxiety.
As my hon. Friend said, my right hon. Friend is to meet the county council very shortly, together with my right hon. Friend the Secretary of State for Industry. My hon. Friend and other hon. Members may well be present. I am sure that they will take the chance to put these points to him again with even more vigour. So I can assure my hon. Friend that when we reach the point where decisions are taken the arguments for Mid-Wales will be known and appreciated by everyone concerned.
But perhaps I can remind my hon. Friend of the background to this whole question. As he will know, following the 1979 review of the assisted areas the Government's policy is now to concentrate regional aids on those areas facing unemployment on a large scale with severe problems of structural decline.
We did, however, appreciate that in some cases, where changes would be drastic, a time for adjustment was needed. Hence, we decided that where areas were to be double-downgraded—Mid-Wales was one of these—the downgrading should take place in two steps; the first from August 1980 and the second in August 1982. We also decided to have a special review of the areas due to be double-downgraded before the final step was taken.
Let me say at once to my hon. Friend that this review is now in progress and that no decisions have yet been taken. My hon. Friend the Minister of State, Department of Industry has told the House that the results will be available later in the spring. That is still the position—no decisions have yet been taken.
My hon. Friend raised the question of administrative action in regard to the submission and processing of applications for selective financial assistance. It needs to be appreciated that under the provisions of the Industry Act 1972 offers of assistance cannot be made in an area which has ceased to have intermediate or higher status. It will be clear that this immediately poses problems in terms of the handling of applications in the weeks and months leading up to the date when an area may lose its assisted status.
In principle, it is open to the Department to accept applications up until the very last day; indeed, in the letter which was sent to more than 120 firms in rural Wales more than a year ago we said that we would continue to accept applications right up to 1 August, the date on which subject to the review now in hand—I stress that—the areas 261 concerned will become non-assisted. In the same letter, however, we called attention to the time taken to process applications and said it wouldbe most advisable for any such applications to be sent to the Welsh Office no later than 31 March 1982".We sent this letter, as I say, more than a year ago to 120 firms employing 11 or more employees in the areas of Wales which might lose their intermediate status on 1 August 1982. A copy of this letter was sent to the Development Board for Rural Wales. In the light of this, I really cannot believe that anyone directly involved can have been in doubt about the vital importance of submitting applications for selective financial assistance well before the cut-off date. The three Departments administering selective financial assistance were anxious to avoid difficulties and embarrassments which would result from the continued acceptance of applications right up to the cut-off date—applications which could not possibly be processed properly in time for offers of assistance to be made before 1 August. It was therefore decided to announce a firm date by which applications would have to be submitted. That date was 30 April, a whole month later than the date by which companies had been urged last year to put in their applications.
This prudent administrative action in no way pre-empts the final decision. It is without prejudice to that decision. I really cannot accept that the Development Board for Rural Wales has had the ground cut from under its feet by this Government action or that there has been what my hon. Friend called "jumping the gun".
Of course there is a relevance with regard to status in connection with tourism. My hon. Friend rightly referred to the importance of tourism in Mid-Wales. That is an unquestionable fact. The tourist board will continue to promote, and give advice on, the development of tourism facilities throughout Wales. However, I recognise the concern that has been expressed in many quarters that if assisted area status is lost, the tourist board's ability to give financial assistance for individual tourism projects under section 4 of the Development of Tourism Act 1969 will also disappear from Mid-Wales.
My right hon. Friend has noted the representations which have been made as to the considerable importance of this assistance to rural areas generally and Mid-Wales in particular, and this will be very carefully considered by the Government in the context of the review.
My hon. Friend also referred to the link between assisted area status and aid from the European regional development fund. It is quite true that if areas do become "white"—that is, no longer assisted—they will no longer be eligible for ERDF receipts. Again, this is one of the matters which will be taken into account in the course of the Review, but its importance should not be exaggerated. To put that matter in perspective, I should say that while figures are not available for the area of the DBRW itself, the take up of ERDF aid within the county of Powys since 1975 has been slightly less than £2 million.
§ Mr. Delwyn Williams (Montgomery)
I am grateful to my hon. Friend for giving way. Is he aware of the British Tourist Authority's annual report for 1980, which says inter alia that it will concentrate tourist grants on development areas? If that is correct, and if Mid-Wales loses its development status, it will be positively discriminated against by the tourist bodies.
§ Mr. Roberts
I have told my hon. Friend that the future of grants under section 4 is under consideration by the Government. It is a matter for my right hon. Friends the Secretary of State for Wales and the Secretary of State for Trade.
The debate has been very much in the context of Mid-Wales as a whole. I can understand why that is so, but I think it is important to keep in mind that we are talking about a very wide and varied area and that within it there is considerable diversity and a wide variety of problems. For example, there are 10 travel-to-work areas in Mid-Wales, which, if the proposals for downgrading are implemented, would lose assisted area status. The rate of unemployment in these currently—these are the April figures—varies from 6.4 per cent. in Carmarthen and 8.8 per cent. in Brecon up to over 14 per cent. in Newtown, Welshpool or Llandeilo.
I recognise the special problems in Newtown. The development of Newtown is an important element of our strategy for Mid-Wales and I accept that the numbers and rate of those unemployed are too high. Indeed, unemployment in Newtown has risen by 48 per cent. over the past 12 months as compared with 16 per cent. in the DBRW area as a whole. There is no doubt that the 400 redundancies at BRD Newtown last summer were a significant factor in this, and the situation will not be made any easier by the 150 notified redundancies due to occur later this year at Dowty Seals. I know that my right hon. Friend the Secretary of State will take note of these worrying problems.
Provision for the DBRW has been maintained at its previously planned level of cash provision and has risen from £7.5 million in 1980–81 to about £9 million in 1982–83 in line with the inflation factors set by Her Majesty's Government. This is a considerable achievement at a time of stringent public expenditure constraints. The level of provision for 1983–84 has yet to be decided, but we shall wish to take account of the Board's record and plans and also the effect of any change in assisted area status.
Another feature of the board's approach to its tasks to which I should like to draw attention is the imaginative and thrusting promotional activities which it undertakes with such valuable results. I know that the board feels that these campaigns have contributed greatly to its success in letting factories.
A good example was the board's rail-borne travelling exhibition—the "Mid-Wales Experience"—which provided a showcase for over 150 Mid-Wales companies, as well as for educational and tourism attractions. In the course of 18 days, the exhibition train visited 10 English locations and was visited by over 25,000 people. A very large number of business and tourist inquiries were received—some thousands—and there have been 132 firm industrial inquiries so far. I believe that these results speak for themselves and contradict the somewhat pessimistic view taken of the board's future and that of Mid-Wales by my hon. Friend.
It is not only the economic sphere upon which the board makes an impact. Social measures, such as its programme of grants, are sustaining and improving the fabric of life and culture throughout the board's area, from the smallest village to the largest town.
Possibly the best way to perceive the board's overall effect on Mid-Wales is to look at population trends. The traditional picture of rural Wales has been of an area 263 suffering from depopulation, an area from which the young people have departed, leaving an increasing proportion of people over working age. Indeed, when the board was established it was envisaged that one of its major tasks would be to attempt to combat all the problems associated with such a scenario.
This picture is no longer true. The 1981 census results showed that over the past decade there was an overall population growth in the board's area of about 8 per cent., highlighted by the growth in Newtown. This is much higher than in the industrial areas of Wales and is exceeded in England by only one region. Furthermore, while the rest of Britain has experienced a growth in the proportion of the population over working age, the proportion has not increased in the board's area. Indeed, the working age population of the board's area has increased by more than in the rest of Wales and Great Britain. I believe that the board has contributed in no small way to these trends.
I have been speaking only of board activities which have the effect of directly and visibly creating 264 employment. Of course it should not be forgotten that the board has a unique and varied range of powers, functions and activities which it has used to remarkably good effect, albeit in less visible ways. To take only two examples, although there are many more, the board's business advisory service has been instrumental in the creation of well over 300 jobs. Secondly, the board's recently established home and small factory based garments knitting industry in south Ceredigion should in 'time provide the equivalent of 300 further full-time jobs.
It is demonstrable therefore that the board is successful in providing jobs in Mid Wales, and substantially I hope that I have reassured my hon. Friend to some extent that the final decision has not yet been taken on assisted area status—
§ The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at twenty minutes to Twelve o'clock.