Government Regional Policy

HC Deb 27 October 1986 vol 103 cc29-76 3.57 pm

Mr. Donald Stewart (Western Isles)

I beg to move, That this House condemns Her Majesty's Government for its total lack of concern for Scotland and Wales as demonstrated by its failure to provide effective regional economic policies; notes the devastating implications of the European Regional Development Fund report on the United Kingdom Regional Development Programme 1986–90; and calls for a fundamental re-think of Government policy towards economic regeneration to provide real and permanent jobs within reach of all the peoples of the United Kingdom.

Mr. Speaker

I have selected the amendment in the name of the Prime Minister.

Mr. Stewart

There can be no doubt that United Kingdom regional economic policy has, to a large extent, failed in its purpose — which was to equalise employment chances among the regions and nations of the United Kingdom, to spread industrial development and to help decentralise the economy.

Even when the policy was at its strongest and most effective in the 1970s, it had only partially succeeded in its task. During the period 1945 to 1970 Scotland benefited the least of all the economic planning regions in terms of net employment gain attributable to the effects of regional policy. I shall refer later to the efficacy of that policy and what I consider should have been done.

For the benefit of those in the least depressed parts of the United Kingdom who have never needed the help of a regional policy, nor are ever likely to, I shall give a fairly brief history of its development. It was born back in the 1930s, but before the second world war there were only a few special areas — west-central Scotland, south-east Wales and small parts of the north of England. In the postwar period the special areas were renamed development areas. The then Board of Trade was empowered with the task of building factories in the areas providing public services, reclaiming derelict land and disbursing loans and grants.

The year 1948 saw the birth of industrial development certificates, which enabled the Government to control the location of new investment and factories. The new development areas were extended in the same year to include other parts of Scotland, Wales, the north of England and Northern Ireland. In 1960 the old development areas were abolished and new development districts created, giving a wider coverage of Scotland and Wales and, for the first time, parts of Devon and Cornwall.

From this point on, industrial development certificates were strictly controlled, with strong preference being shown for companies locating in the disadvantaged assisted areas. In 1967 regional employment premium and regional development grants were introduced. The former was a straight payroll subsidy for manufacturing firms in the assisted areas. In the previous year new development areas were created, covering virtually the whole of Scotland and Wales and large parts of the north of England.

Between 1970 and 1975 the geographical coverage of regional assistance remained virtually unchanged. This was probably the peak period of regional policy. Special development areas within development areas were extended. Intermediate areas were established; and regional development grants, automatic capital grants for firms locating in the assisted areas, were born. They were paid at the rate of 22 per cent. in special development areas, 20 per cent. in development areas and, in intermediate areas, 20 per cent. for buildings. Regional selective assistance continued and was available to companies in any area, at the Government's discretion. With all those powers in force, regional economic policy was at its strongest.

The dismantling of the system began in 1976, when the Labour party suddenly and summarily abolished the regional employment premium. This caused great consternation in industry in Wales, Scotland and other assisted areas. At a stroke, regional aid in Scotland was slashed by £78 million. Also in the mid-1970s, the Scottish Development Agency and the Welsh Development Agency were established. By wielding political power in 1974, in voting for the Scottish National party and Plaid Cymru, the electors in Scotland and Wales enabled our two parties to put on the pressure, to the advantage of the two nations. I shall say more about the Scottish Development Agency and the Highlands and Islands Development Board. My colleagues in Plaid Cymru will no doubt wish to talk about the Welsh Development Agency and the Development Board for Mid-Wales.

The later 1970s saw the beginning of greater Government concern about the state of inner cities, particularly London and Birmingham. In years to come they were to claim the attention of the Government, to the disadvantage of regional policy. Many detrimental changes took place between 1979 and the present. These began with the announcement by the then Secretary of State for Industry, the right hon. Member for Leeds, North-East (Sir K. Joseph), of a three-year programme of descheduling of assisted areas. The requirement of industrial development certificates was abolished in 1982, after having been steadily weakened since 1975. By August 1982 most of the north-east of Scotland had been removed from development area status, as were Lothian and the Borders. Most of mid-Wales was also descheduled.

In November 1984 the most recent round of substantial changes took place. The special development areas were completely abolished. Only development areas retain the automatic right to regional development grants at a lower rate of 15 per cent. of capital expenditure. Intermediate areas qualified only for selective grants.

A particular worrying aspect is that regional development grants are no longer available in development areas for replacement investment. Many of the incoming firms established in Scotland in the 1960s and early 1970s require substantial new investment. With the withdrawal of RDGs, many firms may choose to move to a new location, probably outside Scotland, and in a development area so that they can pick up a better deal.

In the 1984 review of policy large parts of Scotland were completely descheduled. Apart from the obvious loss of United Kingdom Government grants, an additional worrying factor is that these areas are no longer eligible for many European Community development grants. That is a double blow in many parts of the Highlands, Grampian, Lothian, Tayside, Central and the Borders. Scotland bore 30 per cent. of the cut in regional aid spending.

Although regional policy over the years has been inadequate in many respects, it provided a valuable and not inconsiderable boost to many parts of the country. Economists working for the Department of Trade and Industry reckoned that between 1960 and 1981 regional policy was responsible for creating some 600,000 jobs in assisted areas. Some 400,000 positions were still in existence by 1981, although the recession will have reduced that total. Even so, the figures that I have quoted do not take into account any secondary or multiplier effect in creating jobs in service industries in the assisted areas.

This situation is in no way a substitute for Scotland and Wales having the power to use their own resources and skills within an autonomous economic framework and to embark on policies for their own benefit and not for the benefit of the rich south of England. However, it has helped to stem a tide of emigration, unemployment and poverty, which would have been worse without regional economic assistance.

That regional policy in under attack is plain for all to see. The latest changes, in 1984, carried on a series of cuts and expenditure that began some time ago, in 1976. In constant price terms 1975–76 was the peak year for spending on regional preferential assistance of all kinds. First came the Labour cuts in 1976, 1977 and 1978. Spending then recovered for three or four years, but resumed a downward trend in more recent years. In cash terms, spending in 1982–83 was £956 million in Britain. This was cut to £640 million in 1983–84 and £615 million in 1984–85. Spending in Scotland shows the same downward trend from £369 million in 1982–83 to £227 million in 1983–84 and £184 million in 1984–85. There was a slight rise in the year 1985–86, to £199 million. However, in real terms, the level of regional aid now paid to both Scotland and Wales is far below the value of what was paid in previous years. In the case of Scotland, the real value of aid is only about 50 per cent. of the 1975–86 payment. It is also the case that Scotland's share of regional development grant fell from 44.1 per cent. in 1982–83 to 32 per cent. in 1984–85.

On almost any aspect, Scotland and Wales, which enjoyed a reasonably supportive regional aid system 10 years ago, have been relegated into the second division as unemployment and inner city problems have hit the midlands and south-east of England. Money has been diverted to these areas. The work of the Location of Offices Bureau in persuading firms to move their headquarters out of London has been suspended. Over the past few years the south-east region has been able to consolidate its dominance in corporate control and research and development activities.

Scotland has also lost on financial assistance under section 8 of the Industrial Development Act. This category of payment is made to certain sectors of industry, and the high-tech and micro-electronic industries have been among the main beneficiaries. The cumulative payments under section 8, up to March 1985, have been: Wales £25 million, Scotland £48 million, England £474 million. The Thames valley and the south-east region have won again, and section 8 is the fastest growing block of regional assistance.

The Scottish Development Agency and the Welsh Development Agency are well known, but how many know that there is a development agency in England as well? The English Industrial Estates Corporation, in its own words, is the largest developer and manager of industrial and commercial property in England. Our service doesn't end when the building does. We do everything that we can to help businesses in our care to flourish and grow. If hon. Members who represent English constituencies contribute to the debate, I hope that they will not adopt the old, worn-out theme that runs, "The Scots and the Welsh have development agencies, why cannot England have one as well?". If any English Members have listened to the pronouncement of the Scottish sector of the Scottish economy, they might be forgiven for thinking that everything is coming up roses, or thistles in Scotland and daffodils in Wales. Unfortunately, that is not the position. It would be nearer the truth to say that any slight improvement in the relative performance of the Scottish economy is due to the deterioration in England's economy.

The Scottish economy is far from healthy. The same can be said of the economy in Wales, and I know that my hon. Friends from Plaid Cymru will want to deal with that. For the first two quarters of 1986 there were large increases in redundancies in Scotland, while the Great Britain figure remained stable. Output, when set against the 1980 base of 100, is only 104, the same level as that which prevailed in 1976. Net emigration has averaged 15,000 a year from Scotland since the start of the decade. The latest figures tell us that hard-core unemployment is still on the increase. Scotland and Northern Ireland are the only two regions to share that deplorable trend. Weekly earnings have fallen behind the Great Britain average after a few years of parity. Even oil-related employment is on the decline.

In December 1982 the Cambridge Economic Policy Review Group forecast regional unemployment figures by 1990, assuming the current economic policy was maintained. It estimated that in Wales 22 per cent. Would be unemployed, with over 20 per cent. in Scotland. Given present trends, it does not appear that it will be far wrong. I cannot begin to comprehend the Government's thinking behind the destruction of regional policy. I can only guess that the Government know where their support lies, which is in the midlands and the south-east of England, and that that is where they intend to concentrate their attention. Judged by any rational, economic or social standard, there is a crying need for more, not less, regional policy.

Recently, the Fraser of Allander Institute, a body which is engaged in economic research and forecasting in Scotland, stated: The catalogue of spatial, economic and industrial problems in Scotland is extensive. Shipbuilding on Tyneside, social deprivation in Glasgow, rural unemployment in the highlands and islands, skewed spatial distribution of oil-related employment are all affecting the health of the Scottish economy. Gross regional disparities exist in the United Kingdom and these have been highlighted by recession. In a special report in 1983 the Regional Studies Association said: It is clear that … the evidence supports the identification of a basic regional dualism in the United Kingdom. This consists essentially of a 'greater south-east zone of relative economic buoyancy and most of the rest of the country characterised in general by economic debility and decline'. More recently, a document entitled "United Kingdom Regional Development Programme 1986–90" grabbed the headlines. This is the first time that the House has debated regional affairs with a knowledge of what was stated in that document. It was prepared for and published by the European regional development fund. One of the most damning sets of statistics of the 17-volume report is contained in the introduction. Of the poorer regions identified by the European Community within the Community, over one third are in the United Kingdom. The "index of regional disadvantage" that is used by the Community includes in the top 10 disadvantaged areas Strathclyde, Dumfries and Galloway. Gwent, mid-South Wales and Glamorgan appear in the next 10. There are four other Welsh counties in the next 10, and the regions of the Borders, Central Fife, Lothian and Tayside are in the following 10. Of the worst 40 deprived areas, the United Kingdom has 28, 14 of which are in Wales or Scotland. These are staggering and sobering figures which demonstrate how far we have fallen behind our European neighbours in our standard of living.

In another European Community ranking that is included in the report, employment levels are used as the criteria. Eleven of the worst 20 regions are in the United Kingdom, and five of them are in Scotland and Wales.

Mr. Eric S. Heffer (Liverpool, Walton)

I am sorry to interrupt the right hon. Gentleman. I know that his figures are accurate, but does he agree that one of the areas that suffers most is Merseyside? That is why some of us constantly raise Merseyside issues in the House.

Mr. Stewart

I take the hon. Gentleman's point. Merseyside's problems are well known, and in my introduction I said that one of the disadvantaged areas is the north of England. There is no doubt about that. There is no doubt, too, that the hon. Gentleman's argument is valid.

The EC report observes the position of the disadvantaged regions and points out that, while industrial structure and peripherality will continue to contribute to the problem, recent research has identified other causes of continuing disparity. Research and development are concentrated in the south of England, and Scotland and Wales are largely dependent on the south for innovation. Scotland and Wales have a low proportion of managerial and professional jobs and a high proportion of semiskilled or unskilled workers.

The report considers the various regions within Scotland and Wales, and almost all emerge with a similarly depressing prospect. Overall, in Scotland and Wales, unemployment will remain at about the present levels in 1990. Although there are opportunities for expansion in both countries in high technology and the service sector, the good points cannot outweigh the sheer scale of job losses in traditional manufacturing industries such as coal, steel, shipbuilding and engineering. The document from the European Community, which was not intended to be read by anyone other than Ministers, civil servants and European Commissioners, holds out little hope of improvement in the disastrous levels of unemployment in the two nations of Wales and Scotland. The only way to effect improvement is to have a complete change in economic regional policy and thinking.

Attention must be paid to the fact that too many of our factories in Scotland and Wales are branch plants of large foreign-owned multinationals. The figures for Scotland show that in recent years foreign-owned firms were responsible for 38 per cent. of net capital investment. They were responsible for 20 per cent. of manufacturing output in Scotland. In the micro-electronics sector, 40 per cent. of firms in Scotland are owned by United States organisations, while a further 40 per cent. are English owned.

The old problem of the lack of indigenous control and development has reared its head again, with the concomitant disadvantages of a lack of managerial and research and development work. Instead, there is a concentration on assembly-line jobs. Forget the bluff, optimistic noises that emanate from the Scottish Office on the subject of the "recovery in Scotland". That recovery is not taking place. Industries are under-resourced and the unemployment problem is increasing. Our infrastructure is crying out for investment and replacement. Our young people search — mostly in vain — for worthwhile opportunities. Many give up hope and leave the country of their birth. The same can be said of Wales. If anything, the ERDF report to which I have referred paints a rather bleaker outlook for the Welsh economy.

It is against that background that the Government have sought to destroy regional policy and to starve Scotland, Wales and the northern regions of England of investment and the chance of employment and a better future. The Conservatives may continue in power until after the next election, but they will do so only on the strength of support from middle and southern England. At consecutive elections, Scotland and Wales have rejected the Government and their policies. The electorate put the Conservatives in power. The tide has turned in Wales and Scotland and the Government will soon find that people no longer wish to be part of the British state, its political system and its economic tragedy.

4.20 pm

The Parliamentary Under-Secretary of State for Scotland (Mr. Ian Lang)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: recognised the efforts and achievements of Her Majesty's Government in stimulating the economies of Scotland and Wales; welcomes the submission to the European Commission of the United Kingdom Regional Development Programme for 1986–90 as the basis for maximising European Regional Development Fund assistance to the United Kingdom; notes the references in that document to the significant steps being taken by the Government to replace jobs lost in the assisted areas and to strengthen the infrastructure of such areas; and endorses the Government's determination to tackle the problems of all parts of the United Kingdom by means of sustained and effective economic and regional policies.". I am sure that I would have the support of the whole House in saying how sorry we were to learn of the accident that befell the hon. Member for Falkirk, East (Mr. Ewing) at the weekend. He was to have spoken in this debate on behalf of the Opposition. We wish him a speedy recovery.

I congratulate the right hon. Member for Western Isles (Mr. Stewart) on getting to the House in time for today's debate, despite what seems to me to be the only discernible policy of a regional nature that the Scottish National party has adopted—to boycott British Airways. But even the right hon. Gentleman's charm and personal qualities cannot disguise the inherently unsavoury nature of the motion that his party has tabled for this afternoon's debate. Here we see the distasteful spectacle of the two separatist parties, from Scotland and Wales, which want to break up the United Kingdom and which repeatedly claim that they would be better off on their own, whingeing that they are not given enough out of the United Kingdom's policies. I hope that the House will understand if I concentrate my remarks primarily upon the Scottish aspects of the motion, allowing the Under-Secretary of State for Wales — my hon. Friend the Member for Conwy (Mr. Roberts) — to deal with the Welsh side.

There will, I feel sure, be many parallels between the two countries, not least in the great difficulty we have in establishing what the nationalist parties actually stand for. Certainly, there was no guidance in the speech of the right hon. Member for Western Isles. We are falling back on the other half of his parliamentary party, the hon. Member for Dundee, East (Mr. Wilson) who plays the son to his Steptoe. We do find a specific shopping list, although we have to go back to The Scotsman of 27 November 1984 to find it in the "Recipe for Scots Recovery."

It seems that the nationalist parties want £170 million set aside for the budgets of the Scottish Development Agency and the Highlands and Islands Development Board. I have news for hon. Members. That is almost exactly what the present budgets of those bodies now add up to—both substantially increased in real terms since this Government came to office. Then they want £30 million for guaranteed investment in the steel industry. Bob Scholey must have been reading his copy of The Scotsman.

In another document there is an eight-point plan called "Scotland can work", in which its authors, on the one hand, call for a programme of public works, expanded industrial aid, a restructuring fund for industry, higher pensions, social security benefits and overseas aid —perhaps to England—and, on the other hand, call for a cut in VAT, income tax, national insurance contributions, petrol duty and vehicle excise duty.

Perhaps Scotland can work, but clearly the SNP cannot add. Perhaps someone should tell the party what happened to the price of oil. It will not know, because last June, when the Scottish Grand Committee had an important debate on the oil industry in Scotland, so far as I can gather SNP Members were not even there. I suppose that they boycotted that Committee, just as they boycotted the Select Committee on Scottish Affairs.

Mr. Gordon Wilson (Dundee, East)

Does the hon. Gentleman realise that, even with the cut in oil prices, the revenue available to the Treasury would be in excess of £4 billion? Considering the size of Scotland, would that not enable us to carry out any of the plans mentioned?

Mr. Lang

As over the past 10, 15 or 20 years, the hon. Gentleman lives in a pie-in-the-sky world in which he assumes that all oil revenues derived from the North sea would automatically fall to an independent Scotland. I am glad to say that we have the views of the hon. Member for Dundee, East on regional policy from the same report in The Scotsman. It said that the SNP favours reform of the present range of regional grants"— we have now done that— but argues that the whole of Scotland should be eligible for these in some form or other. That is precisely the kind of blanket, everyone-gets-aprize, Socialist type of policy that characterises the lurch to the Left that the nationalists have taken in recent years. But it is not a regional policy, unless of course the hon. Member for Dundee, East regards Scotland as a region. Perhaps he was on stronger ground when, over the weekend, he predicted a Conservative victory in the next general election.

The essence of regional policy is the selection for special help of areas that are relatively disadvantaged. Before I turn to our regional policy in more detail, let me deal more broadly with the monstrous canard, put about by nationalists and Socialists alike, that Scotland does not get its full share of central Government expenditure. It simply is not true.

Identifiable public expenditure per head of the Scottish population is 25 per cent. higher than that in England—£2,210, compared with £1,761 — while the figure in Wales is £1,927. It is right that that should be so because of the special needs and geographical circumstances of our two countries. This can be seen in almost every departmental programme: on housing £126.50 per head in Scotland and £67.40 in England; on education, £392 compared with £284. On health and social services the figure is £428 compared with £336. In local government the current expenditure provision for next year amounts to £638 per head against £535 in England. Our rate support grant stands at 56 per cent. The rate for England is 46 per cent.

So, too, in regional policy the Government's concern for Scotland's special needs is recognised. With around one tenth of the British population, we have almost one third of those who qualify for regional aid. That is a higher proportion than before the 1984 changes. It is twice the British average and it includes 65 per cent. of the Scottish work force.

Last year, regional aid in Scotland through development grants and selective assistance amounted to almost £160 million—over 30 per cent. of the total in Great Britain — compared with only 21 per cent. when we came to office in 1979. That £160 million was equivalent to £62.48 per head in Scotland, as against £19.21 in the rest of Britain. In other words, taxpayers in other parts of the United Kingdom are, along with Scottish taxpayers, helping to support many Scottish industries.

Mr. Charles Kennedy (Ross, Cromarty and Skye)

The Minister will be aware that his Department is considering a request from the Highlands and Islands Development Board for full upgrading to development status for the Invergordon area, which status it had prior to the 1984 review. There is clear evidence that investment is being lost to other parts of the country or abroad because of the failure to have such advantageous rates. I appreciate the fact that the Minister cannot give a definitive response today, but will he confirm that his Department will look at the matter as sympathetically, supportively and quickly as possible?

Mr. Lang

I certainly recognise that there are problems in the lnvergordon area, but I can hold out no great hope for the hon. Gentleman that assisted area status boundaries are being reconsidered. I draw to his attention the considerable and growing success of the enterprise zone in Invergordon. There were nearly 100 jobs a year or so ago, 200 by the turn of the year, and now there are about 300. The hon. Gentleman can derive considerable satisfaction from that.

I believe, and the Government believe, that it is right, given our problems, that other parts of the United Kingdom should help Scottish industries. But against figures of the kind that I have given, I do not know how the nationalists have the gall to raise this subject for debate.

The right hon. Member for Western Isles gave the impression that the Government no longer care about regional policy. Nothing could be further from the truth, as the figures that I have given show. We have made clear our commitment to regional policy on repeated occasions. We included it in our election manifesto; we emphasised it again in our White Paper on regional industrial development; and we are giving effective proof to it in a wide range of measures available for industry in the regions. It must be remembered, of course, that regional policy is not the main source of the Government's support for industry. More important is a stable economic base with low inflation, sound monetary policies and a favourable tax regime, better training and good industrial relations. We have achieved all those. But regional policy continues to have an important part to play.

Mr. Heffer

I come from an area of high unemployment. In fact the area had special development status provided through the efforts of my Government. Will the Minister explain to the House why, in areas like mine and the north-east, unemployment has increased? Is it not precisely because of the Government's failure to continue the previous regional policy?

Mr. Lang

I cannot accept the connection between the two aspects that the hon. Gentleman mentions. There is no provable link between the change in regional industrial policy and the rise in unemployment. Indeed, the development of job creation over the past three years has coincided with the changes in regional policy which we have pursued.

We believe that the present pattern of assisted areas is a fair reflection of the relative needs of different parts of the country. For example, in west central Scotland and parts of south Wales we have older industrial areas where employment in the traditional industries is in decline and where special efforts are needed to help the transition to a modern industrial economy. That is why those areas enjoy the highest level of assistance under our current policies. Other areas, where the need is less great but where help is still needed benefit from regional selective assistance and the value of that incentive should not be understated. The advantage of RSA is that it can be used flexibly and can be tailored to the needs of the individual project by phasing and timing grant instalments. It can ensure that the highest possible level of assistance is available under EEC rules for projects which offer substantial economic and employment benefits. Since May 1979 offers totalling £378 million have been made under RSA, creating or safeguarding over 140,000 jobs.

There are, of course, those areas that do not qualify for regional assistance at all. I know that that can be a source of grievance, particularly in places which had long been accustomed to the benefits of assisted area status. But it is important to remember what regional policy is designed to achieve. It is not a continuing subsidy and still less is it an aid to which any one part of the country has a prescriptive right. Rather it is a means of helping particularly disadvantaged areas to overcome their particular difficulties relative to other parts of the country.

The right hon. Member for Western Isles referred to the reduction in expenditure on our present policy. The effectiveness of a policy should not be judged by the amount of money put into it, but rather by how efficiently that money is directed. If we were, for example, to quadruple expenditure, the policy certainly would not be four times more efficient. On the contrary, there would be massive problems of deadweight and job displacement, and the implications for higher taxation and inflation would be to undermine the steady growth and recovery of the economy that we have been achieving. The new regional development grants are linked to the creation of jobs specifically to ensure that large Government subsidies are no longer handed over to capital-intensive projects which cost a great deal of money but provide very few jobs and would probably have gone ahead anyway. I am sure everyone recognises the sense of what we did.

Mr. Jim Craigen (Glasgow, Maryhill)

Is the Minister telling the House that, given the criteria he has laid down, he thinks that regional policy is succeeding?

Mr. Lang

I think that regional policy is succeeding in giving better value for money to the taxpayer and in directing help to the areas where it can be more productive in job creation.

Any scheme of incentives, however well designed, must be judged by how it works in practice. We now have two years' experience of the new policy, and clear evidence that it is working, helped no doubt by our decision to strengthen our "one-door" approach in Scotland with the transfer of the administration of regional development grants in Scotland from the Department of Trade and Industry to the Scottish Office. In Scotland alone, some 3,250 projects have been approved for regional development grant since the new scheme was introduced. That represents an investment of around £450 million leading to the creation of over 29,000 jobs.

As for the lurid predictions of doom and disaster with which the announcement of changes in the policy were greeted two years ago, it has not happened. Economic recovery has continued. New companies are springing up with a net increase of 1,400 in Scotland last year, and no fewer than 50,000 more Scots are in work than at the last election. Scotland continues to rise in the gross domestic product league table and now lies third, compared with eighth 15 years ago. Our output and productivity, particularly in manufacturing industry, continue to rise faster than in the rest of the United Kingdom and average Scottish male manual earnings are now second only to the south-east of England.

Mr. Alexander Eadie (Midlothian)

Since the hon. Gentleman is giving us a roll-call of statistics, how does he reconcile the progress that he has outlined to the House with the fact that the coal industry in Scotland has contracted at a greater rate and with a greater loss of jobs proportionately than any other place in Britain?

Mr. Lang

That makes my point for me. It is precisely because we have had to contend with such major structural changes and with the decline in and loss of jobs in so many of our heavy industries that the net increase of 50,000 jobs, which means many more jobs being created than that figure suggests, reveals the success of our policy.

Scotland has an enviable reputation in the attraction of new inward investment and, indeed, in the five years that Locate in Scotland has been operating its one-door service for potential investors, planned investment totalling more than £1.9 billion has been won, bringing with it the prospect of more than 38,000 jobs, the majority of which are new jobs. Those jobs will replace the industry to which the hon. Member for Midlothian (Mr. Eadie) referred. It has been a record of growing success — and it is continuing — in which our regional assistance programme has played an important role.

By securing this new investment in Scotland we achieve not just taxation benefits for the United Kingdom economy as a whole, but we secure access to the latest technology, opportunities for suppliers, improved management techniques, better employment opportunities and the creation of real jobs. We believe that we have a lot to offer and that we should play to our very real strengths in marketing Scotland.

No discussion of the Government's regional policy, particularly as it affects Scotland, can ignore the role of the Scottish Development Agency. It has proved an effective and flexible instrument in helping to improve the Scottish economy. That was confirmed by the recent review. Since 1975, the SDA has spent over £940 million and its budget this year is £136 million. Over the life of the SDA, and particularly since 1979, its resources have increased both in cash and real terms and the contribution made by the SDA in tapping Scotland's resources of inventiveness and awakening a new spirit of enterprise is of great importance.

Mr. John Maxton (Glasgow, Cathcart)

Since the Minister is so concerned about the Scottish Development Agency and the work it does, why do the Government intend to cut its capital programme from £61.6 million in 1986–87 to £57.7 million in 1988–89? That does not seem to be much of a commitment to the SDA.

Mr. Lang

The hon. Gentleman is being extremely selective in his use of figures. I have already pointed out that we have increased the budget of the SDA in real terms by a substantial amount. Its creative role in identifying new forms of public-private partnership and its imaginative approach to development programmes have borne fruit in such major projects as the development of the Scottish exhibition and conference centre and an integrated approach to the regeneration of areas such as Dundee and Leith. Its joint involvement with my Department in the Locate in Scotland operation has increased awareness throughout the world of Scotland's advantages as a site for internationally based advanced technology companies. Only lack of time prevents me from enlarging on the SDA's important and growing role in bringing help to rural areas. Suffice it to say that that is an aspect that I regard as important.

Another important source of regional aid derives from our membership of the European Community. For years the SNP was violently and bitterly opposed to our membership; now it tells us it is in favour of it. Perhaps one day it will get around to telling its own supporters.

Certainly Europe is good for Scotland. Over 40 per cent. of our exports go there and we benefit from grants and loans from the European Investment Bank, the European Coal and Steel Community, and the social fund. From that alone. Scotland's share of grants this year, at over £14 million, is the largest of all the parts of the United Kingdom.

Mr. Donald Stewart

rose—

Mr. Lang

I think that I can anticipate what the right hon. Gentleman is going to say.

Mr. Stewart: The point is that such grants have come on the judgment of the European Community to the most disadvantaged parts of the EEC area.

Mr. Lang: I thought that the right hon. Gentleman was about to press me further on the case for the Western Isles to he included in the special priority category. That is something we have been pressing hard. In the meantime, I am glad to be able to comfort the right hon. Gentleman by saying that we have doubled the subsidy for the Caledonian-MacBrayne services, which amounts to a 30 per cent. increase in real terms. There has also been substantial capital expenditure on new vessels and new terminals.

There is also the European regional development fund from which Scotland has done particularly well, having received no less than a quarter of total United Kingdom allocations. The fund has been an extremely useful source of revenue for local and other public authorities and has helped to finance a variety of infrastructure projects.

An important breakthrough was made by the Scottish Office two years ago when ferry vessels serving the Highlands and Islands were accepted under the fund. And when a new ERDF regulation was introduced last year for programme finance, as opposed to project applications, we were quick to take advantage of the opportunities afforded. Already two programmes have been approved by the European Commission —one for Glasgow worth £68.2 million—the first such programme to be approved and one for Tayside worth £20.7 million.

It is against this background that our continuing success in securing a good — and a fair — deal for Scotland and for the United Kingdom as a whole is closely linked to the submission to the Commission of our regional development programme. The right hon. Member for Western Isles referred—as does this motion—to this programme. But in common with others, he misconstrued the contents of the document and its purpose.

It is first important to put the regional development programme into its proper context. The main ERDF regulation provides that: Member states shall communicate Regional Development Programmes to the Commission and any amendinents to them in the case of regions and areas receiving aid eligible for assistance from the ERDF. What this means is that all member states are required to demonstrate that project applications for assistance from the ERDF relate to the problems specified in the relevant regional development programme. The regional development programme is therefore geared to achieving successful bids for ERDF. Without a regional development programme, it would not be possible to secure ERDF help.

In view of the role of the programme, it must of course he a very comprehensive document. The total United Kingdom submission for the period 1986 to 1990 runs to 17 volumes. The Scottish section alone is more than 200 pages in length. The programme is an extremely detailed analysis of the various regions of Scotland. It contains information on the economic and social situation, development objectives, measures for development, financial resources and implementation. [Horn. MEMBERS: "Is it true?"] The programme concentrates on both strengths and weaknesses alike. Indeed, without the latter, one would hardly expect to receive assistance from the European regional development fund, whose main objective is to correct regional imbalances throughout the European Community.

Against that background, it is particularly disturbing to see selective quotations in the national press which portray the programme as an indictment of current economic and regional policy. Nothing could be further from the truth and the Opposition know this.

The United Kingdom, and Scotland in particular, has benefited very considerably from the European regional development fund. Assistance of over £616 million has been won for Scotland since 1975. It is naive to believe that future ERDF support can be secured without some reference to the weaknesses and potential difficulties in the regions.

A particular point, which some hon. Members have overlooked, is that there is not a country within the European Community that does not want assistance for its less prosperous areas. Each country does so with the back-up of an appropriate regional development programme. There is not a single country among the 12 that would make a bid for ERDF aid by claiming nationwide prosperity.

Mr. Dick Douglas (Dunfermline, West)

The Minister has said that all countries in the Community submit programmes. Can he tell us of any other nation state which has made an assumption of such a poor economic performance as we have?

Mr. Lang

If the hon. Member for Dunfermline, West (Mr. Douglas) had read all 17 volumes of the report he would be aware that we do not submit a programme based on such poor assumptions. I had a look at the history of the ERDF programmes. Between 1975 and 1978 the Labour Government secured £64 million from the fund. Of course the fund was much smaller then. However, between 1979 and 1986 we have secured £552 million. When they submitted their programme, did the Labour Government include unemployment assumptions? No, they did not. The Commission wanted such assumptions. However, did the Labour Government fail to submit such assumptions because they did not know what the unemployment assumptions were or because they did know?

Of course, the regional development programme contains assumptions—but I would stress that these are assumptions, not forecasts. The assumptions, and they are the same assumptions as those contained in the public expenditure White Paper, project what could happen if nobody did anything about current problems. This does not mean, however, that the Government are not determined to take every measure practicable to boost the economy, or indeed that many external circumstances—such as oil prices—may not change to our advantage. On top of all the efforts being made to generate more work from purely Scottish sources and the great success we have had in attracting overseas investment, we are determined to complement our own efforts with European help. It is vital that Scotland, and the United Kingdom generally, continues to get its fair share of European money and that is the purpose of all of our regional development programme.

Mr. Dennis Canavan (Falkirk, West)

The EEC report refers to a prediction of Scottish unemployment at a figure of 331,000 by 1990, assuming no radical change in Government policy before then. Was that the Government's prediction? If not, where did that figure come from? Does the Minister believe that the figure is accurate? If not, would he care to tell us now what his prediction for 1990 would be?

Mr. Lang

The hon. Member for Falkirk, West (Mr. Canavan) cannot have been listening to me. The report contains no predictions and the Government have given no predictions. The Government do not forecast unemployment figures any more than the Labour Government forecast unemployment trends. The report contains assumptions and they are the same assumptions that have been made in the public expenditure White Paper and they are assumptions of what could happen if certain action was not taken.

Mr. Maxton

rose—

Mr. Lang

The report is full of positive aspects, covering such promising growth areas as microelectronics, health care, biotechnology, food and timber processing, fish-farming and tourism, and of course our highly successful finance and banking sector. It is quite wrong to accept the ill-judged deceptions perpetrated by those who would present only doom and gloom by selective quotation, and it is disgraceful that the Labour party should seek to distort and undermine the balanced presentation of Scotland's case to the Commission.

Least of all is the Labour party qualified to criticise this Government's successful development of regional policy, or to call for more infrastructure spending. Yes, we have cut spending on industry under the Scottish block by 0.3 per cent. in the past three years in real terms, but we are getting better value for money. However, when we look at the same figures for the last three years of the Labour Government the figure is not 0.3 per cent. but 13 per cent.

It is almost exactly 10 years since that same Government slashed Scotland's regional aid programme by 40 per cent. overnight when they abolished regional employment premium. That was a loss of £60 million to Scottish industry — more than double that figure at today's prices. As if that was not enough, they slapped on a further burden of £200 million when they brought in the national insurance surcharge — Labour's tax on jobs. Those were two direct, vicious, panic-stricken assaults on Scottish industry—and Wales suffered the same fate—by a party that had lost control of events, two deliberate measures that destroyed thousands of Scottish jobs.

This Government have struggled consistently and with growing success to repair the damage and restore the economy. We know, because the former Labour Government proved it, that unemployment can be tackled only through the sound economic strategy which we are following. This includes keeping inflation down and encouraging enterprise. 1985 was the third successive year of steady growth, low inflation, and growing numbers of jobs throughout the United Kingdom. It includes a strong and effective regional policy. The new policy we introduced, at a time of rapid structural change, is bringing new jobs and new hope to Scotland and Wales. Above all, it is helping to restructure the Scottish and Welsh economies on a broader base in a way which will enable them to play their full part in the regeneration of the United Kingdom. I urge my right hon. and hon. Friends to reject this absurd motion and to support the amendment.

4.48 pm

Mr. Roy Jenkins (Glasgow, Hillhead)

I congratulate the Minister on his new office. His speech was persuasive except when he dealt with that impossible part of his brief relating to the application to the European regional development fund.

On that issue, no one expects the Government, when submitting an application for funds to ERDF or to anyone else, to present the weakest case. No one would expect the Government to roll out some of the more complacent speeches that we have heard from successive Secretaries of State for Scotland. At the same time, the Government must not lie. They must not pretend that they can say one thing to one audience and something else to another without both audiences hearing what is said. The Government must not behave like an opera singer bellowing away at the auditorium expecting a singer beside him not to hear him if he puts his hand over his mouth. We could not have expected the report to have remained confidential, and I do not expect for a moment that the Government thought that it would. I therefore thought that the Minister was trying to have it slightly both ways when he stressed that it was 17 volumes long and then accused the press of selective reporting. It would have been a little difficult for them to have printed all 17 volumes.

Many documents are now leaked. That is the contribution, if there be one, of the Xerox machine to the advance of civilisation. The Commission is less addicted even to attempted secrecy than the British Government. To circulate a document in the service of the Commission is to put it into the public domain. That has been the fact for some time, and there is nothing very wrong with it.

The Government have for once been caught out telling the truth. The truth is that, on present policies, with which the Government are determined to continue, there is no prospect of any significant reduction in unemployment until beyond the end of the decade. Their figures are quite precise. It is not just a projection, otherwise where does the 80,000 reduction come from? Such a figure is insignificant, however. Nor is there any prospect of a significant improvement in the circumstances of the worst hit regions. There is nothing shameful about the Government saying that that is the reality. What is shameful is indulging in the hypocrisy of pretending otherwise.

It is already abundantly and depressingly clear that the 1980s will be an incomparably worse decade for unemployment in Scotland and the rest of the country than were the 1930s. The attempt to half deny that there is a peculiar unemployment problem in Britain, especially, but not exclusively, in Scotland and Wales, produces some odd performances from Ministers.

The Secretary of State for Defence, when Secretary of State for Scotland, used to indulge in speeches of a bland complacency which were almost Panglossian. The present Secretary of State indulges in some odd intellectual contortions. Last Wednesday, he assured the House that Scotland has the highest percentage of employment in any comparable European country—63 per cent. as against 59 per cent. in Germany. Does he really believe that that figure is relevant? If so, what is he doing applying for regional aid? If the figure is valid, Strathclyde ought to be giving aid to Stuttgart, not the other way around. If he does not believe that the figures are relevent, why is he trying to throw sand in our eyes and those of the country?

The Secretary of State for Scotland (Mr. Malcolm Rifkind)

The right hon. Gentleman does not need me to give the answer. He knows perfectly well that if far more women work or seek employment in the United Kingdom, that affects unemployment levels and makes straight comparison between Britain or Scotland and the continental countries invalid. A substantial proportion of people who seek employment in the United Kingdom would not seek it in continental countries because it is not as customary for women to work in those countries.

Mr. Jenkins

Of course. I am indeed aware that the factor involved is the stronger tradition of women working in Scotland and the United Kingdom. I am not sure of the comparison between Scotland and England as the right hon. and learned Gentleman did not give those figures last Wednesday. The stronger tradition of Scottish women working has been accentuated by the excessive shift to service industry employment, which has been foolishly over-encouraged by the Government. That move has taken us out of line with France, Germany and Italy, let alone Japan. It leaves us in line only with the United States, which can afford it. We cannot. The United States produces a mammoth balance of payments deficit which can be financed only because the dollar is not like other currencies.

I was interested to see that the Secretary of State rejected an egregious leading question from the hon. Member for Mid-Worcestershire (Mr. Forth) on Wednesday. He spoke of an obsession with manufacturing industry which we must correct. He reverses the case. We have had a dangerous lack of concern for manufacturing industry. The Government have been far too much inclined to believe that service industries can solve our problem. The reason for the apparent figures that the right hon. and learned Gentleman is able to produce is the fact that more women are at work and there is a higher proportion of service employment, a great deal of it part-time and probably low paid. That factor conceals a male unemployment rate in Scotland and elsewhere which is completely out of line with anything to be found in France, Germany, Italy and the United States—let alone Japan —which is socially and nationally debilitating.

The Secretary of State is entitled to produce bogus statistics for a little exchange across the Chamber, but he cannot take them seriously. If he does, he is effectively saying that Scottish unemployment is much less serious than that of Germany, France and any other mainland European country, which is manifestly not the case.

Several extremely interesting points emerge in the submission to the regional development fund. There is a frank comment on the level of industrial investment. It is not entirely in accord with what the Government often say. I shall quote from the summary, which I read with interest. I have not read the 17 volumes and wonder whether the Minister or the Secretary of State has. The summary says: In the present difficult economic climate, investment in directly productive industries is at a low level. That is not what we hear from the Government a great deal of the time. The summary continues: In these conditions, infrastructure developments are doubly important in both stimulating industrial demand and in creating new construction jobs, as well as preparing the assisted regions for new private investment in the future. The summary makes a powerful point about innovation, research and development, and shows how they are associated almost inevitably with the headquarters of companies. I believe that the choice of headquarters is to a substantial extent associated with the site of political decision making. There is a real economic argument for Scottish devolution, including substantial economic devolution. Important innovation and decision making is drawn away to the south-east in particular and is associated inevitably with the foci of political power.

Mr. Maxton

Does the right hon. Gentleman agree with the leader of the Liberal party that the alliance puts proportional representation before a Scottish Assembly?

Mr. Jenkins

It is essential to have proportional representation for a Scottish Assembly. I believe that one strong reason for the disappointing vote in the referendum was the considerable suspicion in Scotland about domination by one party caucus in one region of the country. There would have been a far stronger vote with proportional representation.

Mr. Maxton

Will the right hon. Gentleman give way?

Mr. Jenkins

No. I have allowed the hon. Gentleman to intervene once and I see no reason for allowing him to intervene again.

Next there is an extremely interesting and bland sentence that conceals a multitude of sins: —"The UK Government takes account of expected ERDF receipts when planning public expenditure, and as a result the planned expenditure on the relevant programmes is higher than it would otherwise be. That is a way of saying politely that ERDF money and other European money does not directly affect the total of public expenditure that goes to the regions. Speaking from direct experience, I have no doubt that the United Kingdom Government's persistent unwillingness to agree to additionality—to let money flow straight through to a project — has been a marginal disincentive to the United Kingdom receiving as much money as otherwise it might have received.

The Government are also rather bad—which seems to me to be very foolish—about drawing attention to the part that the ERDF and other Community funds have played in particular projects. The ERDF was crucial to the building of the Scottish exhibition and conference centre. It provided slightly over 30 per cent. of the capital cost. Alas, at the opening ceremony which I attended—I forget whether the hon. Gentleman did — no reference was made to this, which caused considerable affront to the director-general of the ERDF who had come to Scotland for the ceremony. It showed a little foolishness and a lack of skill and courtesy in presenting the case. However, the much more important point is the lack of additionality.

The other point that the Government have made is that Scotland has somewhat improved its relative position. That is a fact, but why has it improved its relative position? It is mainly because other countries and other regions, most notably the west midlands, have had their manufacturing industries decimated — at least — —by the present Government's policies. There is an element of truth in the Government's case. Scotland's relative move up the table does not mean that the present levels of unemployment in Scotland are acceptable, but if there should be a movement forward of the economy generally Scotland is better poised to take off than are many other parts of the country.

There is one other statement in the report which seems to me to make very good sense: Regional prosperity cannot be achieved in the absence of national prosperity. The Glasgow region is well poised to take off. In that sense, its relative capacity to take account of opportunities has improved. It does not assist Glasgow and the surrounding areas to pretend that everything is wrong and to cry "Woe" all the time. In the absence of the Government being prepared to give a stimulus to the economy along the lines laid down time and time again in the report, in particular to the regions which need it, that potential will not be realised, which will he a great and unnecessary waste.

5.3 pm

Mr. Allan Stewart (Eastwood)

This is an important and well attended debate. However, as my hon. Friend the Minister said in his excellent opening speech, it is just as well that the debate is not to take place next week. If we were to take the advice of the Scottish National party, hardly any of us would be able to reach Parliament next week. The SNP is urging Scottish Members to boycott flights from Glasgow and Edinburgh to London in November. If the boycott is not adhered to, those Members of Parliament who ignore it risk being photographed by SNP members, who are to keep a watch on Glasgow and Edinburgh airports. The Glasgow Herald says: If any member is sighted the fact will be publicised in his own constituency. This morning I searched Glasgow airport for some time in the hope of finding SNP photographers. I hope that the SNP will be able to guarantee that next week I shall be photographed at Glasgow airport boarding a plane in order to be here in time for the opening of the proceedings of this House. I hope, too, that it will guarantee that the photographs are publicised in the local press. That kind of silliness characterises many of the SNP's utterances on the more serious matters that the House is debating today, notably regional policy and jobs in Scotland.

Mr. Wilson

The hon. Gentleman has had a little fun with the boycott proposal, and I am sorry that he is a little disappointed that his photograph will not appear in the local press to show that he is doing his job. However, does he not accept that it is iniquitous that British Airways should be able to increase its fares on such a discriminatory basis in order to subsidise transatlantic services which have been hit by terrorist activity? Does this not result in a double jeopardy for Scotland? It is had for regional policy and it is bad for business men. Scotsmen have to pay heavily to travel to London, and then they have to pay to go elsewhere because there are no direct international services from Scotland.

Mr. Stewart

Scottish business men do not need advice from the SNP on how to travel. British Airways has adequately explained its reasons for its fares structure.

My hon. Friend the Minister referred to the SNP's proposals for the revival of the Scottish economy. They are authoritatively described in the 3 September edition of the Glasgow Herald under the heading: SNP unveils plan to cut dole queue by 100,000. They are also authoritatively described in the 9 September edition of the Glasgow Herald under the heading: SNP scheme to cut dole queue by 220,000. It is remarkable that when referring to the same plan the SNP was able to double its alleged impact within six days. I suggest that those who plan SNP policies ought to buy a new envelope on which to do their sums.

I welcome what was said by the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) about the prospects for the Central region. However, his most serious point related to the completely spurious row about the Government's submission to the European regional development fund. To say that this was a confidential document and that it had been leaked is absolute nonsense. It is a completely open document, and a copy has been placed in the Library.

The right hon. Gentleman's criticism of the Government's manufacturing industry policy amounted to a general criticism of the Government's regional policy of the kind that is constantly voiced by the Labour party and the SNP. Therefore, it is interesting to quote from a document that is equally non-confidential — the submission to the European regional development fund by the last Labour Government in 1978. It said: Even when the recession has passed, unemployment rates may remain significantly higher than has been usual in recent years … some areas may be badly affected by shipbuilding redundancies, others by a decrease of manpower in the steel, textile and clothing industries. The document then had this to say about the service industries: Employment in service industries is likely to continue to increase, although not as quickly as in the past. In that the Labour Government were wrong, because unemployment in the service industries has increased substantially under this Government.

The Labour Government continued: The recent decline in employment in manufacturing industry and the present under-utilisation of existing capacity suggests that this sector is not likely to be a significant source of additional employment in the Assisted Areas. That is what the Labour Government said about employment prospects, and it shows the hyprocrisy of many of the statements being made now in criticising the Government's regional policy.

It is important for the House to recognise the crucial point made by my hon. Friend the Under-Secretary of State for Scotland. Regional policy is about relative levels of economic activity, and not about absolute levels of economic activity. However one looks at the figures, it is true that Scotland's relative position and prospects have improved over the years and that they are much better under this Government than they were in 1978 or 1979.

It is also important that right hon. and hon. Members should recognise that some of the traditional economic arguments in favour of regional policy no longer apply. Those arguments, which applied not only in the United Kingdom but throughout the European Community, centred on the fact that regional policy was justified on the ground of economic efficiency to reduce the pressure from wage-push inflation in particular parts of the nation, or the Community.

That argument is no longer valid, but a general economic efficiency argument can still be made for regional policy is so far as it ensures that Scotland in particular and the United Kingdom generally receive inward investment, or at least those internationally mobile projects which they would not otherwise get. That would be a gain for the whole economy. I hope that my hon. Friend the Under-Secretary of State for Wales will be able to reassure the House that regional policy will retain sufficient flexibility for such investments to be continued.

It is interesting to note that the right hon. Members for Western Isles (Mr. Stewart) and for Hillhead, in criticising cuts in expenditure, suggested that if either of their parties was in government it would reverse the Government's decision to make regional development policy expenditure more job-related. That was a sensible decision by the Government. I must tell the right hon. Member for Hillhead that if his party is now committed to the European Community, as I believe it is, he will find the taking of replacement expenditure from regional development grants, which he criticised, to be a condition of membership of the Community.

I hope that my hon. Friend the Minister will say something about the effectiveness of the new job grant. This alternative to traditional regional development grants has been effective, especially for smaller firms and for firms which may be setting up and expanding with replacement capital expenditure, rather than with new plant and machinery.

Any Government would be put under inevitable political and economic pressure to change the rules on regional policy, because it is inevitable that areas that are excluded will make representations to be included. That is a political fact of life. It is important that there should be a period of stability in regional policy, the present balance of which is correct, and I hope that the Government will not yield to the inevitable pressures to indulge in change. It is important that the business man has a period of stability in which to allow regional incentives to work well.

5.14 pm

Mr. Roy Hughes (Newport, East)

First, I congratulate the two nationalist parties on securing this debate. All Labour Members agree that an effective regional policy is vital to Scotland and Wales. I hope that the whole House will join me in regretting the indisposition of my hon. Friend the Member for Falkirk, East (Mr. Ewing), who should have taken part in this debate. He would undoubtedly have outlined the problems of Scotland, about which he speaks with such authority.

My task is to illustrate the severe economic depression that afflicts Wales. The same situation exists in Scotland, as my right hon. Friend the Member for Western Isles (Mr. Stewart) clearly outlined in his opening speech. The difficulties in Scotland and Wales are very much attributable to the Government's seven and a half years of office. What is more, there seems to be little hope for the future if they remain in office.

Last week, the cat was let out of the bag by my hon. Friend the Member for Dunfermline, East (Mr. Brown), who published details of a hitherto unpublished report from the Government to the European Economic Community.

The Under-Secretary of State for Wales (Mr. Wyn Roberts)

I shall clarify once and for all the status of this document. It is a draft document which was submitted to the European Economic Community as on previous occasions and, as on previous occasions, it was intended for publication. A copy of it was sent to the hon. Member for Dunfermline, East (Mr. Brown) by my hon. Friend the Minister of State, Department of Trade and Industry.

Mr. Hughes

The Minister can duck and weave as much as he likes, but the EEC believes the report to be true. It confirmed thinking within the Community on the situation in Britain today. The report was referred to in an interesting speech by the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), and it stated that in 1990 unemployment in the United Kingdom would still be over 3 million. On Wales, there is the revealing submission that: The overall economic activity rate is lower than any other region of Great Britain and is expected to remain so during the period that this programme covers". All I can do is to add those famous words of Aneurin Bevan Why look into the crystal ball when you can read the book? In Welsh debates on the Floor of the House, and in the Welsh Grand Committee, we have often attacked the Secretary of State for Wales for his optimistic forecasts, which seem to be so divorced from reality. In this report to the EEC, we recognise that our worst fears have been confirmed.

The employment figures speak for themselves. In Welsh industry, taking the manufacturing sector as a group, the fall in the period 1979–85 was 110,000, while for the production and construction industries as a whole, employment has fallen by 141,000. Overall industrial output in the third quarter of 1985 was 13.9 per cent. lower than in 1979. The Welsh mining industry has been decimated almost beyond recognition, and now we are told that further job losses are to be expected.

The same woeful tale can be told of our rail network. Last week the Secretary of State for Transport announced a 25 per cent. cut in funding to British Rail. That is bound to have an adverse effect on fares. Lines are put at risk in Wales. There will be no moves towards electrification and the public will suffer from a deteriorating service.

With regard to freight and the proposed closure of the Severn tunnel junction, it seems that instead of fighting for a larger slice of the trade British Rail is abdicating its responsibilities. By doing so it is endangering the job security of its work force and making worse the congestion on our already overcrowded roads.

Wales is a relatively poor area with declining heavy industry and slow industrial growth. That situation is marked by heavy unemployment and low household incomes. Certain districts, particularly our valley communities, have been badly hit. They are wonderful communities in every sense of that term. Jobs are at a premium, though. Depopulation has set in and massive efforts are now required to revive their dying infrastructure.

Everywhere in Wales, not just the valleys, the position is bleak. Therefore, one would hardly think that the way to tackle matters was drastically to cut regional aid. However, that is what happened. On 28 November 1984 the Government announced the changes. They also provided for a greater spread of the reduced regional aid funding to cover service industries.

We could all accept the need for change, the need to move financial assistance away from automatic subsidy of capital expenditure and towards incentives for employment. We could accept the need to ensure that aid is given to areas that are most seriously affected by unemployment, industrial decline and structural change. However, there was no justification for slashing aid in the way that the Government decided upon. It was purely a cost-cutting exercise. The need for change was perverted into yet another attempt to cut public expenditure. The Government will not recognise that the greatest waste of all is unemployment. When regional aid is cut unemployment is directly stimulated.

Our local authorities have felt let down by the Government. Many of them have taken considerable interest in the economic development of their areas because that is the most important issue that faces their citizens. Many imaginative schemes have been proposed, but the response from the Welsh Office has been inadequate and faint-hearted.

My hon. Friend the Member for Alyn and Deeside (Mr. Jones) has repeatedly called for Wales to be designated an assisted area, but his plea has fallen on deaf ears. Wages in Wales are falling behind but unemployment is rising. That blows sky high the Government's claim that low wages mean more jobs.

Now the storm clouds are gathering over Britain. There is persistent pressure on the pound. Mortgage rates have moved upwards and there are signs of more to come. The inflation rate is starting to move up again. There is a deficit in trade in manufactured goods and a more persistent deficit in our overall balance of payments. With the Government's policies our country is heading for disaster.

By contrast we have the imaginative proposals of the Labour party that are contained in the new publication "Investing in People". [Interruption.] Hon. Members will be smiling on the other side of their faces before long. There is one sentence in that document which will give hope to so many people in Scotland and Wales. It says: Every time we create a new job we turn a claimant into a taxpayer, a wasted life into a productive one. Investing in our people is the way forward for Britain, and the sooner the Government are turned out the better.

Mr. Deputy Speaker (Mr. Ernest Armstrong)

I am grateful for the brevity of the previous three speeches. Those hon. Members who will be replying to the debate hope to catch my eye at 6.30 pm, so I appeal for continued brevity.

5.25 pm

Mr. Alexander Pollock (Moray)

I preface my remarks with two observations of a personal nature. Like other hon. Members, I am sorry about the indisposition of the hon. Member for Falkirk, East (Mr. Ewing), the Opposition spokesman on Scottish affairs, and I should like to be associated with the expressions of recovery for him at the earliest possible time.

I am delighted to have been preceded in the debate by my hon. Friend the Member for Eastwood (Mr. Stewart) and should like to place on record that during his term in the Scottish Office I found him always willing to listen to the problems facing my constituents and with a welcome anxiety to help whenever he could. In particular, in the context of the debate, I should like to pay tribute to the launching in Scotland during his term of office of the programme for rural initiatives and development and for giving greater focus to the rural aspects of the work carried out by the Scottish Development Agency. Indeed, he was able to assure rural Members of Parliament such as myself that, on a per capita basis, a disproportionately larger sum was being spent in the rural areas of Scotland than strict demographic criteria might warrant.

The most interesting and curious aspect of the motion is its timing. It will not have escaped notice that on Saturday the hon. Member for Dundee, East (Mr. Wilson) made what was, presumably in his terms at least, an important speech in Wales. According to The Sunday Post: Welsh and Scottish Nationalists were urged yesterday to 'stand shoulder to shoulder' because of the likely prospect of a third Conservative Government. The call came from SNP chairman Gordon Wilson, MP for Dundee East, in a speech to Plaid Cymru's annual conference near Llanelli". He went on: Our two parties have made arrangements to take advantage of a hung Parliament, but we must face the likelihood of a third term of Thatcher and all that implies".

Mr. Wilson

The hon. Gentleman must take into account the fact that I suggested that there might be a constitutional crisis because of the Tories winning on English votes. The hon. Gentleman knows the danger of the Scottish Conservatives becoming extinct at the next election.

Mr. Pollock

We faced that danger in 1979 and 1983 and successfully overcame it and I am sure that we are ready to meet it again.

We know that the leader of the Liberal party once told his troops to prepare for Government, but it is unusual to tell one's troops to prepare for defeat and the political wilderness. If the hon. Gentleman finds that hard to follow he should remember that he has already made it clear to his conference delegates that in no way will the nationalists play any part in working with the next Conservative Government. The electors of Moray expect a rather different attitude. They look to their Member of Parliament to work as best he can with the Government of the day in promoting the proper interests of his constituents.

I was puzzled as to why the hon. Gentleman's speech was made in Wales rather than in Scotland, but then the reason became quite clear. It is comparatively easy to talk to another party about the attraction of an alliance but rather more difficult to do so closer to home, especially in one's own constituency when its association chairman has just resigned, according to the press, to campaign against the party's neutralist defence policy. It might also have been rather unwise to make such a speech in Thurso, where the local Scottish National party branch is openly at odds with the party leadership on nuclear policy.

Regional policy must be vigorously pursued as an important aspect of overall national economic policy. Certainly hitherto the Government have shown a welcome determination to do just that. For example, following the major regional policy review which took place earlier in this Parliament, the Government properly recognised the special needs of the Forres area in my constituency and allowed it to retain assisted area status. But of even more significance was the decision earlier this year by my right hon. and learned Friend the Secretary of State for Scotland to extend, subject to the approval of Parliament, the area of the Highlands and Islands Development Board to include the areas of upper Speyside and west Moray in my constituency. The relevant statutory instrument to carry out that action will be debated in the House next week.

Although there is no sign at present of an alteration in the budget allocated to the Highlands and Islands Development Board, I trust that the funding will be monitored carefully in the light of any pressure on funds that may emerge following the extension into the Moray area. I suspect, however, that in future regional policy such all-embracing geographical demarcations of areas in need of special recognition will be less likely to find favour with our economic masters. Instead emphasis is much more likely to be placed on sectoral aid for specific economic activity.

I do not necessarily quarrel with that approach provided that due recognition is given to those sectors that most properly qualify for support. Due regard must be given to those traditional industries that will remain of critical importance long after transient developments have disappeared. An example is farming, whose importance in areas such as my constituency was well summarised recently by the farming editor of The Press and Journal, Mr. Bill Howatson. On 16 October, he wrote: It is salutary just to take stock of the importance of farming in the economy of the region"— that is to say Grampian region— and to bring some of the facts to the attention of the general public, whose conceptions of the industry are solely based on milk lakes, butter mountains and feather-bedded farmers. By stark contrast to the overall Scottish position where agriculture accounts for less than 4% of total industrial output, in Grampian, the equivalent figure is more than 7% and worth £350,000,000. Agriculture and related industries accounted for an estimated 18–6% of regional output in 1984 and the farming tentacles stretch far into the wider economy. How is farming best helped? The Government as a whole, or failing that the Scottish Office at least, should consider issuing a new paper on what is expected from our farming community. The last such policy paper, "Food from our own Resources"—

Mr. John Home Robertson (East Lothian)

There was another one after that.

Mr. Pollock

—has now been overtaken. The Government now need to issue guidelines, within the framework of European membership, to show what they expect from the farming community. I say to the hon. Member for East Lothian (Mr. Home Robertson) that one thing that would not be wanted in any such paper is the kind of comment recently published in the Labour policy paper which stated that the intention was to see that agricultural land and buildings were brought within the rating system.

Mr. Home Robertson

Will the hon. Gentleman say something about the likely impact of the poll tax which his party intends to impose on farmworkers and other people in rural Scotland?

Mr. Pollock

I regret giving way, as the hon. Gentleman has failed to understand the rationale behind the new welcome community charge, which we trust will be introduced in the Gracious Speech.

Another suggestion which is of relevance, not just to the farming community but to the wider business community, and which hon. Members should consider is the merit of a two-tier interest rate system. That system is operated by many of our partners in the European Community. My constituents Lind it hard to understand why, when there is a financial crisis, no distinction is drawn between those local business men who must borrow as part of sound business practice and those international speculators whose motives are utterly different.

There is no especial difficulty in offering subsidised credit to one part of the community. That is what happens with French farmers. The Government merely need to subsidise the lending institution which can then borrow at the going rate on the financial market and lend more cheaply to farmers, or whoever the beneficiaries might be.

Another beneficiary could be the textile industry, which is of great importance to rural economies, including Elgin and Keith, both of which are in my constituency, but unfortunately outwith the Highlands and Islands Development Board's extension. Those communities would benefit enormously from being able to plan with confidence in a stable atmosphere rather than in the current uncertainty. I hope that when my hon. Friend the Under-Secretary replies he will say whether his Department and the Scottish Office are willing to explore this matter further with the Treasury.

The relationship of company headquarters to their manufacturing bases was touched on by the right hon. Member for Glasgow, Hillhead (Mr. Jenkins). Too often in recent years too many of the decision makers in board rooms have moved further and further from the social and economic fabric on which their profits rest. Clearly, as recent events in the whisky industry have shown, moral persuasion and principle are insufficient weapons to bring them closer. I wonder, therefore, whether a different appeal could be made, an overt appeal to the pockets of board members by way of tax incentives for making a worthwhile contribution to the arts or to other worthy causes in their work forces' locality. That would be better than money being spent on grander settings elsewhere for reasons of national or international prestige. Such incentives might provide a worthwhile route back to the re-creation in those companies of local loyalties, local commitments and investment by those whose money is made largely from the remoter regions.

In short, for a successful regional policy, new ways must continually be sought to develop an ever stronger partnership between central Government and those businesses on which the regional economy must continue to rely.

5.39 pm

Mr. Dafydd Wigley (Caernarfon)

The hon. Member for Moray (Mr. Pollock) touched of an important point, and I thought that he was going to develop it. He said that companies whose headquarters were away from the manufacturing base might become more and more remote in their policy decisions. That has important implications for regional policy. Our experience in Wales is probably similar to that in Scotland and in many of the English regions. We have discovered that when the first ill winds of a depression blow, the branch factory is closed first, and the headquarters last the longest. If fiscal incentives were available to companies so that they located their headquarters in development areas in Scotland, Wales and the depressed parts of England, it might have a significant impact on unemployment. It would certainly be worth exploring that avenue.

It is also worth looking at regional policy in a general context. The motion has been drawn broadly enough to cover the English regions as well as those of Scotland and Wales. After all, both the Scottish National party and Plaid Cymru recognise that it is not only Wales and Scotland that have severe problems, but that parts of the north of England and Merseyside also have tremendous problems and need a much more effective regional policy.

On 24 July 1979 the then Secretary of State for Industry, the right hon. Member for Leeds, North-East (Sir K. Joseph), referred to the changes that the Conservative Government would make to regional policy and said: We propose to toughen the criteria for the provision of regional selective assistance under section 7 of the 1972 Act, and for assistance that is not attached to regions but covers the whole country under section 8. Those changes have the efffect of concentrating assistance from the taxpayer on the areas of highest unemployment and most need for improvement in economic structure. They will focus and concentrate the benefits of regional policy". The right hon. Gentleman said that in 1979, when unemployment in Wales amounted to 73,000. He continued: It is always open to the Government of the day to introduce changes when circumstances change."—[Official Report, 24 July 1979; Vol. 971, c. 364.] In the next four years circumstances certainly changed. Indeed, by 1983 circumstances in Wales had changed so much that that figure of 73,000 unemployed people had increased to 162,000. Consequently, there was a new Government regional policy. The 1983 White. Paper, Cmnd. 9111, contains an interesting quote on page 3, under the heading, "The Government's Approach". It says: Imbalances between areas in employment opportunities should in principle be corrected by the natural adjustment of labour markets. In the first place, this should be through lower wages and unit costs than comparable work commands elsewhere. That was the new regional policy in 1983, after the previous policy had visibly failed to work. We have now had two years of that new policy, and unemployment in Wales has reached 180,000. If the 40,000 or 50,000 people benefiting from temporary jobs and under the MSC schemes are included, the figure is nearer to 250,000.

The Government's regional policy has failed abysmally. Even those bits of regional policy that have worked have not been effective enough. A document by Moore, Rhodes and Tyler was published a few months ago and summarises the position well. It is entitled, "The Effects of Government Regional Economic Policy", and on page 12 it says: However, the scale of the regional problem as a whole in relation to what regional policy can be expected to achieve is alarming. For regional policy to have solved the regional problem in the decade of the 1960s, policy would have had to have been two to three times more effective than it actually was. For regional policy to have solved the regional problem during the decade of the 1970s, regional policy would have had to have been about three times more effective that it actually was. The authors pull their punches when it comes to the 1980s by concluding: The case for an active regional policy in the 1980s therefore remains strong. I have rarely seen such an understatement. In fact there has been an active withdrawal from regional policy.

In Wales the unemployment situation is now desperate. The European regional development fund report, which has been leaked, or published, depending on whose version one accepts, draws attention to the situation in a quite graphic way. It says: for the Production and Construction industries as a whole employment has fallen by 141,000 … industrial output in the third quarter of 1985 was 13.9 per cent. lower than in 1979 …. Unemployment rates in Wales have been higher than those in Great Britain as a whole for a very long time. The recent national industrial decline coupled with the disadvantages of Wales has meant that the rates in Wales are now very high. Indeed, 180,370 people are now unemployed in Wales, and that has a direct bearing on wage levels. In April 1985 the average wage for a man in Wales was £179 a week, compared with £233 in the London area. Thus, a man in Wales earns on average £54 a week less than his counterpart in London, and in the poorer parts of Wales the discrepancy is even greater. The figure for women in Wales is £119 a week, compared with £154 for women in the London area. Again, women in Wales earn on average £35 less a week. Thus, Wales suffers not only from higher unemployment but from low wage levels. That, in turn, depresses purchasing power and the economy as a whole.

When unemployment in the midlands and in the southeast of England becomes worse, there is an active withdrawal from regional policy. Bodies such as the Welsh Development Agency are supposed to concern themselves with the development of the economy, but during the past six or seven years the WDA has not been sufficiently interventionist in its approach. It has not adopted enough initiatives to try to overcome the problems facing Wales. It has had to try to get a return on capital investment that has been targeted by the Government, and as a result it has not been able to use its money in the best way socially. In the corporate plan for 1984 to 1990 the factory investment programme was slashed from £11.5 million to £6 million, yet we need more factory building, not less.

Regional regeneration will not be achieved purely by more incentives. We need a direct capital investment programme in Wales, and no doubt in Scotland too. We need such a programme for social projects, such as housing. After all, 100,000 houses in Wales are unfit for habitation in one way or another and need to be improved. Old-fashioned schools need to be replaced, and hospitals need to be improved, along with community facilities. Probably all the regions need work done on water and sewerage. The Welsh water authority has a £1,000 million programme that it could get on with more rapidly if more money was available.

In April, in its response to the report of the Welsh Affairs Committee, the Welsh water authority said: The projected capital programme assumes that the authority's income base remains firm and that the increased capital can be made available without unacceptable increases in the level of charges or increased borrowing requirements. The truth is that bodies such as the Welsh water authority need more money so that they can get on with their much needed work if we are to overcome the unemployment problems of Wales.

We also need direct expenditure on economic projects, such as factory building. We need more investment in industry. The development of new coal mines, such as the Margam mine, should be accelerated and money should be pumped in. One of the most important factors for Wales is the development of communications. I refer not only to electrification of the railways, but to our roads.

For 20 years Labour and Tory Governments have concentrated spending on roads in Wales on those that run east-west, to the virtual exclusion of those running north-south. Although I appreciate the need for much of that spending on the A55 and the M4 if traffic congestion is to be relieved, the time has come for the north-south links in Wales to be a political and economic priority, with the modernisation of those roads being part of the economic regeneration strategy.

As today's debate has an important European regional dimension, it is appropriate to look forward in a European context. One of the most imaginative and far-reaching ideas, which could have an enormous impact on all of Wales—north, mid and south—is the construction of a major highway linking the A5 in north Wales to the M4 in south Wales. That would then serve as a primary route for Irish road traffic travelling to Europe through the new Channel tunnel.

The existing road service, using the M6 and M1, is fast becoming clogged with traffic, particularly around Birmingham and London. From a south Wales viewpoint there is a need for a fast, convenient road link from the M4 to the Channel tunnel. A north-south road in Wales, involving a rapid upgrading of the A5 in Gwynedd and a spine road linking it to the A470 at Merthyr Tydfil, would enable traffic to travel the length of Wales in under three hours. It could cut the journey time for Irish road traffic to the Channel tunnel by up to two hours.

The building of such a road would provide much needed job opportunities along its full length. If the EEC wants to be seen as making a strategic impact on Wales and as making critical improvements to transport links for Ireland, this project must surely commend itself to the EEC and would be a much more sensible approach than the present policy of scattering largesse like confetti on a myriad of minor local projects with no strategic vision or central economic purpose.

I call on the Welsh Office to open immediate discussions with the EEC on such a project with a view to getting a pilot study undertaken in 1987, a firm decision in 1988 and a rolling construction programme that will get the road in being by the middle of the 1990s. Its opening can be phased with the opening of the Channel tunnel. A scheme such as this would bring the vital impetus that is needed in the Welsh economy and would improve prospects for employment, especially in the construction industry. It would revolutionise communications in Wales and open a new era for our country.

A number of approaches to regional policy need to be rethought. We have possibly thought too much in terms of manufacturing industry, but there are great opportunities in Wales for service industries, such as the film industry. We already have the infrastructure for the S4C channel. We should be looking at our strengths. Universities are being closed, but education in Wales could be a major source of new development. The agriculture industry is being attacked by Government policy, but we could be developing job opportunities in agriculture.

A desperate situation exists in my county of Gwynedd. Of the worst nine counties of England and Wales for unemployment four are in Wales, and Gwynedd is the fourth worst in England and Wales. In spite of that, only about a quarter of our land area is covered by development area status. That is not good enough.

The EEC needs to be much more effective in its policies for Gwynedd and a way has to be found for more EEC money to find its way to the county. The Government say that the answer may be tourism, but tourism is a seasonal industry in areas like ours and we need employment all the year round.

We are also threatened by the possible closure of nuclear power stations. If that happens there will have to be a major initiative such as those that we saw with BSC or by British Coal in areas hit by closures. We need something like a £50 million job replacement fund in the area of a nuclear power station closure in order to get alternative jobs.

More than anything, we need new thinking and new dynamism. We want to see the Welsh Office, in conjunction with the EEC, getting to grips with the problem. We need a Wales office in Brussels to make sure that Wales gets a fair crack of the whip from the EEC. We need a dynamic approach, but the approach by the Welsh Office is tired, lethargic, sterile and sullen.

If Wales is to have a level of unemployment similar to that in other small countries, such as Norway, where unemployment is 2 per cent., or Sweden, where it is 3 per cent. we need new ideas and a new dynamism. In the face of the failure by the Welsh Office, we can get that only if we have our own senate in Wales and dynamism growing from within Wales. I have encapsulated in my speech the failure of Government policy. That policy shows no sign of change. The Government have no new ideas, and that is why we condemn them.

5.53 pm

Mr. Keith Raffan (Delyn)

As a Scotsman by birth and a Welshman by election, I welcome this debate although not the terms of the motion. I am sorry that more English hon. Members, particularly from the south, are not present because nothing would be worse than to create in Disraeli's words two nations between whom there is no intercourse and no sympathy. Wales and Scotland may have relatively small populations when compared to England and we may be looked upon as being on the geographical periphery of these islands, but we are in the economic and industrial front line.

As history has shown, there is no greater stimulus to separatist movements within the two nations than the periodic fits of indifference displayed by the English establishment. It is that indifference that provokes a narrow, inward-looking nationalism that is, of course contrary to the true character of the Welsh and the Scots. That true character is an enthusiastic and intelligent internationalism.

The economic problems facing Wales and Scotland are not regional or peripheral. I think all hon. Members will agree with that. They are the problems of Britain writ large, and no more so than in my constituency of Delyn. In the last 15 years a quarter of the labour force in my constituency have lost their jobs. The two towns of Flint and Holywell currently have a male unemployment rate of 41 per cent. Delyn is a classic example of an area that has suffered massive structural unemployment because its local economy was too narrowly based, too over dependent on just two industries—textiles and steel.

We in Delyn realised fromthe start that we had to create a much more widely based local economy if we were to make a significant impact on the unacceptably high level of unemployment in the area. We could not have had more support from the Government in so doing. [Interruption.] I will gladly give way. I am glad that so many Opposition Members know my constituency better than I do. I will gladly give way to the hon. Member for Buenos Aires, or whatever the name of his Ayrshire constituency is, or to any of his fellow Scots or even to some of the Welsh hon. Members if they can contradict what I have said. [AN HON. MEMBER: "You do not know the constituencyl I do. I am speaking about the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes). The name of his constituency keeps changing. Nothing more could have been done by the Government. That is not a quote from me because it was said by the chief executive of my borough council and I am sure Opposition Members will agree that he is an independent-minded man with no party political stance. Silence reigns in the Opposition.

The Government ensured that Courtaulds did not walk away from a community that had served that company for so long and so well. The Government gave Delyn the highest level of development area status. The Government designated the Delyn enterprise zone and backed it with over £8 million creating, in the words of the borough's chief executive John Packer, the most attractive industrial location in Wales. Already the Delyn enterprise zone has made a substantial contribution to the developmet of a new, dynamic and diverse local economy, showing itself as an outstandingly effective instrument of regional policy.

Over 800 new jobs have been created since the designation of the zone in 1983. Over 60 per cent. of those are full-time male jobs. Over 80 per cent. are in manufacturing in a wide range of industrial activities such as packaging, clothes, frozen foods and electronics. Three major factories are still to open and a further 650 new jobs have recently been announced. The jobs that have been created are all new jobs and the companies locating in the enterprise zone are starting up or expanding. There has been no poaching of jobs from other areas. Again, in the words of our chief executive: Unemployment peaked in this area in 1982. There was a small reduction in 1983. Since then it has been relatively sizable despite the Courtaulds redundancies in 1984–85. There is now the preliminary indication of a downward turn. Delyn's unemployment rate has fallen against the national rate. In other words, I believe the signs are we have hit the bottom of the trough. We have absorbed the major Courtaulds closure and are now beginning to see a slight improvement. That trend was confirmed to me last weekend by Mr. Paul Jones, who is the manager of the Shotton jobcentre. He also has responsibility for the jobcentres in my constituency at Flint and Holywell. He said that the local job market was buoyant and that there were a remarkable number of vacancies. He added that he and his colleagues do not have to go out to local companies to market the centres because they have so many jobs on their books. Contrary to the expectations of Mr. Jones and his colleagues, they have surpassed last year's figures for vacancies at this time of the year.

All credit is due to the Secretary of State for Wales and his team — and to Delyn borough council — for their tremendous achievement in bringing about such a significant turn around in the industrial fortunes of my area. But we must keep the momentum going. The enterprise zone approach has proved how effective an intensive localised response to the problems of unemployment can be. The problems that we now face are the problems of success—[Interruption.] I am glad to tell the hon. Member for Caernarfon (Mr. Wigley) that I am not joking. If the hon. Gentleman listens to me, he will realise what the problems are and that I am asking the Minister for his help. I am quite willing to give way to the hon. Gentleman.

Mr. Wigley

If we face the problem of success, why is it that Clwyd, with 18.7 per cent. unemployment, is one of the worst six counties for unemployment in Wales?

Mr. Raffan

The hon. Gentleman has not been following my speech. I saw him looking at his notes. I hope that hon. Members will not mind if I bring him up to date because, clearly, he was not concentrating. I was talking of the marked impact of the Delyn enterprise zone on unemployment levels in my constituency. I quoted the chief executive of the borough council and the manager of the local Jobcentre, who said that unemployment had been decreasing. I am glad that that piece of good news has now been heard by the hon. Gentleman. It will brighten up his day.

Mr. Donald Coleman (Neath)

Will the hon. Gentleman give way?

Mr. Raffan

I have just given way and I shall not give way again immediately.

We must keep the momentum going. The enterprise zone has proved how effective an intensive, localised response to unemployment can be. Our problem is one of success. We are fast running out of space at Flint. The Delyn enterprise zone is smaller than the average in the United Kingdom, extending only to 263 acres, whereas the average size of enterprise zones is 360 acres. The amount of land available for development is only 136 acres, of which only 89 acres have been available for genuinely new development. The extension of the zone to cover the former Courtaulds Greenfield site would make up that deficiency by adding a further 102 acres. That would bring the zone up to the average size of enterprise zones in the United Kingdom and would give the private sector the incentive to invest at Greenfield.

In Delyn it is widely accepted by Ministers, officials and Members of Parliament that we have an enterprising, determined local authority. In the words of Dr. Norman Wooding, deputy chairman of Courtaulds, we also have a labour force second to none, first-class, hard-working, highly motivated and extremely flexible. All we need is for the land that we have available for industrial development to be given enterprise zone status. When fully developed, the Greenfield business park will have the potential of creating 2,300 jobs. That will go a long way towards tackling local unemployment.

The Government have shown great concern for the problems facing Delyn and have provided an effective regional policy for the area. We look to the Welsh Office for a continuation of the strong support that it has given in the past. The Government have begun to reverse the industrial decline of the past 15 to 20 years and have achieved a reduction in local unemployment figures.

If we listen to the Labour party, unemployment suddenly started one day in May 1979 when the Prime Minister crossed the threshold of No. 10 Downing street. It conveniently forgets that unemployment doubled in Wales when it was in government. It conveniently forgets that major redundancies took place in my constituency amounting to the loss of more than 2,000 jobs. During that period some of my constituents had the misfortune to be represented by the hon. Member for Alyn and Deeside (Mr. Jones)—luckily only some of them. At that time he was also a Minister at the Welsh Office, so he is doubly culpable.

I attack not only the record of the Labour party but its future policies, which were revealingly described by the hon. Member for Newport, East (Mr. Hughes)—he let his own cat out of the bag—as "imaginative proposals."

Mr. Keith Best (Ynys Môn)

We need imagination to understand them.

Mr. Raffan

Exactly.

The mind boggles when we think of the Labour party's proposals. One presumes that the hon. Gentleman was referring to last week's report by the Institute of Fiscal Studies—that neutral body which estimated that the policies of the Labour party so far detailed would cost £10 billion. The others, which are less clearly formulated and are mostly drawn from the speeches of the hon. Member for Oldham, West (Mr. Meacher), are so far uncosted, but were described as being "expensive". I cannot but find myself agreeing with the leader of Sheffield city council, Mr. David Blunkett — I do not usually find myself in agreement with a member of Labour's national executive committee—that the shadow Chancellor would have no option other than to raise the standard rate of income tax, and that he should come clean on that point.

The benefits brought to Delyn by the Government's outstandingly successful enterprise zone policy would be put in jeopardy if the Labour party had its way. The shadow Home Secretary, in a former incarnation, said of enterprise zones We shall have no more of them. I am aware that Labour party policy has the habit of mutating, so in my speech during the Welsh day debate earlier this year I asked the hon. Doctor for Carmarthen (Dr. Thomas), who now and then is brought in to give badly needed first aid to the Labour Front Bench, to say in his reply whether the party had changed its policy of open hostility to enterprise zones. He did not respond. I can only assume that the Labour party is still against them. I warn Labour Members that that is a vote loser second to none in Delyn. I warn my constituents that the 800 new jobs already created in Delyn enterprise zone and the many to come that have been announced will be in grave danger should the Labour party ever return to power.

The fundamental rethink of policy called for in this motion is required, not by the Government, but by the Labour party. The people of Delyn know that the Conservative party, this Government, the Secretary of State and his team do not merely talk about putting people first, but actually do so.

6.5 pm

Mr. John Maxton (Glasgow, Cathcart)

I am sure that the constituents of Delyn will read that speech in their local newspaper. I noted that the hon. Member for Delyn (Mr. Raffan) spent most of his time addressing the officials in the Box and I can only assume that they wrote his speech for him. But from my information it will not do much to save him at the general election.

In view of the motion tabled by the Scottish National party and Plaid Cymru, I was interested in the speech by the hon. Member for Dundee, East (Mr. Wilson) in Wales this weekend. It is clear from it that a Tory victory at the general election will best suit the SNP and PC. I only hope that the people of Scotland listened to his speech and are aware that the SNP want another Tory Government because the Scottish people certainly do not.

Mr. Wilson

Will the hon. Gentleman give way?

Mr. Maxton

I will not give way. Two or three hon. Members still wish to speak.

It is a bit much for the SNP to attack the Government's regional policy in this motion when it played such an important part in ensuring that we had a Tory Government by voting against the Labour Government and bringing it down. I am sorry that the right hon. Member for Western Isles (Mr. Stewart) is not present. He spoke about shipyards in regional policy, but some people in the Labour party remember SNP hon. Members standing in their seats in 1974, tearing up telegrams from Scottish shipyard workers who suggested that they should support the Labour Government's plans for the shipbuilding industry. It is a bit much for those hon. Members to preach to us about these matters.

Mr. Wilson

rose—

Mr. Maxton

I shall not give way because we have a brief debate.

I am sorry that the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) is not in his seat. I asked him a question, which he answered, and then tried to ask him whether the alliance would vote against a Scottish devolution Bill which will be introduced by the next Labour Government, but will not provide for proportional representation. The right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) has made it clear that he will. Eighty-four per cent. of the Scottish people who have said that they want devolution have a right to know alliance policy on that before they decide how to vote at the general election.

Much of the debate has been about the European regional development fund report. My hon. Friend the Member for Dunfermline, East (Mr. Brown) should be congratulated on both it and a new book that he has just written and that has recently been published. I can recommend it to anybody. It is a good read.

There are two criteria against which we have to judge the report. The first is that it is a Government report. The Prime Minister misled the House last week when she suggested that it was manufactured by local government. That was a distortion of the facts.

The second aspect is whether the report tells the truth. We should like to know whether it does. It says that in 1990 unemployment will be as high as or higher than it is today. The Under-Secretary spent considerable time wriggling over whether the report included projections or assumptions—I am not sure what the difference is—but the report says that unemployment will be at least as high in 1990 as it is today. Is that true?

A number of policy assumptions are made in the report. Talking about the infrastructure in the Highlands, it says: the marginal nature of much of the economic activity means that even small savings in transport costs may make the difference between success or failure. It lists the building of the Dornoch Firth rail crossing as a priority plan and comments: further investment on the rail network between Inverness and Thurso, in particular the proposed Dornoch Firth road/ rail crossing will greatly increase the efficiency of the rail network and will be compatible with major track modernisation in the Inverness area". That was set out in the Government's report to the ERDF, but the Government rejected the rail link because, although it was technically feasible, there was no sound economic case for a rail crossing on top of the £20 million road bridge. That goes completely against what the Government put in the report that they submitted to the ERDF. Not only that, but the Government were so inefficient that they did not bother to submit any Dornoch railway project to the ERDF. It is disgraceful that a Government can indulge in that level of duplicity.

I know that one or two other hon. Members still wish to speak, so I will conclude with one more quote from the document, though hon. Members may not believe that it is a quote from a Conservative Government. Talking about development objectives, it says: In urban areas, in order to improve economic performance, direct measures must go hand in hand with the renewal of ageing systems, environmental improvement, the reclamation of derelict land, upgrading of the housing stock and the adaption of commercial and industrial premises to provide suitable accommodation for small and medium sized enterprises. If anybody believes that the Government's economic policy in Scotland, Wales or any other region has been about since 1979, he should look at the record. The people of Britain will do that in 1987 or 1988. When they look at the record, the Conservatives will be out and we shall be in.

6.14 pm

Mr. Keith Best (Ynys Môn)

The hon. Member for Glasgow, Cathcart (Mr. Maxton) told us that the SNP has said that it wants the Conservatives to form the next Government, but the hon. Member for Meirionnydd Plant Conwy (Mr. Thomas), the president of Plaid Cymru, told us on the radio yesterday that he wanted Labour to form the next Government.

I hope that the SNP and Plaid Cymru sort out their differences, bearing in mind their new pact—

Mr. Wilson

Will the hon. Gentleman give way?

Mr. Best

No, I will not give way. I shall be happy to arbitrate on the two parties' difficulties on another occasion when we have more time.

Mr. Wilson

On a point of order, Mr. Deputy Speaker. Do not our Standing Orders say that when an hon. Member has been unjustly attacked from both sides of the Chamber he has the right to reply? I should regard with the greatest reluctance, horror and dismay the election for a third term of the present Prime Minister and her Government.

Mr. Deputy Speaker

The hon. Member knows that it is up to each hon. Gentleman to decide whether to give way.

Mr. Best

I am glad that I have already been of assistance to the SNP and Plaid Cymru in sorting out some of the minor difficulties that they are experiencing over which party they wish to form the next Government.

The hon. Member for Caernarfon (Mr. Wigley) said that we needed a direct capital investment programme. He visits many parts of Wales and is an assiduous attender in his constituency. If he looks around he will see that a direct capital investment programme is going on now. In northwest Wales, the area in which the hon. Gentleman and I are particularly interested, the latest programme of land reclamation works includes three major schemes with estimated individual project costs of over £500,000. In the period up to December 1987 it is planned to start construction of three further major road schemes, with a total estimated cost of £228 million. There are also plans for further substantial investment of £8 million in facilities at the Holyhead port in my constituency, and there is a substantial investment programme in water supply improvements and sewerage, at a total cost of £6.5 million. In addition, capital expenditure on improvements in the electricity network in north Wales will total £2.3 million.

I know that the hon. Member for Caernarfon usually travels by train, but if he drives to his constituency he will travel along the A55 where more than £400 million of Welsh Office money is being spent on improving the road. That will have the same effect on north-west Wales, in terms of the development of industry, as the M4 had on south Wales when it pushed into that area.

All that work adds up to a fairly creditable investment programme. It seems that the hon. Member for Caernarfon's answer to the problems of Wales is to build a major highway between the A5 and the M4. I do not know what he thinks the people of Wales will think of Irish pantechnicons rumbling through Wales, with all the associated environmental effects. At present, they can bypass Wales and preserve our environment.

I also do not know where the hon. Gentleman expects to get the money for his project. In the self-governing Wales advocated by Plaid Cymru, the people of the Principality will be ill equipped to provide the massive funds that presently come from the economy of the whole of the United Kingdom.

The hon. Member for Caernarfon asks for more advance factories and complains that only a small part of Gwynedd is a development area. Does he seriously want advance factories in the Snowdon national park, or perhaps up Snowdon itself?

Mr. Wigley

Will the hon. Gentleman give way?

Mr. Best

No.

Mr. Wigley

But the hon. Gentleman has made a personal attack on me.

Mr. Best

I usually give way to the hon. Gentleman, but his hon. Friend the Member for Meirionnydd Nant Conwy will reply to the debate and I am sure that he will be able to deal with all the points that I am making.

The people of Wales have recently had the benefit of seeing Plaid Cymru's blueprint for Wales unveiled at its annual party conference in Tumble. Considering the way in which Plaid Cymru performed, the name of the place could not be more appropriate. If any of us thought that there was any danger of a cohesive and compelling set of policies emerging from Plaid Cymru, that fear was laid to rest at its conference.

I like both Plaid Cymru Members as individuals. We do not often cross swords and we can and do work together for the benefit of our constituents. Indeed, I have no doubt that if the hon. Member for Caernarfon had been a member of one of the important political parties in Wales he would by now have been a Minister wielding real political power. Sadly, that will always be denied him unless he is prepared to cross the Floor of the House.

The trouble is that Plaid Cymru is not worthy of the two hon. Gentlemen who represent it in Parliament. However, it is worthwhile to examine the blueprint set out at Plaid Cymru's conference recently and how it will benefit the Welsh economy. Plaid Cymru believes that Wales should leave NATO. Wales is a nuclear-free zone. I do not know whether that has been communicated to the Politbureau so that when the rest of the world is burning because of nuclear holocaust Wales will be preserved in some miraculous way. Being a nuclear-free zone did not have a dramatic effect on the way in which the tragedy of the Chernobyl cloud affected north Wales. The Plaid Cymru manifesto in 1983 said: No country could isolate itself from a nuclear conflict". And yet isolationism, neutralism and a departure from the only Alliance that can preserve the freedoms of the western world is a significant part of Plaid Cymru policy.

Plaid Cymru is keen on agriculture. A press report under the heading "Farming Blueprint" describes a comprehensive policy for rural Wales which involves the establishment of a Welsh land commission to control the number and size of farms. How many farmers in Wales want to be controlled in number and size by a quango? The article says that a land tax would be introduced to deter very large farming units and that the suggested commission would buy farms to enable county councils to hold one fifth of all holdings for lease at low rents to new farmers.

I do not know whether Welsh farmers will look particularly favourably on the proposition that their land should be expropriated by a Government commission so that it can be let out to tenants or be deterred by a Government quango from operating large farming units.

In the energy debate Plaid Cymru decided by the narrowest of margins that we should not close all nuclear power stations in Wales. I am sure that there is no link whatsoever with the fact that the hon. Member for Meirionnydd Nant Conwy represents the constituency with Trawsfynydd in it. Everybody knows that Plaid Cymru is opposed to nuclear energy, and some would say that the policy is cynical and drafted for purely electoral reasons.

The great panacea for Wales is said to be the creation of a senate—a senate which, incidentally, would be run by the Labour party because Plaid Cymru has only two of the 38 Welsh seats. Plaid Cymru would, therefore, hand over the fortunes of Wales to the Labour party by the creation of a senate.

Experiments in self-government have been tried in Northern Ireland. None of them has been particularly successful and yet Plaid Cymru still is determined on that route. Its supporters seem to be blind to the overwhelming result in the 1979 referendum. The right hon. and learned Member for Aberavon (Mr. Morris) said on that occasion that he recognised an elephant when it was in his back garden. Plaid Cymru seems to be surrounded by a safari park. Its members cannot see the writing on the wall.

Plaid Cymru has existed for 61 years. What has it achieved in that time? Workmen's compensation for pneumoconiosis? Not so, say the trade unions. They say that they were responsible for that. Was it responsible for S4C? The Government had already committed themselves to that. The Welsh Language Act 1967? I welcomed it, but it was introduced by a Labour Government. Even if Plaid Cymru were responsible for all those measures, not one of them directly affects the economic well-being of the Welsh people. That is not much of a record.

The 1979 Plaid Cymru manifesto called for an economic plan for Wales. We have heard that phrase elsewhere, but it usually emanates from eastern European countries with all the commensurate disaster. The reality is that Plaid Cymru is not the national party of Wales. It is not Plaid Cymru but Plaid Hanner Gwynedd. It is the county party for half of Gwynedd. Plaid Cymru holds only two out of 38 seats in Wales—the smallest number for any party in Wales.

I can understand why the hon. Member for Meirionnydd Nant Conwy wants to lurch his party to the Left. He realises that the only way that his party can gain any credibility in Wales is to try to be a better Socialist party than the Labour party in the valleys of South Wales. That is anathema to the people because if they did not vote Plaid Cymru they would vote for the traditional values for which the Conservative party stands.

The people of Wales realise that the answer to their problems rests with remaining a close and integral part of the United Kingdom. Only as part of the United Kingdom can we have a regional policy. Plaid Cymru policies would isolate Wales with all the terrors and misery that that would occasion to the Welsh people. Fortunately, after the next election that party will not have the chance to do that.

6.26 pm

Mr. Jim Craigen (Glasgow, Maryhill)

I want to refer again to the European regional development fund report. Government reports seem to be helped when they are leaked. I hope that more Ministers will take the trouble to read the documentation submitted to Europe. I wonder whether the report needs 17 volumes to spell out that most people outwith the home counties know only too well about employment and industrial or housing and social issues.

Ministers have said that the reports were compiled mainly by the local authorities, but they carry the Government's rubber stamp and shame in their content. Of course, they argue for as much resource as possible from the European Community but regional policy does not really matter to this Government, north of Blaby. The Chancellor of the Exchequer and his Conservative predecessor believe in a fiscal blood-letting for the northern half of the United Kingdom.

My criticism of the Government's economic policy is of their total mismanagement of untold benefits. I am thinking of North sea oil revenues, the proceeds from the sales of public assets and a parliamentary majority in both Houses which leaves few legislative uncertainties.

The Government show absolutely no political commitment to Scotland. We heard the hon. Member for Eastwood (Mr. Stewart) upstaging the leader of the Liberal party when we last debated industry in the Scottish Grand Committee. The hon. Member for Eastwood spoke of the Secretary of State for Scotland giving Ernest Saunders a dressing-down and about what was going to happen if he did not locate Guinness in Scotland. What has happened? Just a lot of political waffle from the Secretary of State. The leader of the SNP talked about Scotland having a greater share of higher paid employment and he focused on the need for more headquarters to be located in Scotland—as they should be—and in Wales. Reference was made to the need for better communications between the north and the south of Wales. Having travelled in the Principality, I can understand that.

We recently received a brochure about the M25. I say good luck to greater London, which is having this marvellous investment, but it is a great deal cheaper to build a mile of motorway and extend the M74 or the connections to Scotland and improve the connections in Wales than it is to improve the infrastructure in the metropolis.

Over the past decade, Glasgow has been trying to create a new role to overcome the problems of the recession in manufacturing in the west of Scotland. There have been a number of ego boosters such as the Burrell gallery, which was approved by the last Labour Government, the Scottish Exhibition Centre—to which the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) referred, but which I suggest in my cynicism owed more than a little to the by-election timing — and the city of culture nomination for 1990, for which the Government will not give any additional funding to Glasgow. All those are very helpful, although they are not compensating for the job losses in manufacturing. They do not appear to be denting the unemployment total, which now stands at 77,000 in the city of Glasgow and 200,000 in Strathclyde. They are also not overcoming the essential problem of diminished household incomes. If there were more people in jobs in the west of Scotland, and more people in better jobs, that would help both the public and the private sectors because it would boost both the manufacturing and service sectors.

I think that we should become a little more self-interested in Scotland. Earlier this year I noted that Strathclyde regional council pension fund, which is very substantial, was investing in high-tech in Hemel Hempstead. I wrote to the chief executive and I understand that the trustees are now taking a more earnest attitude to these matters. It is a bit much that such pension fund development should not be happening on our own doorstep.

The report identifies housing estates and their lack of environment, maintenance and repair besides the problem of youth unemployment and the lack of social and recreational facilities. It is ironic that it spells out in such detail the amount of vacant land and derelict industrial buildings in the Glasgow area, when there are grants available for people who want to plant trees. It might be better to have a couple of forests in parts of Glasgow so as to obtain grants—the only trouble is that the grants are not available to the public sector.

I do not regard regional policy as being an act of charity; it is an act of Government responsibility. The Government are not exercising that responsibility. They should be worried about the extent to which there is overdevelopment of land in parts of southern England, which is detracting from environmental considerations. Reference has been made to the cost of that development, but what about the difficulty of getting into and out of London? There is even talk of another air terminal at Heathrow, but cattle are sometimes treated better than the travellers going backwards and forwards between central London and Heathrow. The problem is one of over-concentration in the south.

This Government's regional policy is pure farce. The Minister said that we were looking for fair shares. Let us see more evidence of that in the policies that the Government pursue, quite apart from the 17 volumes that have been shipped over the Channel to Brussels.

6.35 pm

Mr. D. E. Thomas (Meirionnydd Nant Conwy)

The Plaid Cymru and Scottish Nationalist parties are glad that we selected this day and this topic for debate. It has been a lively debate, not least because certain Conservative Members are becoming very excited about the prospect of having to face Plaid Cymru and the SNP at the coming general election. I shall not spend time responding to the hysterical speeches of the hon. Members for Moray (Mr. Pollock) and for Ynys Môn (Mr. Best), because I want to address the central issues of regional policy, which neither hon. Member did.

I want to follow the point made by the hon. Member for Glasgow, Maryhill (Mr. Craigen) about the regional policy being, not an act of charity, but an act of Government responsibility. If anything has been shown by this debate, it is the lack of Government responsibility for the regions and nations of the United Kingdom. The hon. Member for Galloway and Upper Nithsdale (Mr. Lang) cited the levels of public expenditure in Scotland per capita over and above the average for Great Britain, as though that were some great act of Government charity and benefit for Scotland. Yet the expenditure levels for social security, unemployment, housing and other social requirements, where they are higher, are so only because the need is greater. The whole point about regional policy is that its purpose is to correct imbalance rather than to provide charity for one region over another.

That relates to the specific point made by the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), that we should view EEC expenditure in Britain, not as being in place of United Kingdom Treasury expenditure, but as additional to it, because there is a direct link between the regional input of the EEC fund and the regions affected by it. I am sure that all Opposition Members support that view.

The hon. Member for Newport, East (Mr. Hughes) referred to the glossy brochure about Labour's programme — which is now available in the shops —which he described as imaginative. Some of us are interested in the small print of the imaginative Labour programme. We want to know how many of the 1 million jobs which the Labour party says it will create during its first two years in government will be created in the regions of England, Scotland and Wales.

My hon. Friend the Member for Caernarfon (Mr. Wigley) dealt specifically with the role of the development agencies. I wish to refer to the Mid-Wales Development Agency, whose role the Government have undermined by changing the boundaries of regional policy. It makes nonsense to have an agency with specific responsibility for an area when that area does not qualify for the whole range of regional aid.

The hon. Member for Delyn (Mr. Raffan), in a characteristic speech, quoted the experience of his constituency. The submission to the ERDF says, in reference to Clwyd: While the recent gains are encouraging, they have not, however, offset the major job losses of the period up to the 1980's. Furthermore job gains and job losses have not always balanced in individual areas within the profile area. That sums up the whole argument. The new jobs that have been created since 1979 do not in any way make up for the massive job losses in basic industries during that period.

We must consider the way in which infrastructure investment is an integral part of regional policy. That was stressed by the hon. Member for Maryhill and also by my hon. Friend the Member for Caernarfon, who called for additional road expenditure in Wales. Regional policy must be seen in the context of the British economy during the past few decades. There was a period when regional economists, and even Government Ministers, used to make speeches as though the so-called regional problems were improving, if not disappearing.

Since 1979 we have seen a return to the geography of the great depression of the 1930s, with the addition of a new generation of depressed areas to the map of the 1930s —the English regions of the west midlands, the northwest and the inner cities. That has been superimposed on the traditional division — the so-called north-south divide, which is also an east-west divide. It is a divide betwen nations, regions and classes in Britain. Whatever set of indicators we take, whether it is direct unemployment, level of income, educational opportunity, or the social indicators of health care, housing or perinatal mortality, or inward of outward migration, the league table is always the same. Northern Ireland is always at the top, with its bitter and tragic history, with Wales and the north and north-west of England vying with Scotland for second place. If there have been changes in the league table, as in some figures for Scotland, it is because other areas have declined more. Always the south-east of England is at the bottom of the inequality league. That always masks the inequalities of class, race and gender in the inner city areas of cities such as London.

Regional disparity has not simply been caused by declining major industries. The argument used to be that job losses were caused by the decline in coal, steel, textiles, shipbuilding and other old basic industries. In recent decades there has been an increasing over-dependence of the regions outside the south-east of England on branch plants that have no high skill functions, no significant research and development and a small job multiplier effect.

As my right hon. Friend the Member for Western Isles (Mr. Stewart) said, the real regional disparity is between the outer metropolitan golden triangle in the south-east, taking in Bristol, Southampton and Cambridge, and the rest of Britain. In this triangle are the corporate centres, the head offices of companies, the research and development units, the marketing and sales centres, the banking, financial and computer services and so on. About 50 per cent. of research and development in private company establishments and in public departments is located in this area.

There is also the secret regional policy in Britain, which is the £8.3 billion equipment budget for the Ministry of Defence. Defence procurement and aerospace investment are as much part of regional spending as the official regional development policy. Defence procurement and aerospace investment are located mainly in the south-west and south-east of England. Whereas the official regional policy will have been cut by half between 1980 and 1987, the secret regional policy has increased rapidly. We need to ensure that, in our study of regional policy, public spending on defence procurement, which is not usually regarded as regional policy, is so regarded.

The effects of the higher interest rates and exchange rates, which have been such a feature of Thatcherite policy, should also be regarded as regional policy. They affect manufacturing in regions outside the south-east more directly than they do in the prosperous regions.

The massive decline of the depressed regions is set out in the ERDF proposal document. We have already heard the figures for Wales, and I shall not repeat them, but we are talking about job losses in production and construction of 141,000. We must have a clear statement from the Minister as to the status of this document. As has been emphasised in the debate, the Government cannot have it both ways. Either, as the hon. Member for Glasgow, Cathcart (Mr. Maxton) said, this is an official document, written, or at least collated, by the Government, and therefore is in no sense merely a local government document, or it is not. Either the document is factually correct in terms of the profile that it presents of the relative prosperity or depression of the regions within Britain, or it is not. I hope that the Minister will respond specifically on that point.

The ERDF document shows clearly the need for an increasing link directly between European regional policy and the depressed regions within Britain. We have a regional policy specifically based either on an attempt to regenerate the regions or on encouraging the continuation of disparities. The big lie that the Government have been trying to maintain is that if one relies on market forces one does not have a regional policy. Reliance on market forces is a regional policy and one aimed at increasing disparities between the regions, classes and nations within the United Kingdom. That is why we must go for a regional policy based on equality. That can never be forthcoming from this Government, and that is why no Plaid Cymru or SNP Member wishes to see the return of this Government to power.

However, we are also critical of the Labour Opposition's approach. Mild reflationary policies for the British economy as a whole cannot be effective unless their regional impact is properly quantified. It is not enough to talk of hypothetical jobs in Britain as a whole. There must be a specific approach to the regional dimension of unemployment and economic inequality through enabling nations and regions themselves to plan their economic development. That is why it is the political will expressed in our parties that can most effectively regenerate the nations of Scotland and Wales.

6.45 pm

The Parliamentary Under-Secretary of State for Wales (Mr. Wyn Roberts)

At the heart of the motion that inspires the debate is the United Kingdom regional development programme for 1986–90. It is not the European regional development fund's report, as the motion implies, except in the sense that it will be published in due course by the Commission. I must tell the hon. Members for Glasgow, Cathcart (Mr. Maxton) and for Glasgow, Maryhill (Mr. Craigen) that the report was compiled by the Government in accordance with guidelines issued by the Commission, and it comprises information drawn from statutory bodies, including local authorities. My right hon. Friend the Prime Minister did not mislead the House in any way.

As my hon. Friend the Parliamentary Under-Secretary of State for Scotland explained, the document's purpose is simple. It is to provide a background for the United Kingdom's application for ERDF assistance. It is a factual account of the problems facing us, of what has been clone and of what needs to be done. As for the report being secret, as stated in one newspaper headline, I cannot see how the hon. Member for Dunfermline, East (Mr. Brown) could have said or implied that when he was given—

Mr. Gordon Brown (Dunfermline, East)

I never said that.

Mr. Roberts

I am happy to hear the hon. Gentleman say that, because he was given a copy on 1 October by my hon. Friend the Member for Pudsey (Mr. Shaw). I accept his denial. It was a case of some loose newspaper reporting. I did not attribute the word "secret" to the hon. Gentleman—it was in a press report.

I am sure that the right hon. Member for Glasgow. Hillhead (Mr. Jenkins) knows that there is a copy of this report in the House of Commons and House of Lords Libraries. Many local authorities that have contributed to it have, I understand, received relevant sections of it. As for being a "devastating indictment" of our record in office, as the Leader of the Opposition said in his hyperbolical cliché, that does not fit anything in the report, nor show anything but the right hon. Gentleman's ignorance of its purpose. If we look at the amount of European aid received in the past, we can put the value of the ERDF document into perspective. Since 1979, the ERDF commitment for Wales has totalled £309 million. That is 17 per cent. of the total ERDF commitment for the United Kingdom, and 70 per cent. of it, about £225 million, has gone on infrastructure.

Mr. Gordon Brown

Is not the use of such words about the prospects for reducing unemployment as "gloomy", "frighteningly bleak", "impossible" until fundamental problems are resolved a devastating indictment of the Government's policies for the unemployed? Did the Prime Minister say that the report had been compiled from local authorities? Given what the Minister has said tonight, was she not misleading the House?

Mr. Roberts

What my right hon. Friend the Prime Minister said is in Hansard for us all to read, and she was certainly not misleading the House. I have said that the report is a factual document and I have described its purpose.

Since 1979, the annual receipts of ERDF grant have reached record levels in Wales. This has helped development in a number of key sectors in the Welsh economy, and to date Welsh ERDF commitments for 1986 total £19.8 million, a massive 25 per cent. of the United Kingdom's total for the year to date. About £57 million of Welsh projects bids are also awaiting approval in Brussels. It is the securing of that sort of money that is the purpose of the report.

My hon. Friend the Member for Eastwood (Mr. Stewart) said that right hon. and hon. Members on the Opposition Benches appear to have forgotten that they submitted a similar document themselves to the EC in 1978. I do not expect the right hon. Member for Islwyn (Mr. Kinnock) to remember it because he was not a member of the then Labour Government, but the hon. Member for Alyn and Deeside (Mr. Jones), who is absent from the Chamber at the moment, was a Minister at the Welsh Office at that time. That Government were supported by Plaid Cymru, and the House will recall that those were the days of the Lib-Lab pact.

Opposition Members would do well to remember their own document of 1978 before attacking the Government and the current draft of the report. The prospects outlined in the 1978 document were pretty bleak and I shall be kind and give only a flavour of it. One passage read: The structural weaknesses in local economies, arising mainly from their reliance on a narrow industrial base, can only be remedied over a long period of time. When referring specifically to Wales, it stated: Unemployment has remained persistently high, averaging about 11/2; times that of the United Kingdom as a whole. Activity rates are low, particularly for women". This picture of the north-east of Wales—the area of the hon. Member for Alyn and Deeside—is as gloomy as any of his speeches. It is as follows: Unemployment over recent years has increased substantially". The Labour Government's report went on to talk of uncertainty about the future of the area with its dependence on a narrow manufacturing base centred on the steel, textile and aircraft industries. That was described by my hon. Friend the Member for Delyn (Mr. Raffan). Have Opposition Members forgotten that report and all its gloomy forecasts? What a contrast there is between what the 1978 document said about the north-east of Wales and what is said in our document in 1986. Our report states: Job gains at new manufacturing plants since 1981 have more than offset job opportunities lost as a result of plant closures during the same period. I can tell Opposition Members that the 1978 report merits further study on their part.

The nub of the debate is regional policy, and the Government's tremendous achievements are recorded in the report. I must tell the hon. Members for Caernarfon (Mr. Wigley), for Maryhill and for Meirionydd Nant Conwy (Mr. Thomas) the facts about Wales. I hope that they find them dynamic enough for their taste. Since April 1979, some £657 million in regional development grants has been provided and £271 million in selective assistance has been offered in Wales. Since the introduction of the new regional policy regime in November 1984, 1,242 projects have been approved for regional development grants. This represents a total investment of £260 million with the prospect of 19,000 jobs. As for selective assistance, offers have been made and accepted for 166 projects, leading to a total investment of £218 million with the prospect of 6,000 new jobs and the safeguarding of 3,500 others.

Mr. Wigley

rose—

Mr. Roberts

Since 1979, we have spent over £700 million on road construction in Wales—this issue was raised by the hon. Member for Caernarfon—to provide 22 miles of motorway and 84 miles of trunk roads. I must answer what has been said in the debate in these final 10 minutes.

Mr. Wigley

rose—

Mr. Roberts

No. The hon. Gentleman should be interested in this part of my speech because he made great play of how much money was or was not spent on roads in Wales. I am answering a point that he made in his speech. I can tell him that 40 miles of trunk road are currently under improvement at an estimated cost of £270 million.

Since May 1979, the Welsh Development Agency has spent £296 million creating over 6 million sq ft of factory space and £77 million on reclaiming 7,700 acres of derelict land. Since 1979, Mid-Wales Development has spent £45 million on factories and on other services to bring new jobs to central Wales. Since 1979, we have approved £122 million in urban programme schemes, helping to safeguard and create about 20,000 jobs. Since April 1982, nearly £24 million in urban development grant has brought about a total investment of £139 million, safeguarding 4,300 permanent jobs and creating 2,200 others during construction.

Mr. Wigley

Will the Minister give way now?

Mr. Roberts

Since 1979 the Wales tourist board has helped create 2,600 jobs with £17 million in assistance towards 600 projects, bringing forward about £65 million in total investment. In the present year, the Welsh water authority — the authority was mentioned by the hon. Member for Caernarfon—is planning to spend about £60 million in improving water and sewerage services. In two years' time this will rise to £73 million. Before the end of 1987, we hope to start construction on 10 further major road schemes, providing a further 25 miles of new roads at an estimated cost of £115 million.

Mr. Wigley

rose—

Mr. Roberts

I have not finished yet. Between January 1988 and December 1990 we are planning to make a start on a further 26 schemes that will provide 60 miles of trunk road and motorway improvements at a cost of nearly £280 million. It is no wonder that Wales is so attractive to foreign investors. It is no wonder that since November 1984 WINvest has received 83 overseas projects promising a total of over 4,200 new jobs and safeguarding 2,800 others.

Social investment, too, has been on a massive scale. Again, this was mentioned by the hon. Member for Caernarfon. Since 1979, £367 million has been spent on hospital and community health capital projects. Capital spending on housing is 30 per cent. up on last year. Private sector housing starts are at their highest point since 1979. We are working on major new partnership initiatives to bring forward housing schemes involving local authorities, housing associations and the private sector. We are looking to the valleys initiative, coupled with extensive road projects, to open up the valley areas to trigger off a series of co-ordinated activities by the people who live there.

Mr. Wilson

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the original words stand part of the Question:—

The House divided: Ayes 163, Noes 247.

Division No. 296]	[7 pm
AYES
Adams, Allen (Paisley N)	Hardy, Peter
Alton, David	Harrison, Rt Hon Walter
Anderson, Donald	Hattersley, Rt Hon Roy
Archer, Rt Hon Peter	Heffer, Eric S.
Ashton, Joe	Holland, Stuart (Vauxhall)
Atkinson, N. (Tottenham)	Home Robertson, John
Bagier, Gordon A. T.	Howells, Geraint
Banks, Tony (Newham NW)	Hoyle, Douglas
Barnett, Guy	Hughes, Dr Mark (Durham)
Barron, Kevin	Hughes, Robert (Aberdeen N)
Beckett, Mrs Margaret	Hughes, Roy (Newport East)
Bell, Stuart	Hughes, Simon (Southwark)
Benn, Rt Hon Tony	Janner, Hon Greville
Bidwell, Sydney	Jenkins, Rt Hon Roy (Hillh'd)
Boothroyd, Miss Betty	John, Brynmor
Boyes, Roland	Jones, Barry (Alyn & Deeside)
Bray, Dr Jeremy	Kaufman, Rt Hon Gerald
Brown, Gordon (D'f'mline E)	Kennedy, Charles
Brown, N. (N'c'tle-u-Tyne E)	Kinnock, Rt Hon Neil
Brown, R. (N'c'tle-u-Tyne N)	Kirkwood, Archy
Brown, Ron (E'burgh, Leithj	Lamond, James
Buchan, Norman	Leadbitter, Ted
Caborn, Richard	Leighton, Ronald
Callaghan, Jim (Heyw'd & M)	Lewis, Ron (Carlisle)
Canavan, Dennis	Lewis, Terence (Worsley)
Carlile, Alexander (Montg'y)	Livsey, Richard
Cartwright, John	Lloyd, Tony (Stretford)
Clark, Dr David (S Shields)	Lofthouse, Geoffrey
Clay, Robert	Loyden, Edward
Clwyd, Mrs Ann	McCartney, Hugh
Coleman, Donald	McGuire, Michael
Cook, Frank (Stockton North)	McKay, Allen (Penistone)
Corbett, Robin	McKelvey, William
Corbyn, Jeremy	MacKenzie, Rt Hon Gregor
Cox, Thomas (Tooting)	Maclennan, Robert
Craigen, J. M.	McNamara, Kevin
Crowther, Stan	McTaggart, Robert
Cunliffe, Lawrence	McWilliam, John
Dalyell, Tarn	Madden, Max
Davies, Rt Hon Denzil (L'lli)	Marek, Dr John
Deakins, Eric	Marshall, David (Shettleston)
Dewar, Donald	Martin, Michael
Dixon, Donald	Maxton, John
Dobson, Frank	Maynard, Miss Joan
Dormand, Jack	Meacher, Michael
Douglas, Dick	Michie, William
Dubs, Alfred	Mikardo, Ian
Dunwoody, Hon Mrs G.	Millan, Rt Hon Bruce
Eadie, Alex	Miller, Dr M. S. (E Kilbride)
Eastham, Ken	Morris, Rt Hon A. (W'shawe)
Edwards, Bob (W'h'mpt'n SE)	Nellist, David
Field, Frank (Birkenhead)	Oakes, Rt Hon Gordon
Fields, T. (L'pool Broad Gn)	O'Brien, William
Fisher, Mark	Orme, Rt Hon Stanley
Flannery, Martin	Owen, Rt Hon Dr David
Foot, Rt Hon Michael	Park, George
Foulkes, George	Parry, Robert
Freeson, Rt Hon Reginald	Patchett, Terry
Garrett, W. E.	Pendry, Tom
George, Bruce	Pike, Peter
Golding, Mrs Llin	Powell, Raymond (Ogmore)
Gourlay, Harry	Prescott, John
Hamilton, James (M'well N)	Randall, Stuart
Hamilton, W. W. (Fife Central)	Roberts, Allan (Bootle)

Roberts, Ernest (Hackney N)	Stewart, Rt Hon D. (W Isles)
Robertson, George	Strang, Gavin
Rogers, Allan	Thomas, Dafydd (Merioneth)
Rooker, J. W.	Thomas, Dr R. (Carmarthen)
Ross, Ernest (Dundee W)	Thorne, Stan (Preston)
Ross, Stephen (Isle of Wight)	Tinn, James
Rowlands, Ted	Wainwright, R.
Sheldon, Rt Hon R.	Warden, Gareth (Gower)
Shields, Mrs Elizabeth	Wareing, Robert
Shore, Rt Hon Peter	Welsh, Michael
Short, Ms Clare (Ladywood)	White, James
Short, Mrs (W'hampt'n NE)	Williams, Rt Hon A.
Silkin, Rt Hon J.	Winnick, David
Skinner, Dennis	Woodall, Alec
Smith, C.(lsl'ton S & F'bury)	Young, David (Bolton SE)
Smith, Cyril (Rochdale)
Snape, Peter	Tellers for the Ayes:
Soley, Clive	Mr. Gordon Wilson and
Spearing, Nigel	Mr. Dafydd Wigley.
Steel, Rt Hon David
NOES
Adley, Robert	Dover, Den
Aitken, Jonathan	du Cann, Rt Hon Sir Edward
Alexander, Richard	Dunn, Robert
Amess, David	Dykes, Hugh
Ancram, Michael	Edwards, Rt Hon N. (P'broke)
Arnold, Tom	Eggar, Tim
Ashby, David	Emery, Sir Peter
Aspinwall, Jack	Eyre, Sir Reginald
Atkins, Rt Hon Sir H.	Farr, Sir John
Baker, Rt Hon K. (Mole Vall'y)	Favell, Anthony
Baker, Nicholas (Dorset N)	Fenner, Mrs Peggy
Baldry, Tony	Forman, Nigel
Banks, Robert (Harrogate)	Forsyth, Michael (Stirling)
Bellingham, Henry	Forth, Eric
Bendall, Vivian	Fowler, Rt Hon Norman
Best, Keith	Fox, Sir Marcus
Biffen, Rt Hon John	Fraser, Peter (Angus East)
Biggs-Davison, Sir John	Freeman, Roger
Blackburn, John	Fry, Peter
Blaker, Rt Hon Sir Peter	Gale, Roger
Bonsor, Sir Nicholas	Galley, Roy
Boscawen, Hon Robert	Gardiner, George (Reigate)
Bottomley, Peter	Garel-Jones, Tristan
Bottomley, Mrs Virginia	Gilmour, Rt Hon Sir Ian
Bowden, A. (Brighton K'to'n)	Glyn, Dr Alan
Bowden, Gerald (Dulwich)	Goodhart, Sir Philip
Braine, Rt Hon Sir Bernard	Gorst, John
Brandon-Bravo, Martin	Gow, Ian
Bright, Graham	Gower, Sir Raymond
Brinton, Tim	Grant, Sir Anthony
Brittan, Rt Hon Leon	Greenway, Harry
Brooke, Hon Peter	Gregory, Conal
Browne, John	Griffiths, Peter (Portsm'th N)
Bruinvels, Peter	Grist, Ian
Buck, Sir Antony	Ground, Patrick
Budgen, Nick	Hamilton, Hon A. (Epsom)
Butterfill, John	Hamilton, Neil (Tatton)
Carlisle, Kenneth (Lincoln)	Hannam, John
Carlisle, Rt Hon M, (W'ton S)	Harvey, Robert
Cash, William	Haselhurst, Alan
Channon, Rt Hon Paul	Havers, Rt Hon Sir Michael
Chapman, Sydney	Hawkins, Sir Paul (N'folk SW)
Chope, Christopher	Hawksley, Warren
Clark, Dr Michael (Rochford)	Hayes, J.
Clark, Sir W. (Croydon S)	Hayhoe, Rt Hon Barney
Clegg, Sir Walter	Hayward, Robert
Cockeram, Eric	Heathcoat-Amory, David
Colvin, Michael	Heddle, John
Conway, Derek	Heseltine, Rt Hon Michael
Coombs, Simon	Hickmet, Richard
Cope, John	Higgins, Rt Hon Terence L.
Couchman, James	Hill, James
Cranborne, Viscount	Hind, Kenneth
Crouch, David	Hirst, Michael
Currie, Mrs Edwina	Hogg, Hon Douglas (Gr'th'm)
Dickens, Geoffrey	Holland, Sir Philip (Gedling)
Dorrell, Stephen	Holt, Richard
Douglas-Hamilton, Lord J.	Howard, Michael

Howarth, Alan (Stratf'd-on-A)	Marlow, Antony
Howarth, Gerald (Cannock)	Marshall, Michael (Arundel)
Howell, Rt Hon D. (G'ldford)	Mates, Michael
Howell, Ralph (Norfolk, N)	Mather, Carol
Hubbard-Miles, Peter	Mawhinney, Dr Brian
Hunt, David (Wirral W)	Maxwell-Hyslop, Robin
Hunt, John (Ravensbourne)	Mayhew, Sir Patrick
Hunter, Andrew	Mellor, David
Jenkin, Rt Hon Patrick	Merchant, Piers
Jessel, Toby	Meyer, Sir Anthony
Johnson Smith, Sir Geoffrey	Mills, Iain (Meriden)
Jones, Gwilym (Cardiff N)	Mills, Sir Peter (West Devon)
Jones, Robert (Herts W)	Miscampbell, Norman
Kellett-Bowman, Mrs Elaine	Mitchell, David (Hants NW)
Kershaw, Sir Anthony	Monro, Sir Hector
Key, Robert	Montgomery, Sir Fergus
King, Roger (B'ham N'field)	Moore, Rt Hon John
Knight, Greg (Derby N)	Morris, M. (N'hampton S)
Knight, Dame Jill (Edgbaston)	Morrison, Hon C. (Devizes)
Knox, David	Mudd, David
Lamont, Rt Hon Norman	Murphy, Christopher
Lang, Ian	Neubert, Michael
Latham, Michael	Newton, Tony
Lawler, Geoffrey	Nicholls, Patrick
Lawrence, Ivan	Normanton, Tom
Lee, John (Pendle)	Norris, Steven
Leigh, Edward (Gainsbor'gh)	Onslow, Cranley
Lennox-Boyd, Hon Mark	Oppenheim, Phillip
Lester, Jim	Osborn, Sir John
Lewis, Sir Kenneth (Stamf'd)	Ottaway, Richard
Lightbown, David	Page, Sir John (Harrow W)
Lilley, Peter	Parkinson, Rt Hon Cecil
Lloyd, Sir Ian (Havant)	Patten, Christopher (Bath)
Lloyd, Peter (Fareham)	Pattie, Geoffrey
Lyell, Nicholas	Pawsey, James
McCrindle, Robert	Percival, Rt Hon Sir Ian
Macfarlane, Neil	Pollock, Alexander
MacGregor, Rt Hon John	Porter, Barry
MacKay, Andrew (Berkshire)	Portillo, Michael
Maclean, David John	Powell, William (Corby)
McLoughlin, Patrick	Powley, John
McNair-Wilson, M. (N'bury)	Price, Sir David
McQuarrie, Albert	Proctor, K. Harvey
Madel, David	Raffan, Keith
Major, John	Raison, Rt Hon Timothy
Malins, Humfrey	Rathbone, Tim
Malone, Gerald	Rees, Rt Hon Peter (Dover)
Maples, John	Renton, Tim

Rhys Williams, Sir Brandon	Taylor, John (Solihull)
Ridley, Rt Hon Nicholas	Thomas, Rt Hon Peter
Ridsdale, Sir Julian	Thompson, Donald (Calder V)
Rifkind, Rt Hon Malcolm	Thompson, Patrick (N'ich N)
Rippon, Rt Hon Geoffrey	Thorne, Neil (llford S)
Roberts, Wyn (Conwy)	Twinn, Dr Ian
Robinson, Mark (N'port W)	Waddington, David
Roe, Mrs Marion	Wakeham, Rt Hon John
Rost, Peter	Walden, George
Rowe, Andrew	Wall, Sir Patrick
Ryder, Richard	Watts, John
Sackville, Hon Thomas	Wells, Bowen (Hertford)
Sainsbury, Hon Timothy	Wells, Sir John (Maidstone)
St. John-Stevas, Rt Hon N.	Whitfield, John
Shaw, Giles (Pudsey)	Whitney, Raymond
Shersby, Michael	Wiggin, Jerry
Skeet, Sir Trevor	Wilkinson, John
Smith, Sir Dudley (Warwick)	Winterton, Mrs Ann
Speller, Tony	Winterton, Nicholas
Spencer, Derek	Young, Sir George (Acton)
Squire, Robin
Stanbrook, Ivor	Tellers for the Noes:
Stewart, Allan (Eastwood)	Mr. Tony Durant and
Tapsell, Sir Peter	Mr. Francis Maude.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 33 (Questions on amendments) and agreed to.

Mr. Speaker

forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House recognises the efforts and achievements of Her Majesty's Government in stimulating the economies of Scotland and Wales; welcomes the submission to the European Commission of the United Kingdom Regional Development Programme for 1986–90 as the basis for maximising European Regional Development Fund assistance to the United Kingdom; notes the references in that document to the significant steps being taken by the Government to replace jobs lost in the assisted areas and to strengthen the infrastructure of such areas; and endorses the Government's determination to tackle the problems of all parts of the United Kingdom by means of sustained and effective economic and regional policies.