Welsh Economy

HC Deb 20 December 1989 vol 164 cc530-50 3.29 am

Mr. Nicholas Bennett (Pembroke)

May I say what a pleasure it is to have you, Madam Deputy Speaker, in the Chair, albeit at 3.29 am?

I am reminded of a fairly recent political event in the United States that appeared on C Span, the channel that covers Congress. After the session had finished, a member carried on speaking to the empty house. He berated his opponents and asked why there was no reply from them. Tip O'Neill, the Speaker of the House of Representatives, was so enraged that he demanded that the cameras should pan the empty chamber to show that the member was speaking to himself. Four hon. Members are present to debate the economy of Wales.

I welcomed the chance to debate the past 10 years because the Government have an excellent story to tell. Let us remember the situation in 1979. The coal, iron and steel and tinplate industries in Wales were heavily dependent on Government subsidy and were all chronically inefficent. The steel strike in 1980 led to a marked and dramatic reduction in employees in the industry. Within a short time, Llanwern, with half the labour force, stopped making a loss and doubled its production.

As a result of the Scargill strike of 1984—85, there was a dramatic reduction in the number of pits in Wales. However, they were not quite as dramatic as the reductions made under the right hon. Member for Chesterfield (Mr. Benn). The coal and steel industries in Wales have emerged from the recession fitter, leaner and profitable, and now produce at a price that the consumer is prepared to pay.

We have seen an end to one of the problems that has beset Wales over the past 100 years—dependence on two or three basic industries, which meant that in the past it was very prone to structural unemployment.

Those days have passed, and now the Welsh economy is broadly based. It has diversified into many industries and is confident and strong. It will be able to face up to whatever is thrown at it in the future. Although we have experienced much hardship in Wales over the past 10 years, we have passed the worst by a long way and we are seeing considerable improvements throughout its economy.

We shall hear from the hon. Member for Torfaen (Mr. Murphy), whom I am pleased to describe as a friend outside the House, the usual Labour party gloom-and-doom speech about everything that is wrong with the economy. Before he speaks, it is worth remembering what some of his predecessors on the Labour Front Bench have said. The hon. Member for Wrexham (Dr Marek) said: The Government have massaged the figures. True unemployment is well over 4 million and may be approaching 5 million."—[0fficial Report, 28 February 1984; Vol. 55, c. 165.] The then hon. Member for Carmarthen, who spoke for the Labour party on Welsh matters, said: registered unemployment is expected to stay at 3 million well into the last quarter of this decade, the pace of growth for this year falls to just over half of that during the previous year." —[Official Report, 3 March 1986; Vol. 93, c. 102.] In fact, the pace of growth increased that year and in the succeeding year.

Having not learnt anything from that wrong prediction in 1986, the hon. Member for Alyn and Deeside said: There is no doubt that the Government have been massaging the unemployment figures downwards over successive months."—[Official Report, 2 March 1987; Vol. III, c. 612.] When summing up the Welsh day debate, the hon. Member for Newport, East (Mr. Hughes), quoting the hon. Member for Dunfermline, East (Mr. Brown), said: The Goverment were clearly reconciled to the fact that mass unemployment in Wales would continue for years."—[Official Report, 2 March 1987; Vol. III, c. 673.] We know exactly what happened to unemployment in Wales. As those hon. Members were speaking, it was falling, and it has continued to do so for 42 consecutive months. The current figure is 6.9 per cent. of the working population in Wales—the lowest level since July 1980.

There has been a considerable increase in the number of people employed in the Welsh economy. There has also been a larger increase in Wales than anywhere else in the United Kingdom in the number of people who have "got on their bikes", to quote my right hon. Friend the Member for Chingford (Mr. Tebbit) and become self-employed. Those people are responsible for the increase in investment and business in Wales.

When I was elected in 1987, unemployment in my constituency was 7,381. A year later, it had fallen to 6,232. When 1 spoke in the Welsh day debate in the House at the beginning of this year, the unemployment figure for my constituency was 4,899. The latest figures—issued only last week by the Welsh Office—show that unemployment in my constituency has fallen to 3,366. It has more than halved in the two and a half years that I have had the honour to represent the constituency. Although I can claim no credit for that fall, I am proud to have supported the Government, who have encouraged that fall and enabled it to happen. Although the figures are still far too high, I recognise that the Government have the right policies to ensure that unemployment continues to fall over succeeding years.

The hon. Member for Alyn and Deeside, leading for the Opposition, said in 1984: Well before the end of the century I should like to see a reconstituted economy in Wales. I should like to see Wales regenerate and modernise her industries, diversify her economic base, and become successful and banish large scale unemployment. I am sure that all hon. Members would say, "Hear, hear," to that. That is this Government's policy. As soon as Labour Members face a difficult challenge—pit closures or steel closures—they forget their grand words.

The hon. Member for Alyn and Deeside, in that same debate, said: The closure of any pit in Wales, certainly in the south-east Wales coalfield, will wipe out the gains of new industry in the south Wales economy."—[Official Report, 28 February 1984; vol. 55, c. 168–9.] In 1987, the hon. Member for Newport, East quoted the Western Mail, and said: Wales' economic future continues to look as bleak as a derelict coal mine or an abandoned steelworks."—[Official Report, 2 March 1987; vol. 111, c. 672.] The hon. Member for Alyn and Deeside, earlier this year in the Welsh day debate, when challenged about his policy, said: On these Benches we say no to a free market."—[Official Report 1 March 1989; Vol. 148; c.309] It is no use the hon. Member for Alyn and Deeside saying that he wants a reconstituted economy and, when the difficult decisions have to be taken and pits have to be closed and when new industries have to be encouraged, turn his face against the free market. It is the free market which has helped Wales over the past few years to revitalise.

The free market has been assisted by the Government. A former Member for Pembroke and Secretary of State for Wales, now Lord Crickhowell, started the process in 1979, and it has been continued and expanded by my right hon. Friend the Secretary of State for Wales.

The figures for regional assistance in 1987 show a promise of 28,000 new jobs. In 1988, the figure was 32,200 new jobs. To October this year, the figure had increased by 15,200 new jobs. In 1979–80 to 1989–90, the urban programme has meant more than £203.5 million for Wales, and that has safegurded and created 37,000 jobs. Urban development grants since 1982 have led to £37 million of grant, and investment of £173 million.

The Government have been active in encouraging existing and new businesses to take advantage of the opportunites created by the transformed Welsh economy. In 1988–89, the level of assistance to Welsh industry was increased by 39 per cent.—an extra £54 million –over the prevous plans, taking the total figure to £194 million, and a further increase to £212 million has been taking place during the present financial year.

The Welsh Development Agency has been part of the focus for the Government's programme and for ensuring that their policies are spearheaded. It was created in 1966, but only under this Government and in the past few years the WDA has taken on a major role in transforming the economy of Wales. It has adopted new efficient business principles for its own operation and it has been out into the marketplace to attract new business.

In 1987–88, nearly 2.5 million sq ft of floor space was let. That is equivalent to 7,000 new jobs. In 1988–89, there were 2.4 million sq ft of lettings, leading to more than 7,000 jobs and the budget for this year is another £130 million, which is 15 per cent. more than even last year. Total WDA investment in factory building in 1988–89 was £20 million, and it is expected to be £66 million over the three years of the programme. That is even more than my right hon. Friend the Secretary of State forecast when he set up the programme.

The WDA has been at the forefront of ensuring that the Welsh economy should be improved. It is encouraging that at its head is a dynamic young chairman, Dr. Gwyn Jones, who is leading the way and has been out to get new business in other parts of the United Kingdom and, even more important, from abroad. In his chairman's statement in the annual report for this year, he said: The Wales for the 1990s will be a dynamic country. `Dynamism' is an unusual attribute to apply to a country, but the current level of activity in the Welsh economy makes it particularly apt. How different that is from what the chairman of the WDA said in the final year of the Labour Government: In a year in which the United Kingdom continued to be beset by economic problems, the work of the WDA, as a body concerned with stimulating industrial expansion, was inevitably constrained. That was said in 1979, the last year in which the Labour party was in power. Now we see what has been achieved by the WDA.

The present chairman's statement continues: The success that Wales has achieved in continuing to attract inward investment is quite remarkable, and WINvest has played its full part in this. We consistently gain some 20 per cent. of all the inward investment that comes to the UK whilst we have only 5 per cent. of the population. Such names as Ford with its £275 million investment—a record for the automotive industry in the UK". It goes on to refer to Bluebird Toys, Star Micronics, the financial services initiative, NPI and Rothschilds.

Any Government would be proud of that record of achievement, but the work does not end there. WINvest is continuing under its new name to go out and look for new investment. In the current year, 98 projects were announced, with a capital investment of £1.12 billion and the possibility of nearly 14,000 more jobs.

Why is Wales attracting all that investment? We have a Government who believe in business. President Coolidge said: The business of America is business", and the business of this Government is to get business. It is certainly not to run it, and they have been determined not to do that. They have been creating the climate of opportunity which has enabled business to grow and expand in Wales.

As members of the Select Committee on Welsh Affairs, the hon. Member for Torfaen and I remember a quotation from our first report which was published in 1988£89. In its report on inward investment into Wales and its interaction with regional EEC policies issued in February of this year, the Select Committee said: We were told they concentrated upon 'the entire business package"'— talking of overseas companies— encompassing the size and growth of the UK market and the ease of access to Europe from Britain, political and economic stability, the large size and rapid growth of the UK market, labour issues, (high productivity, relatively low costs, good industrial relations), a favourable tax regime, financial incentives, the welcome by government and the regions, the living environment and English as 'the international business language'. Many of those qualifications would not be available under a Labour Government. We certainly would not have a favourable tax regime, good industrial relations, or economic stability. As a result of the climate which the Government have created, inward investment has increased at a tremendous rate. In 1988, Wales attracted 22 per cent. of all jobs in the United Kingdom which came from foreign investment. About 250 foreign-owned companies in Wales have created about 48,000 jobs.

It is rather ironic that, when the country has been investing heavily abroad to the benefit of our balance of payments, some people are opposed to foreign investment doing the same in this country and creating work. We live in an interdependent world economy, so how much better that each of us should have a stake in each other's economies and so make the prospect of war less likely. It is time that some of the little Britons who have argued in the past against foreign investment changed their policy. Since 1983, about £2 billion of inward investment has been secured—and at a steadily increasing rate.

Wales is now a first-class location for the financial as well as the industrial sector. The TSB Trust is embarking on a multi-million pound office development in Newport, and 500 jobs will come as National Provident Institution enlarges its Cardiff operation.

As I have said, this change could only have been brought about by a Government who believe in business and who have created the right climate. Part of the Government's role in the past 10 years has been to ensure that the infrastructure—or as we normal people tend to call it, the roads and railways—has been improved to allow better communications. In Wales, the Government have undertaken 47 major motorway and trunk road schemes; 140 miles of roads have been provided.

Spending on new capital schemes of structural renewal and maintenance has exceeded £1 billion since 1979. Sixteen bypasses have been completed; four are in place and 25 more are programmed for the 1990s; and 16 miles of road are presently under construction, costing £270 million.

Perhaps the most remarkable development at the moment is the Conwy tunnel and the associated works on the A55. I know that my hon. Friend the Minister of State is keen on that. I recently went to speak in Bangor and drove there at 4 o'clock in the morning. I have to admit that I was astonished to see such a road cutting right across north Wales. Indeed, I had to cut my estimate of my arrival time by about 45 minutes as a result of travelling for the first time on the modernised A55. I only hope that my hon. Friend the Minister will bear in mind the pleas to uprate the A477 that I made to him in an Adjournment debate earlier in the year. We should like a similar road to go to west Wales.

Not only have we seen an improvement in the infrastructure; we have also seen an improvement in our tax regime. When the Government came to power, we had punitive tax rates, which have now all been reduced. We have also seen a proactive role in those areas where both Government money and private money have been necessary.

Perhaps the best example of that has been the valleys programme—a programme for the people—which was launched by my right hon. Friend the Secretary of State for Wales in June 1988. Not only has my right hon. Friend launched the valleys programme, but we now have the north Wales initiative and exciting developments throughout Wales, such as the Cardiff bay scheme, the Newport barrage, and the Swansea marina. Wherever one goes in Wales, one sees a Wales that is growing, modernising and improving.

I am proud that this Government should have been the Government who got Wales moving at last towards the 21st century. Part of that achievement has been because the Government have also recognised that Governments can do only a limited amount and that it is important that we encourage business by creating the right climate. The Government themselves are not the right force to choose the winners. The Government are not capable of running business. Business is too important to be left to Governments. It should be run by business men. The Government's attitude under my right hon. Friend the Prime Minister has certainly paid off.

Before considering the future, I turn to two sectors of business that are of particular concern to my constituents. The first is agriculture. Representing as I do a rural constituency in west Wales, I am most concerned to see an improvement in the agricultural industry. I use the word "industry" deliberately because we often forget that we are talking about business men, people who have to make a profit and try to generate growth.

In the past few years, there has been a dramatic fall in farm incomes. There have been both major bankruptcies and smaller bankruptcies among family farms. I hope that the worst is over. It certainly looks as though it is in the dairy industry in west Wales.

I should be wrong not to mention my two major concerns for farmers in this debate on the economy. The first relates to interest rates. It is no use denying that interest rates hurt a lot. Indeed, as my right hon. Friend the Chancellor of the Exchequer said, "If they are not hurting, it isn't working." I only hope that we shall turn the corner very soon and be able to reduce interest rates, because I fear that, if we do not balance the economy properly, we shall end up with the economy in recession. We are all looking to my right hon. Friend to ensure that that fine tuning and balance is maintained.

The second issue is that of the green pound. Earlier this year, the green pound was moving towards parity, but marked gaps have now appeared. I hope that my right hon. Friend the Chancellor will take note of a recent letter from the president of the National Farmers Union, Simon Gourlay. There is a clear and pressing need to tackle the green pound gap during the next few months.

The other industry in my constituency, apart from light engineering, is tourism, in which also a major transformation has taken place. Until a dozen years ago, tourism in Wales was hidebound. The market had disappeared to Spain, Portugal and the Italian riviera. At last, there has been a major change in the industry. It has had to recognise that the days of the day tripper and the two weeks beside the seaside are over. Instead, there has been a massive growth in the second and third holiday market of two or three days. That is partly because of the increase in prosperity, but also as a result of the changing demands of clients as they wish to see more of their own country as well as touring abroad.

What do the tourists want? First—in parts of Wales this is very important—they want proper wet weather facilities. That is not something about which the tourist industry, until recently, has been concerned. It is no use providing third-rate tatty entertainment, because today's customer is used to high-quality entertainment and leisure facilities. Anyone who produces only third-rate facilities will soon go out of business. They want variety; they want, when visiting Wales, not to be told that there is only one attraction on offer. They want to see a range of attractions, covering not only good scenery and history but entertainment and other forms of leisure. They want to stay in good hotels.

I welcome the fact that in recent years it has been a deliberate policy of the Wales tourist board to improve the quality of the hotel accommodation. If we do not improve that quality, we will lose the customers. It is important, especially in my part of the world that relies so much on tourism, that we should be aware of the importace of providing value for money and good quality accommodation.

That is why I welcome the LEAD initiative of the Wales tourist board and the fact that Wales still has section 4 grants, unlike the remainder of the United Kingdom. As a result of an announcement earlier this year and in co-operation with the South Pembrokeshire district council, a £1 million project has begun in Tenby. The total value, with the £1 million from the Wales tourist board, will be £14 million. That is the sort of pump priming and local assistance of which I approve. It allows local authorities to put taxpayers' money where their mouths are, with private finance, and the Government to give a shove with a grant from the Wales tourist board.

It will be important to consider how we will tackle the problems that lie ahead. Governments can prime the pump and create the conditions, but at the end of the day it will be for business to make the decisions and to use its judgment.

The Government have done a tremendous amount for the people of Wales in ensuring that business has the right climate. We have deregulated in all sorts of spheres. We have taken Government off the backs of industry and business. We have reformed the trade unions so that there is a new air of realism. When members of the Welsh Select Committee went to Japan last year, we found that labour relations were placed high on the agenda as a good quality of the work force in Wales.

We have reduced inflation from its 28 per cent. level under the Labour Government. It is still far too high, but this Government put at the top of their agenda the priority of getting it down. We have increased competition; we have encouraged inward investment; we have reduced Government spending; we are paying off the national debt. We no longer have a public sector borrowing requirement, that we had for so many years. We are tackling inflation in a way that ensures that the economy continues to prosper without going into recession.

Business has its role to play. It must remember that it must produce at the right price and quality and produce the goods on time if it wants to stay in business and compete with the rest of the world.

I am optimistic that we are witnessing a revitalisation of the economy of Wales. We have a good story to tell over the past decade, and under this Government it will continue. However, I am worried about what would happen if the party of the hon. Member for Torfaen came to power.

The hon. Member is a moderate, reasonable and intelligent man. He must wince sometimes when he sees the contradictory promises that are made by his hon. Friends. He will have to answer four crucial questions if he is to have credibility. How do Labour plan to control inflation? How many taxpayers will lose out under Labour's tax plans? How much does Labour want to add to public spending and where will the money come from? How will Labour create an environment in which British business has the confidence to create wealth and jobs?

My constituents want to know the answer to those four crucial questions. The hon. Member for Torfaen will have to answer them is he is to have any chance of convincing the electorate at the next election. I fear that he will have a slim chance. Already we have seen massive contradictions from the Labour party. We have had the ring of honesty from the right hon. Member for Llanelli (Mr. Davies) about credit controls. When asked about them by the Press Association in June 1989, he said: There is no way you can control credit except by controlling the price of credit and the price of credit is the Bank Rate. He described the Labour party's policy as "rubbish".

On the question of home owners and mortgages, the hon. Member for Dagenham (Mr. Gould)—who has been moved to greener pastures where he is less likely to put his foot in it—has argued for mortgage controls which could affect young couples on the bottom of the mortgage ladder and couples who plan to trade up, by making it difficult for people to move on to their second home.

In "Meet the Challenge: Make the Change" the Labour party argued for several new taxes. The hon. Member for Torfaen could perhaps tell us a lttle more about them. Perhaps he could tell us about the new tax, which will probably be set at 9 per cent., on investment income in excess of £3,000, or £5,000 for pensioners.

The Labour party would force all new businesses to pay a new training tax, which will be set at 0.5 per cent. of all payroll costs. The tax bill of, for example, British Airways, would increase by £5 million, enough to employ another 200 staff.

The Labour party plan to abolish the national insurance upper earnings limit, which would add another 9 per cent. to the marginal rates of all those earning £16,900 or more. It plans to phase out the married man's tax allowance, which is currently worth £1,590 a year. It also plans to increase the top rate of income tax. It has promised that it will be only 50 per cent. We cannot believe that when we listen to the promises of the Labour party in every Budget debate since 1987. It constantly advocates strike action in support of pay rises yet votes against reducing the workers' tax bill at every opportunity and in every Budget. That is a strange contradiction. In spite of all its new glossy policies and packaging, it still has not learned that it must cost its programme to ensure that it obtains value for money and that the taxpayer is not penally taxed out of existence.

I finish with a quotation from the hon. Member for Brent, East (Mr. Livingstone). It sums up what many Conservative Members think about the Labour party's economic policies and what they might do for Wales. He said in The Guardian of 2 October 1989: We have to say now what we are going to spend and where the money is going to come from. That is the challenge facing the hon. Member for Torfaen. If he wants to convince the people of Wales that he would run the economy better than the Government, he had better answer those questions.

3.58 am

Mr. Dafydd Wigley (Caernarfon)

Having a debate on this important subject at 4 am hardly does justice to the subject or to Wales. The fact that only four hon. Members are present out of the 38 who represent Wales is a reflection on the time rather than a lack of interest in the subject. This underlines the need for more prime time for important Welsh debates. Is this an adequate way for Wales to be governed?

I congratulate the hon. Member for Pembroke (Mr. Bennett) on securing this debate, although I should have congratulated him more warmly if he had secured it at a sensible time, but I know that that is well outside his control.

It will not be any surprise to the hon. Gentleman to learn that I disagree with his highly subjective and selective analysis of the Welsh economy. I am tempted to suggest that his contribution tonight is the first draft of his election speech for the next general election. I suspect a hint of desperation in what he said tonight. He cannot fool all the people all the time and the people of Pembroke, in common with the rest of the Welsh people, will know that reality in Wales is more mixed than the hon. Gentleman suggested.

There are some areas where the signs are hopeful and suggest that things are going in the right direction. No one would play down those successes but, my goodness, we still have enormous problems to overcome. We must quantify those problems and develop an action programme to overcome them. The hon. Gentleman rightly paid tribute to the work that is done by the Welsh Development Agency. I realise that he was not in the House when his colleagues voted against its establishment. I am only glad that it still survives.

Those of us who try to describe the Welsh economy are in danger of being caught in a Catch 22. If we refer to the blacker aspects of our economy we are accused of talking Wales down—the last thing that we want to do. But if we ignore those blacker aspects, we are not addressing ourselves to the serious problems, nor are we setting the right agenda.

We welcome the successes, particularly the inward overseas investment from which Wales has done notably well. Unfortunately, not all Welsh areas have benefited as much as others, and I hope that the investment spread will be more even in the future.

We debate the Welsh economy against the background of massive structural changes. It is incredible to think that in 1925 250,000 people were employed in the coal mining industry—one in three of the working population. Now, fewer than 10,000 people are employed in coal mining. Any economy that has faced such change will inevitably have had difficulties. The question is whether we have succeeded in establishing in Wales a new, alternative economic and industrial base to face the next century, or whether we still have a great deal to do.

There is an enormous challenge. We should pitch our targets to compare with the most successful countries. We should not say that, because things were even worse a few years ago, they must be good now. The unemployment rate in Switzerland is 0.5 per cent., in Sweden it is 1.5 per cent., in Luxembourg it is 1.3 per cent. and in Norway it is 5 per cent. Those unemployment levels make us realise that we still have a long way to go. In the United Kingdom in the south-east unemployment is 2.1 per cent. in Berkshire, 2.2 per cent. in Buckinghamshire and 1.7 per cent. in West Sussex. We should pitch similar unemployment targets in Wales.

Unemployment in Wales is falling and that is welcome, but merely adjusting the base in which that number is calculated does not overcome the problem for the unemployed. Yet another base is now being used that can knock between 1 and 2 per cent. off the recorded number. I accept that any Government would want to dress up the figures as best they can, but that is not good enough.

The truth about unemployment in Wales is recorded in the December 1989 Employment Gazette. In my constituency, Pwllheli has the highest unemployment of any travel-to-work area in Wales at 14.3 per cent. In Aberdare unemployment is 13.4 per cent., in Holyhead it is 12.7 per cent., in Cardigan it is 11.4 per cent., in Bangor and Caernarfon it is 11 per cent., and in South Pembrokeshire it is 10.4 per cent. Those problems are scattered across Wales, not concentrated in one corner. In the north-west, the south-west and the old industrial valleys of the south-east we see the same problems of persistent, residual unemployment which is not going away. We have an awful lot of work to do if we are to overcome them.

I sympathise with the Minister at having to stay awake at this time of night. The time has surely come now, with some of the successes—which we welcome—to reconsider the way in which the assisted area map for Wales is drawn. The difference between the intermediate areas and the development areas has almost disappeared—8 per cent. for the intermediate areas and 8.9 per cent. for the development areas. Some development areas have lower unemployment rates than some intermediate ones. It is high time to look at that matter again.

The hon. Member for Pembroke (Mr. Bennett) painted a rosy picture of the position as it has developed in his home area. Looking through my pile of cuttings I find that it was only last year, in 1988, that the Western Mail carried a story entitled "Wales's jobless capital". It starts: Pembroke is the jobless capital of Wales. It continues: In that area of south Pembrokeshire District there is a total population of 1,637, of whom 524 are registered as out of work. I accept that those figures will have decreased since that report was drawn up. Nonetheless, there has been a serious problem in south Pembrokeshire and I am sure that the hon. Gentleman would not want to ignore or contradict that.

Not long ago I saw a report in which the EC pinpointed the decline, decay and neglect in Wales. The report drew out the fact that between May 1981 and 1987, more than 22,000 factory jobs had disappeared in south Wales and only 6,000 new ones had been created. We welcome the 6,000 new ones, but the loss of 22,000 has hit many communities hard. It was reported at the same time that 152 manufacturing firms had opened in south Wales, about which we hear a lot. However, at the same time 250 manufacturing firms closed. There is a credit side and there are successes, but set against those are the victims. People have suffered as a result of the Government's free-for-all economic policies which have hit some manufacturing companies particularly hard.

My former company, Hoover in Merthyr Tydfil, is an example of a company that has suffered. About 470 jobs were lost, according to a Financial Times report of only a couple of months ago. The total number working there now is less than 2,000 compared with 5,500 working there when I left in 1974. I realise that some of those jobs losses are due to automation but many are caused by the difficulty, in the present economic climate, for such companies to attack the marketplace. Interest rates have a critical effect on companies making manufactured goods such as washing machines.

Only a couple of months ago, there was a shock in Gwynedd, in the Minister's constituency, when it was announced that 100 jobs were to be lost in the Austin Taylor company which deals with telecommunications equipment. That meant that 100 out of the 450 work force in the Bangor area would lose jobs.

These are serious losses and we cannot paint a rosy picture of the Government's economic policy when that very policy leads to such a crisis. Only this October, the Liverpool Daily Post had a large headline, Gloominess infecting all of industry. It referred to the way in which the Confederation of British Industry was reacting to the then Chancellor's economic policies.

The CBI's report on quarterly trends in Wales makes bleak reading. We should counterbalance what the hon. Member for Pembroke said. I accept that there are many good points, but we should counterbalance them. The report starts: Business confidence has fallen … There has been a marked decline in total new orders and manufacturing output with further falls expected during the next four months… Investment intentions have weakened … Employment in Welsh manufacturing industry has fallen for the first time since October 1986 and a further decline is expected into the fourth quarter of 1989. Those are not Plaid Cymru comments: they are CBI comments. What is causing this? The Government should deal with the problem.

Only 5 per cent. of the companies surveyed were more optimistic than four months before; 44 per cent. were less optimistic. So there is a serious decline in the confidence of industry, and it is hitting Welsh industry just as it is hitting the prospects of other areas.

Between 1980 and 1987 total production in Wales increased by 2.1 per cent., but total production in the UK generally increased by 12.6 per cent. Although we started from a lower base, our success has been less than that of other parts of the country. That shows how far we have to go.

The most recent issue of "Welsh Economic Review" contains disturbing information about the formation of new firms. Three of the eight Welsh counties are in the bottom sector—between 54 and 63 in the ranking throughout the UK. Regrettably, they include Dyfed, the county of the hon. Member for Pembroke, and my county of Gwynedd. I am sure that we should both like our counties to be at the top of the league table, not the bottom. That, too, underlines how far we have to go. Much more work needs to be done.

What effect has this had on the people? Gross domestic product in Wales per head of population was 86.9 per cent. of that of the rest of the country in 1977. Ten years later, it had fallen to 82.4 per cent. As a result, personal disposable income fell from 94 per cent. of the United Kingdom average in 1977, to 90.6 per cent. in 1985, to 87.4 per cent. in 1986, and to 86.2 per cent. in 1987—a persistent decline. There may be reasons for that, but the success about which we heard from the hon. Member for Pembroke has not worked through to the spending power of the people of Wales.

As the hon. Member for Pembroke rightly said, tourism offers a substantial amount of new employment, but the problem in our areas is that so much of the work is seasonal. We need year-round work. There are ways of overcoming the problem, but immense injections of cash are needed to develop facilities that are attractive all year round. I welcome Butlin's announcement of a £20 million investment in my constituency to meet this challenge, but if tourism is to become the base of the economy, it will need tremendous investment. I sometimes wonder whether we can base our economy in some parts of Wales only on tourism. It has a part to play, but it must be alongside a strong manufacturing sector.

One problem in areas such as mine is housing. House prices in our part of Wales, as in other areas of the United Kingdom, have risen so far that it is extremely difficult for young people to buy houses. Available rental stock has declined—we discussed that earlier today in the Welsh Office—and that means that waiting lists for houses have increased incredibly. In Arfon borough the figure rose from 800 to 1,400 in two years, and I know that other areas have similar problems.

Agriculture, the base of the Welsh economy in so many areas, is going through a time of considerable uncertainty and insecurity. If interest rates remain high, the effect on rural areas will be serious. The Welsh Development Agency must act, not just to bring work to the M4 corridor in the south and to the north-east of Wales—to areas of potential growth such as Clywd and Deeside—but to areas beyond such as Pembrokeshire and Gwynedd. The WDA, for understandable reasons, has not yet succeeded in doing enough in that respect.

An effort must also be made to reduce high interest rates, which are caning not only individual families with mortgages but small businesses, which will not invest further until rates are at a more acceptable level. Many projects are simply not viable at present rates of interest.

If a successful economy is to be built up in the 1990s and into the next millennium, an attempt must be made to improve the skills of the young in Wales, and that poses a challenge to the schools and colleges. The infrastructure must also be improved. As hon. Members have said, the A55 will have a major effect on north Wales. We want to ensure that it is a positive effect, enabling the creation of new manufacturing and employment opportunities, and that it does not simply serve people who want to travel across the border to buy goods, at the expense of local shopkeepers.

The railway to south Wales should also be improved, and the line from Crewe to Holyhead electrified. That would help to secure the basis of Wales's infrastructure. Down the years, there has also been the challenge of encouraging more enterprise among the young people of Wales, as the figures that I quoted earlier on the number of new firms being created amply testify.

The challenge of 1992 is also before us. If Wales is to meet that challenge, it must develop greater dynamics than it has at present. I hope that things are moving in the right direction. In Gwynedd and in many other parts of Wales, the proof of the pudding has yet to appear—and it must do soon if Wales is to be ready and fit in 1992 to meet the challenge of Europe. It is in that context that we must take a balanced view of the Welsh economy—and against that background, build for the future.

4.16 am

Mr. Paul Murphy (Torfaen)

I echo the sentiments expressed by all hon. Members about the timing of this debate. Given that the responsibilities of Welsh Office Ministers and of shadow Cabinet spokesmen do not extend to the British economy as a whole, I shall not accept the challenge of the hon. Member for Pembroke (Mr. Bennett) to comment on the economy generally. However, I shall be happy to do so when the next general election is drawing much closer, and I shall repeat my performance of some months ago at Pembroke Dock, when I addressed much wider issues than those before the House today.

Much of what has been said by the hon. Members for Caernarfon (Mr. Wigley) and for Pembroke is welcome. If one removes the beginning and the end of the speech of the hon. Member for Pembroke, and then extracts much of what he said in the middle, I would find little with which to disagree. On inward investment, for example, all would agree that the inward investment made in the Principality over the past few years has been good for the areas concerned. Whenever the Welsh Grand Committee has investigated that aspect over the past year or so, its members have commented that Wales has done better than other regions in Britain. No one would be churlish enough to deny that that is the case.

Similarly, I accept the comments of the hon. Member for Pembroke about tourism. A considerable improvement must be made in the way tourism is developed in the Principality and elsewhere in Britain. On other matters, however, there is not so much agreement—although I concur with the hon. Member for Caernarfon that a balanced view must be taken of the Welsh economy, which must be set against a number of other factors.

We must remember also that there are major differences within the Principality. Wales cannot be considered as a single economic unit. There are major distinctions to be drawn between north and south Wales, between rural and urban areas, and between the tops of the valley areas and the valleys which border the M4. There are great pockets of unemployment and deprivation, which my right hon. and hon. Friends and I believe are not being tackled adequately by the Government.

Perhaps the most accurate of all the indicators is the view taken by the people of Wales themselves of the Government's economic record in the Principality. Over the past three or four years, the people of Wales have said, with overwhelming conviction, that Conservative government is not working. Their inability to deal with the Welsh economy lost the Conservatives a seat in Wales that they had held for a quarter of a century or more, and reduced the party to a rump in the Principality. The Conservatives' fortunes are worsening, not simply because of the national situation, but because of what the Welsh people think about the Welsh Conservative party and about the Conservative Government's performance in Wales.

I accept wholeheatedly that unemployment has fallen, but in my view we must look at the figures relating to people in work as well as those relating to the unemployed. In Wales today, 118,000 fewer people are employed than were employed a decade ago. That is a remarkable statistic, and the sort of statistic that the Welsh people consider when they judge the Government's record.

Unemployment in Wales is 45 per cent. higher than it was in 1979. It has fallen, yes, but it has fallen less than it has in Yorkshire and Humberside, the east midlands, the south-west, the west midlands, the south-east and East Anglia, and it is still the fourth highest in the regions of Britain. As the hon. Member for Caernarfon pointed out, there are pockets in Wales where unemployment is even worse, such as Pwllheli—perhaps one of the worst black spots in the country—Cardigan, Holyhead and, of course, South Pembrokeshire, as well as parts of my constituency.

The hon. Member for Pembroke (Mr. Bennett) mentioned self-employment. Wales has experienced the lowest increase in self-employment in Britain; since 1979 it has increased by 18 per cent., compared with 103 per cent. in the south-west of England. That is a pretty poor record. At the same time, there has been a considerable increase in the number of part-time workers, especially women. While some of those jobs are decently paid, many are poorly paid and provide little job security and unsatisfactory working conditions.

The coal industry had its problems all those years ago, and no one is suggesting a return to the worst aspects—the loss of life, and the other problems that men encountered when they worked in the pits. I come from a mining family and a mining constituency, but I am the first to acknowledge that I should prefer people to go into jobs that did not involve such risks. But in Gwent and in Monmouthshire—once a great coal-mining centre—not one pit remains, and this year we have seen the last of our pits at Oakdale, Marine colliery and Cwm Ebbw Vale. They have closed, with the loss of hundreds of jobs. Jobs in coal and steel were difficult, but they paid well and provided young men with good opportunities. Now, in many instances, they have been replaced by jobs which are poorly paid by comparison, as well as being part-time or temporary, often non-unionised and generally unwelcome to the people of Wales.

We must also remember that many of the unemployment figures have been fiddled. People put into training schemes have been taken off the unemployment registers, bringing the numbers down; but we in Wales know in our heart of hearts that people are still out of work, particularly young people. Investment in manufacturing industry has declined by some 56 per cent. since 1979, and Government assistance to Welsh industry has been cut by 51 per cent. since that year.

I was glad to hear the hon. Member for Pembroke refer in glowing terms to the Welsh Development Agency, and to its first-class chairman, whom I knew many years ago at ICL. He was right to say that a Labour Government set it up, although he qualified that later. It was the Welsh equivalent of the National Enterprise Board.

The Conservative Government were more than willing to let the Welsh Development Agency stay, but I believe that the high rents that it sometimes charges in parts of Wales ought to be changed because they make business men in south Wales and elsewhere suffer. The regional development grants have gone. Their automaticity has disappeared. Although I welcome the fact that selective grants remain, some companies are suffering because they relied on the regional development assistance that had existed for a long time.

I also believe that the Government have under-valued the work of local authorities, particularly district councils. I hope that the Minister will comment on their excellent work in industrial development.

In any analysis of the economy, we must consider what people are paid in Wales. The Welsh are at the botton of the British earnings league table. Between 1987 and 1988, average earnings in Wales increased by 7.1 per cent., which was the lowest increase in Britain. The north of England came next, with an 8.6 per cent. increase. In 1988, the average white collar worker in Wales earned £13,200 a year. In the City of London, the figure was twice that. According to a recent jobcentre survey in south Wales, only 9 per cent. of the jobs available offered wages of more than £135 a week and 12 per cent. offered only £80 per week to people prepared to accept such a ridiculously low wage. One in five women in full-time work earn less than £100 a week, and one in four men earn less than £150 a week. If we are examining the economy, we must consider wages, and in Wales they are among the lowest in Great Britain.

The Minister has responsibility for infrastrucure. I agree with the hon. Member for Pembroke that it is an appalling word, but we both know what it means. We have already had one debate about the Severn bridge, but since then things have got worse. Tolls have doubled and the problems of getting across have intensified the nearer we come to Christmas. I hope that lifeline will be improved.

The hon. Member for Caernarvon mentioned north Wales. We all welcome the A55 and what it has done for the economy of the north. I am sure that much will be said about it in the Welsh Grand Committee debate after Christmas. In the south, the M4 comes to a pretty awful grinding halt when it approaches Port Talbot. Something must be done about the gap between Port Talbot and Swansea in Baglan. The problems in south-west Wales will get worse, unless that important lifeline between the rest of Wales and England and London is improved substantially by improving the M4 and closing the gap in the Baglan area.

The business rate is looming ahead of us. It has been universally condemned by the business community in Britain, especially in Wales. It has been condemned by the Confederation of British Industry, the National Federation of Self-Employed and Small Businesses and others who represent all manner of industry and business in Wales. There is a valid reason for their opposition. The revaluation, which I assume will happen at the turn of the year, will represent an increase of eight times. We already know from a statement made in a written answer that the rate poundage for businesses in Wales will be 38p, which is 2p higher than in England.

When we put those facts together, we know that at least 70,000 of the 100,000 business properties in Wales will be worse off as a direct result of the introduction of the business rate in the Principality on 1 April next year. Many of those will be small businesses which are the lifeline of business communites in many of our smaller towns in rural areas and in the south Wales valleys. Ironically it will also hit many of our business parks and high-tech industries on the M4 corridor. Those are the last industries that we want to be knocked heavily by that tax, but unfortunately that will be the case. I hope that there is still time for the Government to rethink some of their policies with regard to the business rate in Wales as I believe that its effect on business life in Wales could be calamitous.

I conclude by welcoming the opportunity to discuss such an important matter. Like the hon. Member for Caernarfon I hope that we shall have a better opportunity to discuss it later in the Session when more right hon. and hon. Members are present. I hope that the Minister will consider setting up a Welsh economic development council, as has been urged upon him by the Welsh TUC and others, as that would be an important forum in which to discuss Welsh economic matters. I hope that he will encourage local authorities, and, above all, I hope that he realises that the final test as to how the Welsh economy is performing will be the next general election. I have no doubt that the verdict of the Welsh people will be to support the Labour candidates in that election.

4.31 am

The Minister of State, Welsh Office (Mr. Wyn Roberts)

My hon. Friend the Member for Pembroke (Mr. Bennett) has correctly drawn attention to the range of hard facts which clearly show the revitalisation that has taken place in Wales under the present Government. Our economy in Wales is now much more diversified than it was over a decade ago—and is therefore more stable and secure.

I am glad to say that the outmoded perception of Wales as dominated by coal and steel is fast disappearing. Present-day Wales has excellent communications, a skilled and flexible work force, a range of splendid sites for industry and commerce and an enviable partnership between the public and private sectors, all working together to ensure that a strong economy is securely in place as we face up to the challenges of the 1990s and move forward to the next century. I am glad to pay tribute to the role that the local authorities have played and are playing in that.

Unemployment continues to fall throughout all areas of Wales. The total has fallen for 42 consecutive months and in the last year by a staggering 30,500. The November 1989 unemployment total was 86,400, with a rate of 6.9 per cent. As my hon. Friend the Member for Pembroke said, that is the lowest total and rate since July 1980. The fall of 30,500 in the past 12 months represents 26 per cent. of the unemployed and since May 1986 we have seen a reduction of nearly 50 per cent. in the numbers. I am sure that the House will welcome in particular the reduction of more than 10,000 in unemployment in the south Wales valleys since the launch of the Secretary of State's initiative.

To put into perspective the measure of our success in combating unemployment, if we can achieve the same reduction in 1990 as we have achieved in the past year, unemployment in Wales will be lower than the current level in south-east England.

Wales already has an unemployment rate far lower than many regions of the United Kingdom and is maintaining its position among the regions with the highest reductions in unemployment. Furthermore, the current rate of 6.9 per cent. for Wales is certainly lower than the EC average and for many of our main European competitors.

The fall in unemployment has been matched closely by the growth in the numbers of people in paid employment in Wales. Between June 1986 and June 1989, the number of employees in employment in Wales grew by 78,000 to 965,000, despite the loss of about 10,000 jobs in the energy, mainly coal, sector.

Male employment, predominantly full-time, went up by 23,000; female full-time employment went up by 33,000; and female part-time employment went up by 22,000. Those figures speak for themselves and totally dismiss the Opposition allegations that the jobs being created in Wales are primarily female part-time. Indeed, 72 per cent. of the employment growth since 1986 has been in full-time jobs.

In addition, the growth is not confined to the service sector. Since 1986, service employment has grown by 10 per cent., but that is dwarfed by the 14 per cent. growth in manufacturing, the 33 per cent. growth in metal goods, engineering and vehicles, and the 20 per cent. growth in financial services.

Since the beginning of 1979, 675 new manufacturing plants, which are still in production, opened in Wales and now employ 44,500 people—in employment terms, some 20 per cent. of all manufacturing employment in Wales.

Since 1980, the stock of business in Wales has increased by 16 per cent. to nearly 82,000, and the net increase 1987 to 1988 was 4.1 per cent., only marginally less than the figure for the UK as a whole, which was 4.2 per cent., but higher than for any other region except the south-east, East Anglia and south-west.

The number of self-employed in Wales has grown from 115,000 in 1981 to 151,000 in 1989, an increase of 31 per cent. I noted what the hon. Member for Torfaen (Mr. Murphy) said on that point. I counter his statement by saying that one would not expect self-employment to grow quickly in Wales, bearing in mind our tradition of dependence on our major industries, but the spirit of enterprise is certainly alive and flourishing in Wales, as the facts demonstrate.

Local enterprise agencies are well-established, covering virtually all the industrial areas, and there are plans to extend provision to the rural hinterlands not already covered. There are now 23 agencies either approved or seeking approval in Wales. They are spearheading the private-sector-led co-operation at local level and playing a vital role in assisting small businesses and in enterprise generation and job creation.

The regeneration of the Welsh economy is a reality. The Government have revitalised the economic and industrial base of Wales, and that process is continuing. Output figures on industrial production clearly show the advance being made. The latest figures for the second quarter of this year show that over the year, output in Wales grew by 4.1 per cent. against the comparable figure for the United Kingdom of 0.1 per cent. Since 1985, manufacturing output in Wales has grown by 33 per cent.

We have heard much about the Welsh Development Agency, which is a far different agency from the one on which we legislated during the period of the previous Labour Government. Factory lettings by the Welsh Development Agency are at record levels. In the last financial year, some 2.4 million sq ft of industrial floor space was taken up, matching the record levels of 1987–88; and with the projected lettings in the current year, agency premises will have accommodated some 20,000 jobs over the three-year period.

The Government have committed significant financial resources to ensure that the agency can keep pace with the demand for industrial premises throughout Wales. For the next year, the agency's gross budget has been increased to £150 million, up 15 per cent., and this level of provision will be maintained. That will enable the agency to plan for the future, expand its property development programme by the provision of additional floor space for industrial expansion and to continue the progress in bringing back into productive use land that has for so long borne the scars of our industrial past.

Upon completion of the latest land reclamation programme, over 15,000 acres of derelict land will have been reclaimed since May 1979—one of the largest and most sustained programmes of its kind in Europe.

Mr. Wigley

The Minister has referred to the WDA's success in filling advance factories. Does he accept that the success has been much greater in some areas than in others, and that in some, including parts of his constituency and mine, there is still unacceptable unemployent? Will he undertake to have discussions within the Welsh Office and with other Departments about the boundaries of assisted areas to ascertain whether they can be adjusted to reflect the reality and to fill factories in areas where they are needed?

Mr. Roberts

I noted the hon. Gentleman's earlier remarks about assisted areas. The Government have made it clear that there will be no review of the assisted areas map during the lifetime of this Parliament.

The hon. Gentleman referred to his constituency and to mine. I am sure that he will have noted from a document which the Welsh Office has produced, entitled "The A55—The Road of Opportunity", that the WDA will be investing about £25 million in north Wales, which the chairman estimates will generate additional private sector investment of at least £100 million and create more than 3,000 jobs within the next two or three years. It is to be hoped that some of the jobs will be quite well paid, and they will enable the hon. Gentleman's constituents and mine to buy homes of their own.

Inflation is the greatest threat to our long-term prosperity. United Kingdom inflation performance over the whole period of this Government is far better than during the period 1974–79. which saw the highest United Kingdom inflation experienced this century. We are not taking lectures from the Opposition on this subject. I do not think that any of us wants to return to the period between March 1974 and April 1979, during which the average increase in the retail price index was 15.5 per cent., with a high of 26.9 per cent. Compare that with the Government's performance since June 1983, when the average increase has been 5.2 per cent. with the highest figure at 8.3 per cent.

Even so, we regard the present level of inflation as too high and we are determined to counter the damage that unchecked inflation will cause to national economic performance. My right hon. Friend the Chancellor of the Exchequer has made it clear that the main priority is, and will continue to be, the reduction of inflation. This action is working through high interest rates, and Wales will share in the benefits that will stem from the Government's firm control of the situation.

Against a background of falling unemployment and substantial factory lettings by the WDA, we have the details on regional aid further to underline the economic diversity that is taking place in Wales.

In 1988, regional aid was associated with capital investment of nearly £1 billion and some 32,200 jobs. To the end of November 1989, the figures are £1.3 billion and 15,500 jobs. There can be no doubt about the effectiveness of regional selective assistance as a forceful measure to provide for the expansion of indigenous industry and to attract new industrial investment and jobs to Wales. In 1988–89, grant acceptances for regional selective assistance in Wales amounted to £81 million, which is 30 per cent. up on the previous year, and one third of the Great Britain grant total.

We have heard much about inward investment. We remain increasingly confident about the future of the Welsh economy. One reason for that is the very large share of United Kingdom inward investment taken by Wales. It is consistently about 20 per cent. of the total, and was 22 per cent. in 1988. This is a record to be proud of when we have only 5 per cent. of the United Kingdom population. Since April 1983, 500 mobile industrial investment projects have been secured for Wales, involving £2.5 billion of capital investment.

In the past year, Ford announced a £750 million investment at its Bridgend plant; Toyota is to build a £300 million engine plant at Shotton; and West German Robert Bosch is investing £100 million in a new plant near Cardiff. All the jobs associated with those plants have yet to come on stream, but they will help in our commitment to reduce unemployment still further.

There are over 250 foreign-owned companies in Wales providing employment for about 50,000 people. We have the greatest concentration of Japanese companies in western Europe. Those overseas concerns cover a broad range of industrial activities and have undoubtedly made an important contribution to the restructuring of the Welsh economy.

Further evidence of the broadening base of the economy of Wales can be seen from the more recent emergence of the growth in the financial services sector. Based on the percentage growth achieved over the past 10 years, I forecast that, by the mid-1990s, more than 100,000 people will be employed in the financial services sector in Wales. More recent developments include the Trustee Savings Bank deciding to relocate its insurance work to Newport, and National Provident Institution establishing a major part of its work in Cardiff. Those follow decisions by Chemical bank, Rothschilds and Banque Nationale de Paris to relocate functions to south-east Wales, which is now firmly established as a growing force in the financial services sector of the UK. Quite simply, this reflects the growth of the Welsh economy and a demand for financial services which the market is increasingly recognising.

The hon. Member for Torfaen referred to earnings in Wales. Between 1988 and 1989, average weekly earnings of adult full-time workers in Wales increased by 9.9 per cent., which was greater than six of the other nine regions in Great Britain. The average increase for Great Britain was 9.8 per cent., which was bettered by all the Welsh counties save West Glamorgan and Gwent.

Under the previous Labour Administration, average weekly earnings in Wales increased in real terms by 6.1 per cent. between 1974 and 1979. Since 1984, the comparable increase in real terms is 12.2 per cent. —exactly double the increase under the Labour Administration—and we have cut the basic rate of income tax from 33 per cent. to 25 per cent. as well as increasing main personal allowances by over 25 per cent. in real terms.

A key part of the Government's strategy of regenerating Welsh economic life is the massive investment in Wales to improve road communications. Since 1979–80 some £800 million has been spent on providing 140 miles of new and improved motorway and trunk roads, and over £200 million has been spent on maintenance and renewal.

In south Wales it is clear that the M4, and the major improvements on links to it. has stimulated significant economic development and the Government, through their commitment to the second Severn crossing, clearly intend to stimulate further economic activity.

I am well aware of the problems of the Baglan-Lonlas section of the M4. We are taking steps to improve the roundabouts on that stretch of road. We intend to dual the whole section between Baglan and Lonlas and we hope to start on the Earlswood section early next year.

The completion of the A55 in north Wales will provide opportunities to increase the prosperity of the area. It was for this reason that I undertook on behalf of the Secretary of State to consult a wide range of interests in north Wales to seek their views on how best to take advantage of the opportunities presented by the £550 million investment in upgrading the A55 from Bangor to Chester. I was very impressed by the plans that the local authorities at district and borough level had already worked out in that regard by way of anticipated development.

On 6 December, the Government published their document which sets out a framework for a range of policies and proposals that can further benefit north Wales. We have already seen the impact that the expressway is having within the context of the Government's successful implementation of their economic policies. The future for north Wales lies in harnessing the enterprise and initiative which clearly exists. In addition to inward investors, we want to encourage the indigenous people, the native people, to develop businesses. The Government will continue to encourage a positive approach from the public and private sectors to ensure that the A55 is used to enhance the economic, social and cultural life of north Wales. We look forward to a full debate on the document in the Welsh Grand Committee early next year.

The hon. Member for Torfaen mentioned business rates. Business and commerce will benefit from the certainty and stability which the new system of uniform business rates will bring. The results of the revaluation will be known shortly. It will have the effect of redistributing tax burdens, not increasing the overall burden on business, which will remain at about 20 per cent. of local authority costs. In general, revaluation and the uniform business rate together will reduce the burden on industrial property, particularly in the valley areas of south Wales—a further boost to reinvigorating the valleys economy.

The Secretary of State has met his commitment to ensure that Welsh business contributes no more in real terms in 1990–91 than it will in 1989–90. The total take from business—£443 million—is £10 million less than predicted. Hon. Members have mentioned the impact on small businesses. The transitional arrangements are designed to give both enhanced protection to small businesses facing increases and quicker reductions to small businesses entitled to them. More than 80 per cent. of all properties in Wales are "small" for that purpose.

There can be no doubt that one of the requirements of a thriving economy is a skilled and well-trained work force and a spirit of enterprise. Across the Principality, there is a growing realisation of how vital training and enterprise are to our future success. I do not think that the hon. Member for Torfaen intended to cast any aspersion on training when he referred to the number of young people currently being trained. He might take an opportunity at a later date to emphasise, as I hope to do now, the key importance of training in providing a skilled work force, which is essential to our future success.

The development of training and enterprise councils will be a key factor in fostering those qualities in the future. Local employer-led councils will have responsibility for determining the nature of training provision and of enterprise suppport which are appropriate for their areas.

There has been a warm reception for the concept of TECs and a magnificent response from employers and others with an interest in education, training and business enterprise. They are working together to develop councils in their areas. Earlier this week, I was very pleased to be able to present a certificate of development funding to the chairman of the north-east Wales group, and I was able to hear agan at first hand the interest being shown in TECs.

The north-east Wales group was the third group to receive development funding of nearly £100,000, following on from the others in Mid Glamorgan and west Wales. Development funding applications have also been approved recently for TECs in South Glamorgan and in north-west Wales. A bid from Gwent is under consideration, and good progress is being made with discussions on arrangements for Powys.

Early in the new year, the whole of Wales should be covered by TECs in a development phase, and all are expected to start active operations during 1990. All that has been achieved well in advance of the three to four years that we originally envisaged. TECs will make a real impact on economic growth in their localities. They will help to provide the answer to many of the black spots where unemployment percentages are high but the figures may not be all that great.

TECs will bring together the two strands of training and enterprise into single strategies for their areas, liaising fully with the other bodies involved. They will work to stimulate enterprise and the local economy; they will help businesses to develop training suited to present and future needs; and they will provide support to inward investment activities by responding rapidly to new requirements. TECs are poised to make a real contribution to the economic growth of Wales in the 1990s.

Glancing at Wales as a whole, north Wales offers striking evidence of the transformation. Delyn is a particularly good example of what can be achieved if the Government, local authorities and the public sector co-operate effectively together. There has been substantial investment in the Delyn enterprise zone, with about 1,300 new jobs being created since designation in 1983, and remarkable progress is being maintained through the development of the Greenfield business park.

We are also seeing increased demand for factory floorspace across north Wales into Gwynedd as companies—including possible foreign ventures—anticipate the improved communications and infrastructure benefits which the A55 will bring.

Within mid-Wales, the Development Board for Rural Wales expects 1989–90 to be a record year for factory allocations—some 350,000 sq ft will be allocated.

Further south, we can see clear signs of development being drawn westward. Camford Engineering has taken over the Austin Rover plant at Llanelli and the buy-out of Llanelli Radiators by the Japanese company Calsonic has secured the existing jobs and involves massive new investment. The Ministry of Defence will be creating 250 new jobs at Llangennech.

As my hon. Friend the Member for Pembroke will know, we have invested substantial resources in the Milford Haven enterprise zone and the major deep water facility at Pembroke dock was supported by funds from the Welsh Office.

I could go on to cover the remaining parts of Wales, but fear that I may not. A new Wales is emerging, and we can confidently look forward to continuing success while this Government remain in office.