CONSTRUCTION OF BARRAGE ETC. AND OTHER WORKS

HC Deb 20 October 1992 vol 212 cc382-408

Mrs. Clwyd

I beg to move amendment No. 82, in page 1, line 7, at beginning insert 'Subject to subsection (8) below'.

Mr. Deputy Speaker

I suggest that it would be convenient for the House to discuss at the same time the following amendments: No. 80, in page 1, line 18, at end insert— '( ) No such works shall be constructed until the Development Corporation shall have published proposals showing the maximum cost of constructing the barrage and associated and consequential works and an assessment of any adverse impact on the costs of industry and employment business in adjoining areas.'. No. 88, in page 2, line 35, at end add— '(8) Expenditure by the Development Corporation on the works referred to in this section and specified in Schedule Ito this Act shall not exceed a total sum arrived at by adding to the sum of £85 million a further sum reflecting inflation in the cost of civil engineering works since November 1989, calculated on the basis of official figures published by the Department of the Environment.'. No. 91, in page 2, line 35, at end add— `(12) The Development Corporation shall not commence the works until after completion and publication of a cost-benefit analysis of the works as a whole, and of each work itemised in Schedule 1 separately based on the most recent cost data and market forces available.'.

Mrs. Clwyd

I hope that the Government will be more reasonable with this set of amendments than they were with the previous 27 amendments that my hon. Friends and I tabled. It is important that amendments that the Opposition consider to be vital to the success of the Cardiff bay barrage are considered carefully by the Government.

At every stage, our criticism of the Bill has not been about the need for economic regeneration, for we accept the necessity for the economic regeneration of the Cardiff bay area. There can be no doubt about the need for urban regeneration in the Cardiff docklands. It should be remembered—people sometimes forget—that unemployment in parts of the inner-city areas of Cardiff and on council estates such as Ely and Llanrumney is as high as in the valley communities.

Today's debate is linked to the key political issues of the moment—the state of our economy and particularly the future of our coal industry. The Cardiff docks were at the centre of the coal economy of south Wales. Coal from the valleys made Cardiff the world's leading coal exporting area. There would not be a Cardiff without the valleys.

8 pm

Now the Government threaten to kill our coal industry and our coal communities. They threaten to plunge thousands more families in Wales into unemployment and poverty. They threaten to gamble our children's future on the spot markets of Rotterdam and in the gas fields of the former Soviet Union. Where was the Secretary of State when that economic absurdity was dreamt up? The self-styled voice of Wales in the Cabinet had to admit yesterday that he was not even consulted. So much for a Tory from the Wirral speaking up for Wales in Whitehall and Westminster. What more graphic an illustration of the absurdity of the Government's policy is there than the picture in The Guardian today of a ship unloading 500 tonnes of foreign coal, imported from Vietnam, at Swansea docks?

We support the regeneration of Cardiff docklands but, despite all the time spent debating the Bill and its predecessors, the Secretary of State for Wales has still not answered many fundamental points. Where does the barrage fit into his overall strategy for Wales? The Government are in real danger of putting all their eggs in one basket. The case for economic regeneration in south Cardiff is clear, but what do the Government propose to do to help the south Wales valleys, blighted by some of the highest rates of long-term unemployment and deprivation in Britain? What about rural Wales, suffering from low pay, under-employment and unemployment? What about north Wales? Bearing in mind the iron grip which the Government have put on local authorities in Wales—county councils and district councils—regarding revenue and capital spending, I suspect that no public authority would have got away with the enormous and still escalating costs in capital which the Cardiff Bay development corporation seems to be getting away with.

The Government's plan to scrap the Barnet plan for public expenditure makes this even more critical. Make no mistake about the fact that public spending cuts may be hard in England but they will be even more brutal and savage in Wales. The Secretary of State for Wales must shoulder the blame because he has not fought his corner in the Cabinet to save the Barnet formula. The Welsh Office's budget will be slashed. The Secretary of State for Wales refused to deal with that issue at Welsh questions yesterday, but it still leaves a big question mark: what does it mean for the planned spending on the barrage, now estimated at £167.4 million based on construction starting in 1993? How does the Secretary of State for Wales hope to balance spending on that one project, important as it will be for south Cardiff, against all the other pressing needs in Wales? For example, what will happen to expenditure on roads, hospitals and schools if the barrage proceeds?

It is amazing that the Wallace Evans technical report on the proposed wells and pumping facilities to deal with the ground water problem, which has been published and arrived in my office this afternoon, has not progressed beyond the desk study stage. The Government will not have details of its findings for another six months but they have still brought the Bill back to the House today. That is an insult to the House of Commons. It is yet another example of those involved with the project trying to steamroller the process of consultation and public discussion in the House and outside.

I should have thought that the Government would learn a lesson from the outrage that has been expressed about the way in which they have dealt with the future of the coal industry in the past few days. However, as has happened in the past, they seem to have learnt nothing. Although the Minister has apologised for not making the documents available earlier, and I accept his apologies, apologies are not sufficient when we are expected to deal with two major reports and they arrive on our desks today—they have not arrived on some people's desks at all.

That is why we are particularly concerned about cost and why we expect the Government to give us many explanations this evening as to what they intend to do about developing the cost of the development of Cardiff bay with public expenditure and the demands that undoubtedly exist for the rest of Wales.

The Minister of State, Welsh Office (Sir Wyn Roberts)

In view of the hon. Lady's belief in the regeneration of docklands, does she not accept that this scheme will contribute towards jobs in Cardiff, estimated at some 23,000 jobs and involving 4,400 houses? How can she say that she believes in the economic regeneration of Cardiff while at the same time opposing the Bill that will bring it about?

Mrs. Clwyd

I am pleased to respond to the Minister's question, particularly as he places such heavy emphasis on jobs in Cardiff. Ministers have told us that there will be jobs for the valleys in addition to jobs for Cardiff. I wonder why the right hon. Gentleman did not emphasise that, or does he see those as jobs for Cardiff alone? I have made it clear that jobs for Cardiff are important, but so are jobs for other parts of Wales that are suffering from high long-term unemployment. Does the Minister remember that the main aim of the valleys initiative was to create between 25,000 and 30,000 jobs for the valleys? Unemployment in the valleys is as high as it was in 1988 when the valleys initiative started. Will it be different in Cardiff?

Sir Wyn Roberts

Will not the hon. Lady accept that many of the people who work in Cardiff come from the valleys, as has been shown in successive surveys?

Mrs. Clwyd

I am glad that the Minister now stresses that there will be jobs for people from the valleys as well. But should we have more faith in that promise than in previous promises made by Ministers, given that the main economic aim of the valleys initiative has failed? I hope that the Cardiff Bay Barrage Bill will be more successful in providing those jobs.

Mr. Jon Owen Jones

I tried to catch my hon. Friend's attention before the Minister stood up. I should like to make her aware that, when authorities in Cardiff and south Glamorgan carried out a survey to ensure that we kept our area status—which the Government are reviewing at present—we found that between half and two thirds of the new jobs coming to Cardiff were taken up by people who lived outside Cardiff. When I recently visited Panasonic, which is the largest television producer in Europe on the outskirts of my constituency, I found that more than 50 per cent. of the people who worked there came from the valleys of south Wales.

Madam Deputy Speaker (Dame Janet Fookes)

Order. I have just taken the Chair and I am having the greatest difficulty in relating the exchanges to the amendment.

Mrs. Clwyd

Perhaps I may respond to the point made by my hon. Friend the Member for Cardiff, Central (Mr. Jones). We are not opposed to the creation of jobs in Cardiff. On the contrary, we would like many more jobs to be created in Wales. However, we are worried about the implications for the rest of Wales of the current public expenditure round. It is reasonable to ask the Minister for assurances that any spending on Cardiff bay will not affect the demands by the rest of Wales which, I am sure he agrees, are equally important.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

My hon. Friend the Member for Cynon Valley (Mrs. Clwyd) has rightly presented the dilemma and the issues at stake. Legitimate arguments must be aired about public expenditure priorities and the spending implications of the Bill. During his winding-up speech when we last debated the Bill the Minister used the phrase "déjà vu" several times. I make no apology for returning to the issues that I have constantly sought to develop during debates on the Bill. An elderly parishioner in one of our Baptist chapels said to the minister at the door after listening to the sermon, "Every time I hear it, I enjoy it more and more." I hope that the Minister will once again enjoy my attempt to discover how much the scheme will cost.

Our amendments seek to limit costs. We have every reason to seek to do that because we have watched the costs alter. One of the running issues in our debates has been the problem of discovering what the scheme will cost. There are two sets of costs—the barrage costs and the costs related to it. When the Bill left Committee the barrage-related costs were set out in a letter. Much of the information has been by correspondence, especially that between me and two Parliamentary Under-Secretaries. In a letter of 30 June this year it was stated that the total barrage-related costs had risen from £547 million to £662 million and that the public expenditure component had risen from £335 million to £405 million.

Mr. Ron Davies

My hon. Friend has followed the matter with special care. He speaks about barrage-related costs. What does "related" mean in terms of costs directly associated with the barrage rather than those which are indirectly associated?

8.15 pm

Mr. Rowlands

Table 2 in appendix Al in the January 1990 assessment shows that the figure of £547 million had risen to £662 million. It consists of the barrage at £125 million; the cost of a variety of improved accesses, the chief of which is the primary distributor route link at a cost of £95 million; other road schemes costing £33.94 million; car parking at £12.96 million; a light rapid transit system costing £10 million; and other environmental improvements totalling £25 million. Those are what we call the barrage-related costs. On 30 June the £547 million rose to £662 million using the GDP deflated market prices at 10 March 1992. The public expenditure element of that increased amount was £405 million. Those were the costs in June this year.

Mr. Michael

It is always easier to follow figures on one's own piece of paper than to follow those quoted by a colleague. Has my hon. Friend included in the barrage-related costs the cost of the primary distributor route? May I say to him, not for the first time, that the PDR was to be constructed before the barrage and is not directly barrage-related. It is directed at the transport of the city and is for the benefit of constituents who have lorries using their roads. It is contained in the figures for technical, legal reasons, and I hope that my hon. Friend will make that distinction.

Mr. Rowlands

I am happy to do that. We must compare like with like. Those were called related costs by Ministers and were so described in correspondence. I accept that the PDR link has other functions, but in every ministerial letter and reply and in every table and document issued to us the PDR link and other items have been described as barrage-related costs.

Mr. Michael

I appreciate that in seeking to make his point my hon. Friend has to compare like with like. I am sure he will accept that a facility that has been long needed to open up the docks and remove traffic from domestic roads which have suffered devastation over the years is not related to the barrage. I argued with Ministers that it should not be included as a barrage-related cost. To argue that it is is to exaggerate the sum of money involved in the barrage. I ask my hon. Friend to accept that.

Mr. Rowlands

My hon. Friend has obviously failed to persuade Ministers that it should be excluded because it has been perpetuated by being included in the latest document.

Mr. Michael

As I have said several times, for the purposes of the legislation technically it has to be included in the figures. I ask my hon. Friend to accept that a road which was to be built anyway and which was desperately needed in that part of Cardiff is not truly barrage-related although it may technically be brought into barrage-related figures.

Mr. Ron Davies

I do not wish to become involved in what is developing into an intimate and interesting discussion.

Mr. David Hanson (Delyn)

Force yourself.

Mr. Davies

It will not be the first time that I have had to force myself. If my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) completely accepts at face value the comment by my hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael) that the cost of the distributor road should be excluded from the barrage calculations, presumably it must be included somewhere else. Given the considerable distortion of expenditure on transportation in South Glamorgan, does not my hon. Friend agree that Mid Glamorgan, the county that he and I represent, would be even worse done by in terms of the proportion of expenditure on transport? That is the downside of the case presented by my hon. Friend the Member for Cardiff, South and Penarth.

Mr. Rowlands

Yes, it is, because whether we include it in barrage-related costs or not, it is just about one of the most expensive roads built since the Conway tunnel. In fact, the costs per mile are about the same. That expense comes out of the roads pool expenditure into which we all have to dip, whether we are in Brecon and Radnor, in Caerphilly, in my constituency or in Gwynedd. The cost is not modest—it is about £15 million per mile.

Mr. Jon Owen Jones

Will my hon. Friends who represent Mid Glamorgan concede that it is more expensive to build roads through the middle or on the edge of large conurbations? There does not happen to be a large conurbation in Mid Glamorgan. The costs of building the M25 or roads in London is far higher than the cost of building roads through the countryside. The logic of my hon. Friend's argument is that the latter should not be built.

Mr. Rowlands

No, I am simply pointing out that the cost of building a road at £15 million per mile comes out of the same roads pool and roads expenditure programme of the same Government Department from which the rest of us are seeking approval for road schemes. Therefore, as my hon. Friend the Member for Cynon Valley (Mrs. Clwyd) said, the issue is one of priorities, and these must be discussed openly and fairly.

Let me return to my case. I had not started to develop my argument. I wanted only to ensure that we were comparing like with like in costs. On 30 June 1992 when we came out of Committee, the barrage-related costs stood at £662 million, of which £405 million were public expenditure. We were then issued with a blue book that told us that barrage-related cost have become £497 million. I hope that the Minister will clarify this point and let us know where we stand. Are we talking about the same figure? What has changed? I have read that that is a 21 per cent. reduction. I am not good at arithmetic—I was literate but not numerate, like my daughter who got an A in English but failed her maths GCSE.

I hope that, as I speak, the Minister will be able to get some advice from nearby quarters and tell us whether the £497 million is the equivalent of the £662 million. The document explains that there is a 21 per cent. reduction in barrage-related costs. The chief cost is the PDR Bute Town link, which was to cost over £90 million but now is to cost £53 million. Is that because it has become cheaper to build? I should like a more detailed explanation than is contained in the allusions in the blue book.

If the £497 million is related to the same costs as the £662 million, what proportion of it is public expenditure? On 30 June we were told that of the £662 million of barrage-related costs, £405 million was the public sector component. How has that dramatic difference of £162 million been arrived at? We have worked on these figures from the start, so we might as well see them through to the end.

A second cost, and one that has changed for good reasons, year by year and month by month, is the construction cost for the barrage. That figure started off at around the £45 million mark. When this Bill came before us, the financial memorandum mentioned a figure of £82 million plus land acquisition costs of £2.5 million. It rose over the next 18 months to £125 million and now stands at £152 million using the mid-1992 prices. We are told, fortunately, that the real capital cost of the barrage has increased by only £9 million at mid-1992 prices or about 6 per cent. since the January 1990 appraisal, of which £4.63 million represents the increased cost of remedial work for ground water protection.

Given the variety of figures that we have had and the changing costs that we have tried to follow, there must be a strong case for a form of expenditure that limits the continuing increase in expenditure that we have witnessed over the past 18 months or two years of debating the Bill and the scheme. The late Mr. Ian Grist—late in parliamentary terms—called me a one-man Public Accounts Committee on this Bill. I think that he meant it as an insult, but I took it as a compliment. Therefore, I shall return to the argument and ask the Minister, before we start discussing the comparative merits and priorities involved, whether we can have a definitive set of figures before we finish the debate.

I shall now deal with the case being made for this expenditure. My hon. Friend the Member for Cynon Valley is absolutely right. Whether we like it or not—I wish that there was room to accommodate every view—we all know that, as Aneurin Bevan said, politics is the language of priorities. We know that crucial decisions on public expenditure priorities will be made in the coming weeks. Therefore, a valley Member like me is right to ask whether we can justify the public expenditure costs involved both in the barrage itself and in the barrage-related projects, which are very large and must be balanced against the needs of the Principality and of communities such as those that I represent.

The case made for such high levels of expenditure is repeated in the review of the January 1990 appraisal. As soon as I got my hands on it I read it avidly to see what case it made. It is what will come to be known in the language of politics as a Heseltine review. It is a review that comes to the conclusion that it intended to come to from the beginning—that a marvellous and fantastic benefit would accrue from building the barrage and impounding water. We must analyse the report in a reasonably critical fashion because it contains the latest, hot-off-the-press levels of expenditure being advocated.

Mr. Morgan

I merely wanted to draw to my hon. Friend's attention, in case he had not noticed it, the fact that there are two models of review. He has referred to one as the Heseltine review—that which comes to the conclusion that it intended to come to at the beginning. The other kind is the Wakeham scheme, which was revealed to the other place today. This one puts forward the idea that all 31 pits should remain open and that the review on that should be carried out independently. Is that the kind of review that my hon. Friend has in mind for this project as well?

8.30 pm

Mr. Rowlands

There should certainly be an independent review of expenditure of this sort. To borrow a phrase from the Minister, the document before us produces a sense of déjà vu when it comes to assessments. The argument is that the proposed additional expenditure will create about 23,000 permanent jobs in addition to the many jobs that will genuinely be created by the marvellous organic development of the dockland area. I have been to the area, as have many of my colleagues, to see it for myself. What is happening now without the barrage is impressive.

Mr. Michael

rose—

Mr. Rowlands

I shall make my case and then give way to my hon. Friend.

TheWestern Mail headline told us that 23,000 new jobs will come to the area. When we read the KPMG document, however, we are told that that figure is not a forecast. It is based on the assumption that if so many tens of thousands of square feet of office space are built and all that accommodation is filled there will be that number of jobs. What will happen if the offices lie empty for 12 months, 18 months or two years?

I shall show my age now. If a number of Centre Points are constructed—

Mr. Morgan

Or Canary wharves.

Mr. Rowlands

Yes. If they are dotted around the area and they lie empty, presumably it will be claimed that 23,000 jobs have been created. The KPMG document states that if so many thousand square feet of office accommodation is built and we assume that there is one typist in X square feet, there will be an additional 23,000 jobs. That is merely an assumption based on new build and occupation.

There is a mighty lesson to be learnt from the past 18 months. It has been demonstrated by the Canary wharf development and elsewhere that assumptions or forecasts of the sort that I have outlined must not be made.

Mr. Michael

I hope that we can treat south Cardiff rather differently from places like Canary wharf. One of my reasons for saying that is that there is co-operation between elected representatives and central Government.

My hon. Friend has been careful enough to visit my constituency to see what is happening. I am grateful for the revelation of his interest in what is happening in south Cardiff. Presumably he noticed the close relationship between the places where jobs have been developed and located as a result of work that has not been confined to organisations such as the development corporation. Account must be taken also of what has been done by South Glamorgan county council and Cardiff city council, the economic development committee of which was chaired so recently by my hon. Friend the Member for Cardiff, Central (Mr. Jones). I am sure that my hon. Friend noticed the relationship between water in the docks and full accommodation. I appreciate the need for him to question closely the assumption of Ministers and those that are related to the figures which stem from the Bill, but there are realities to be seen and considered in the constituency. We can learn from them as well as from theories or developments in London.

Mr. Rowlands

Yes, of course we can learn from them. What is going on in the docks without the barrage is extremely impressive.

Mr. Michael

With the water.

Mr. Rowlands

Much of what I saw had nothing to do with water. There has been development on land that has been cleared.

We are expected to assume and believe—this was taken up by the Western Mail—that 23,000 permanent jobs will be created. When we read the document we find that that estimate is not based on an assessment of demand. It is merely an assumption that is based on what would happen if every new office block were occupied. I have a right to query whether that is a reasonable assessment or judgment. A recent Public Accounts Committee report on the Welsh Development Association's job assessments showed that it is possible to get things hopelessly wrong. I am not convinced that the intellectual rigour that went into producing the document before us would stand up to investigation of the sort conducted by the PAC.

Madam Deputy Speaker

Perhaps the hon. Gentleman will favour me with his face rather than his back.

Mr. Rowlands

I apologise, Madam Deputy Speaker. I was interrupted by my hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael), who sits behind me, and I was determined to respond. I should say that he intervened in an extremely civilised fashion. I shall, of course, Madam Deputy Speaker, take note of what you have said. I shall not be sexist and say what a pleasure it would be to press a comparison.

I question seriously the justification that is being used for such large sums of public expenditure, which is that many permanent jobs will be created by the scheme. I have every right to query it. There is no detailed assessment of demand. Indeed, the very reverse is the case. It is interesting to read the 1990 appraisal. Even the county and the district did not believe that the proposed extra office space was justified. On page 4 of the 1990 assessment there is the following passage: The demand for office space … in Cardiff bay will probably average"— this is what the supposed job creation figure is based upon— about 23,000 square feet per annum, which is around 70 per cent. of Cardiff's total. A beautiful understatement follows: This is a considerable increase on the city's own target. This is most unlikely, however, to occur. It is then argued in a woolly fashion that the extra expenditure can be justified.

It is claimed that one of the great benefits to emerge from the proposed expenditure will be about 23,000 new jobs, which will become available in office space in particular. Again, I have a feeling of déjà vu. I had the privilege of serving Cardiff in the 1960s, when a similar grandiose scheme came forward. It was claimed that if the development took place a huge number of jobs would be created. The scheme was rightly and democratically rejected at local level. We now have a successful organically developed city centre. Cardiff is one of the finest retail centres in the Principality as well as in the country. It is a privilege and pleasure to walk through Cardiff. The development of the city centre was the result of skilful planning by the city council and South Glamorgan county council. The authorities rejected the grandiose development that was proposed, which is related and somewhat built into the proposed developments in and around the proposed barrage scheme.

Mr. Ron Davies

I wish to follow carefully my hon. Friend's argument, and I have before me page 22 of the economic appraisal. He has talked about 23,000 additional jobs. That assumption must be set against the 13,000 jobs that will be created without the barrage. I share with my hon. Friend a degree of suspicion about the assumptions, but it seems that the barrage would be responsible for only 10,000 additional jobs and not the 23,000 suggested in the economic appraisal.

Mr. Rowlands

Yes. In fact, these are theoretical assessments. They are not based on a rigorous analysis of demand. It is assumed that if construction takes place the office space will be filled.

We have every reason to doubt that development of the sort that is proposed will be achieved in anything like the timescale that is being talked about. There is much genuine questioning taking place. The only hope of achieving such development lies in the Government relocating Government Departments. Has the Minister any announcements of such dispersal? It is rumoured that the Lord Chancellor's Department will be shifted and I should like to know whether the move will take place. If there is dispersal, will Government Departments move only to Cardiff? We are talking of the need to diversify the economies of neighbouring communities such as my own. As a part of a diversification programme it should surely be considered as part of a Government Department dispersal programme.

I read in one of the Sunday newspapers this weekend that, as a result of the collapse in the property market, London rents have fallen dramatically and Government Departments and others who had talked about dispersal now plan to stay in London at much cheaper rents. The property balloon has finally burst, but one would not think so from this document.

Chestertons has come to the conclusion that the changes in property prices and property development have in no way affected the long-term forecasts for the scheme and that has been used to justify the additional expenditure involved which our amendments seek to limit. I doubt whether any independent economist would argue that there has not been a sea change in attitude towards property and land and rental values as a result of the drama of the past 18 months or two years. Yet Chestertons blithely continues to assert, with no firm foundation, that all its valuations in the original document, published before the property crisis, are still valid.

Modest adjustments have been made. Chestertons now expects an annual increase in rentals and land values of 6.5 per cent. No one seems to have told Chestertons that we are supposed to be heading for zero inflation. Property inflation in the Cardiff docklands area is supposed to rise by at least 6.4 per cent. each year for the next 15 or 20 years. We have every right to doubt that.

The people who make such assessments are estate agents and surveyors. About 12 months ago, my mother wanted to sell her house. It was something of an emergency and the local estate agent quoted me a price. I said I wanted to sell the property, not stand there. There was a look of horror on the estate agent's face when I suggested that his figure was not right. Twelve months later, not one interested party had looked at the house, so the price had to be dropped by a phenomenal amount. Chestertons has the same mentality. It cannot believe that the property world is changing around it. The same outfit gives the advice in this document that property values will rise by 6.5 per cent. a year, year after year.

Mr. Jon Owen Jones

My hon. Friend mentioned that rising property values as a result of inflation are no longer tenable. My hon. Friend may have noticed that south Cardiff has changed dramatically and is still changing. It is in a state of flux. Anyone renting property next door to a scrapyard would expect to pay less for it than if it were next to a major development. Therefore, property prices will go up regardless of inflation because land values have gone up.

Mr. Rowlands

The proposition is that such values will rise for the next 20 years at the rate of 6.5 per cent. per annum. Such assumptions are less valid than they used to be. They are made by people who do not realise that a sea change is taking place in attitudes.

The best test would be for the Minister to tell us the rental agreement with the Welsh Common Health Services Authority but he has refused to do so. What assumptions were made about rentals in the docklands area and what did the Government negotiate?

I was talking to a firm which intended relocating in the Cardiff area. I was appalled that it should because I thought that, given the nature of its business, it should be in my community. It told me that it had been offered something in the Cardiff area at £4 or £5 less per sq ft than it had originally been quoted.

Rents are going down. The property balloon has burst but one would not think so from this document. It carries on blithely making the same assumptions. Therefore, we have a right to question the boom that the barrage is expected to result in.

8.45 pm

Mr. Michael

Will my hon. Friend give way?

Mr. Rowlands

In a minute. I do not wish to be discourteous to Madam Deputy Speaker. I am not sure whether to incur the wrath of my hon. Friend or you, Madam Deputy Speaker.

Mr. Michael

I assure my hon. Friend that he does not have to look at me to listen to my words. We can both look in the direction of Madam Deputy Speaker.

I suggest that my hon. Friend takes to heart the point made by my hon. Friend the Member for Cardiff, Central (Mr. Jones) that we need to look not simply at inflation-related figures but at the change of environment that is taking place. Obviously there will be fluctuations. At present, property is going at lower prices than it was 12 months or two years ago. That is manifest. But there are changes in the whole area which is benefiting from the experience of the two local authorities which, over the years, have shown how to bring economic benefit to the area, despite the fact that there has been a bleeding of jobs from the area. Again, as has been said, we desperately need the continuation of assisted area status. It is not just on the report but on the experience of the two local authorities that we must base a proper assessment of the benefits to the area in terms of employment and the value of the barrage.

Mr. Rowlands

It is proposed to build 23,000 sq ft of new office space every year for the next X years. I am simply questioning whether Cardiff will remain immune to what has happened not only this year and next year but for the next 15 or 20 years. There has not been just a little blip in the market. Most independent experts that I can find believe that there has been a sea change in attitudes. As these guides have been hopelessly wrong in the past two or three years, we have a right to put a question mark over the whole scenario that has been described to us to justify the levels of expenditure.

That is not a particularly grandiose point although it seems to have made my hon. Friends jump up and down. It seems a rather modest point to make that, given the changes, we have every reason to doubt the rosy scenario for jobs that has been portrayed in the latest document. The jobs scenario on page 26 shows that the one area in which jobs would be lost if a barrage were built is the industrial and manufacturing sector. That is why I query the scheme. It is fascinating that without a barrage the number of manufacturing and industrial jobs would be much higher than with a barrage. In other words, the barrage would produce yuppy service jobs at the expense of industrial manufacturing.

I question whether, in Cardiff or in communities such as mine, the age of growth in service employment is coming to an end. Technological change in the Hoover factory in my constituency has led to a drop in jobs from 5,400 to 1,100 and that will eventually penetrate the whole service sector. All the assumptions for job creation based on office accommodation will be knocked askew as a result of technology. The new diversified service economy is the déjà vu economy of the 1980s, and I hope that it will not be the economy of the 1990s. It is astonishing that there should be no increase in the one area where I should have thought that we needed new jobs, whether in Cardiff or in our communities—the industrial manufacturing side.

Table 11 of the KPMG report shows that 550 industrial jobs will be created by the barrage, but 1,782 without it. The thinking is that manufacturing and industrial employment is somehow dirty—that dirty jobs are not wanted in the vicinity of a yuppie marina and that they must be moved elsewhere to make way for the potted plants and atriums. That is a fascinating insight into the 1990s.

Mr. Michael

Does my hon. Friend not accept that some of those living near to the East Moors steel works who regretted the loss of jobs when it closed have noted an improvement in the cleanliness of their environment?

Mr. Rowlands

I dare say that the people of Merthyr noticed an improvement in their environment when the pit there was closed. The same is true of deep navigation. However, that is not a case for closure and for turning one's back on industrial manufacturing jobs. They will be needed in the 1990s, but we are being asked to support a Bill which will produce fewer jobs in the barrage area.

Mr. Rogers

I do not think that my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) is being fair to those of our hon. Friends who represent Cardiff constituencies, who obviously want to attract jobs to their areas. Is my hon Friend saying that if a barrage is built with mooring places for yachts, more jobs will be created? My understanding is that the barrage will not add one square inch of land to the amount available for industrial, commercial, or housing development. If it did, I would support it. I cannot follow my hon. Friend's logic.

Mr. Rowlands

The assumption is that 10,000 new jobs will be created if water is impounded to make it possible to look out across a nice lagoon. I spent the last quarter of an hour doubting that assumption, and if my hon. Friend has not understood that point by now, I will repeat it.

Mr. Rogers

I still cannot understand the logic. My Conservative opponent in the elections to the European Parliament, Dr. Ann Robinson, who is now a policy adviser to the Institute of Directors, said that one way forward in south Wales would be to flood the coal-mining valleys. Is it suggested that areas of impounded water must be created to create industrial development? If so, I must tell my hon. Friend that he is not going to flood the Rhondda. We do not have the boats to cope with that.

Mr. Rowlands

In March 1959 a report was published that suggested closing down Merthyr completely and moving that community of 60,000 people to the River Usk. If that had happened, we would all be middle-class yuppies now. I am glad to say that the people of Merthyr rejected that proposal, and they no more desire their community to be flooded than the Rhondda. If my hon. Friend is asking whether manufacturing jobs are created by flooding lagoons, the answer is no. Even the KPMG report reaches that conclusion.

Public expenditure is about priorities. We are fishing in the same pool and making claims on the same finite amounts of money. To borrow a phrase from the President of the Board of Trade, we know that we are confronting a pretty bloody review of public expenditure. Crucial decisions must be taken about the ways in which public money is to be spent.

The census returns of the communities that I represent reveal that 25 per cent. of the men of workable age there are economically inactive. I am supposed to accept that the trickle-up or trickle-down effect of the building of the barrage will be to create employment for those men. Male unemployment in my constituency exceeds 20 per cent., and our last pit is to be closed within the next 90 days. Every penny of public expenditure is needed to create jobs in a community such as mine, where there is rising unemployment of a kind and character that I never expected to see during my political lifetime.

I wish that it were not necessary to make a choice, and that enough money were available to build a barrage as well. Some of my hon. Friends have other good reasons for opposing its construction, but I do so because in the language of public expenditure priorities there should be a positive discrimination in favour of constituencies such as mine which, by any indices or census returns, are shown to be infinitely worse off even than Cardiff, relatively speaking.

The building of a barrage comes lower on my list of priorities than the creation of a new manufacturing base that will provide jobs for the 25 per cent. of the potential work force in my constituency. While Dowys Toft and Merthyr Tydfil produced the coal and the wealth that created Cardiff in the first place, we do not want a return to the trickle-up or ripple effect. I do not want to spend the rest of my political career allowing my valley to become a dormitory town for a Cardiff dockland development. In supporting the amendments, I seek to control and to limit the public funds to be devoted to constructing a barrage, knowing the tremendous needs which exist in the communities that I represent.

Mr. Morley

My hon. Friend argued the case for his own community and for the money being spent in other ways. I spoke earlier of the environmental issues, and there is a link between them and the financial amendments before us. If we are to pay the price for the environmental destruction of Cardiff bay, will the financial input be worth the damage that will be done?

One must question a number of the assumptions made in the figures that have been provided. The latest outturn cost of the barrage scheme is £167.4 million. This autumn, we face a very difficult public spending round. Given the huge amount of money involved, surely it is reasonable to ask whether it will secure a good return in the form of benefits to the Cardiff area and the national economy, or whether the money could better be put into capital projects in other parts of the country. My hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) has suggested that it should be invested in the Welsh valleys. It might be possible to obtain a better return—more job creation, for instance.

I am worried by the assumption that inflation will remain at a constant 2.5 per cent. after 1995–96. I do not know who produced the figures, but they may be based on the Treasury model, and we all know the record of the Government and the Treasury in predicting inflation and outturns. Any major scheme of this kind is bound to overrun. The Channel tunnel project, for instance, has overrun its budget many times—although, of course, no public money is involved. The Humber bridge scheme, which was publicly funded, did the same, and has caused considerable problems ever since.

What chiefly worries me about the barrage scheme is the calculation of the leverage—the argument that the leverage in terms of jobs and investment is 3.6 times higher than the leverage that would exist without the barrage.

9 pm

Mr. Michael

Is my hon. Friend saying that he would have argued against the building of the Humber bridge?

Mr. Morley

Absolutely not. I think that the bridge was worth building, and that it has brought advantage to the community. The problem is that, because of its massive overrun, its debts cannot be serviced by income, and that is a major difficulty for the local people. I merely used the bridge as an example of major public works programmes that dramatically overrun their budgets and cause problems. The Cardiff bay barrage scheme has the advantage of receiving not a loan but a grant. I wish that the Humber bridge could be treated as generously.

Mr. Rogers

My hon. Friend has made a valid point. Evidence provided by the consultants to the Cardiff Bay development corporation reinforces his view. As soon as the water is impounded, water levels will rise. Initially, it was said that there would be no ground water impact in Cardiff, but Hydrotechnica now proposes to set up a pilot scheme to dewater the ground water, before building some 64 bore holes that will need to pump water continually to carry out that task. I do not know where it will go; water tends to come back in. [HON. MEMBERS: "The river."] From the river it will go back into the wells. It will be a wonderfully circular process. I think that I have practised as an engineering geologist for a good deal longer than my hon. Friends have practised as politicians, and I can tell them that the scheme is likely to cost a huge amount.

Madam Deputy Speaker

Order. I am sorry to stop the flow, but this is supposed to be an intervention rather than a speech.

Mr. Rogers

That is true, Madam Deputy Speaker. I was merely referring to the imponderables of calculating the total engineering cost.

Mr. Morley

I am grateful to my hon. Friend, who speaks with some authority and whose comments should be noted.

I would like the Minister to give us some positive examples of the way in which the leverage has been calculated and the way in which it will work. Some of the assumptions are very optimistic. According to the report, there will be a 78 per cent. increase in the number of jobs if the barrage is built, and there will be a total leverage of 7.5 on the investment—as against 3.9 without the barrage. The report says that the informal leverage target for the Welsh Office is 4. Without the barrage, the scheme certainly meets the target. The report makes massive assumptions about extra leverage and extra jobs. That point has been made all too clearly by my hon. Friend the Member for Rhondda (Mr. Rogers).

I should like the Minister to give examples of companies, investors and retailers who have said, "Without the barrage and the lake, we will not invest in Cardiff." I do not recall any great emphasis being placed on the fact that Canary wharf was surrounded by water and docklands. The main criteria for schemes such as Canary wharf were its cost and convenience and whether it could attract investors. The fact that Canary wharf is not attracting investors demonstrates that the environmental impact of the development does not matter as much as the economic strength of the country, the convenience of the development, rents and other factors. I suspect that the key to investment in Cardiff or anywhere else will be not the barrage scheme or any other scheme but the prevailing economic circumstances. They will encourage private investors to move to Cardiff and elsewhere and invest in development schemes.

I query whether the case put in the report has been proved. I strongly query the concept of leverage and the very optimistic figures that have been produced. I should like the Minister to tell us just how that leverage has been calculated and to give us examples of companies that have made it clear that the barrage is vital to the scheme, if they are to invest in Cardiff. I know that a number of investors have made it clear that the barrage is vital to the scheme, if they are to invest in Cardiff. I know that a number of investors have made it clear that the barrage is not important to them. Tarmac Homes is a case in point. That major private sector developer said publicly that it would be willing to invest in the Cardiff bay area without the barrage—that the barrage was not important to it.

I ask again whether this is good use of public money, whether the figures are reliable and how the leverage has been calculated. A natural phenomenon such as an intertidal zone—a site of special scientific interest with a community of 300,000 people—has its own benefits. Those benefits are just as great as the ones that would be provided by means of an impounded bay of polluted water; they may even be stronger. If I had to live and work in the Cardiff area, I know which one I should prefer. I should prefer a living estuary rather than a dead and polluted bay.

Mr. Hain

When I became a Member on 16 April 1991, I was escorted by my hon. Friends the Members for Cardiff, South and Penarth (Mr. Michael) and for Pontypridd (Dr. Howells). The significance of those two supporters is that my hon. Friend the Member for Cardiff, South and Penarth was my boss in the by-election campaign—a very successful one, for which he was largely responsible. His primary duty was to keep me in order. My hon. Friend the Member for Pontypridd's primary responsibility was to be my minder—to keep me swimming vertically through the rain which drenched that by-election. The same day as they escorted me into the Chamber they fell out in the debate on the Cardiff Bay Barrage Bill, then a private Bill. The House sat all night debating it. My hon. Friends kindly advised me immediately prior to the debate to go home and spend the evening with my wife. They believed that my political virginity ought not to be lost during the debate on the Cardiff Bay Barrage Bill. I gratefully took their advice. Therefore, I intervene now with some trepidation.

I pay tribute to my hon. Friend the Member for Cardiff, South and Penarth for the diligence with which he has defended his case and for the way in which he has sought to attract an important development to his constituency. It is understandable that he should have done so and I would not deny his right to do so, or the persistence and energy with which he has pursued his case. There are many issues, however, that I as a valley Member of Parliament in south Wales and as someone who is concerned with the general impact of policy throughout Wales—in particular on the south Wales valleys—need to raise on this Bill.

There are important environmental questions, some of which we shall debate later, some of which we debated earlier. I refer to the effect of the barrage on the flora and fauna. The real issue, which I want to address and which is addressed in our amendments, is the cost. In terms of the economy of Wales, and even more in terms of the economy of south Wales, huge costs will be absorbed by the development—perhaps as much as £500 million in direct costs. The figure is movable, as my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) has demonstrated eloquently. Nevertheless, the figure is of that order and, on one estimate, it may increase to as much as £1 billion over the years.

The issue that we are entitled to put to the House and on which we are entitled to have an answer is the question of priorities. I can think of communities at the top of the valleys in my constituency which are becoming increasingly deprived as jobs are stripped out of them almost weekly—no, certainly weekly. I think of communities such as Cwmllinfell, Gwauncaegurwen, Banwen and many others.

Those communities ask me, "Where are we being looked after? Where are our interests being protected in the overall strategy being developed by the Welsh Office or by the Government this parliamentary Session?" Those communities look at the substantial costs being borne by the public sector—a point to which I shall return. They ask what the Government's priorities are and whether they are to have more investment so that, as one resident rather cynically said to me at my surgery on a Saturday morning in the little village of Tairgwaith, which feels itself to be forgotten and isolated, the people in those communities can sail their yachts and moor them in the new marina which will be set up around the Cardiff bay barrage. Anyone who knows those communities knows that that is a fanciful notion, to say the least.

Those residents raise the question of priorities and ask whether the priority is for development in the Cardiff bay area or for those huge sums, or their equivalent, to be directed towards valley communities which have suffered more than any others from the impact of Government policies, especially over the past 10 years.

When we consider the valleys and the costs that will be incurred under the Bill, if it is enacted, we should bear in mind that regional preferential assistance to Wales has been cut by almost 60 per cent. at constant prices between 1979 and 1991. The valleys initiative programme, which was launched in 1988, has brought little new funding to the valleys; it has been a question more of recycling existing programmes.

I will quote from the important study commissioned by the Neath conference which was recently held on the future of the valleys. The study was carried out by the Cardiff univerity lecturers Kevin Morgan and his assistant Adam Price, and is entitled, "A New Agenda for the Valleys". It is pertinent to our debate that they discuss the resources being channelled into the valleys compared with the resources being channelled into the area around the M4 corridor and into the relatively large conurbation of Cardiff, which we are discussing this evening, and Swansea.

The study says: While the aims and values of the Valleys Programme were laudable enough, the initiative was essentially a marketing exercise in the sense that it packaged together a host of policies and projects that were for the most part already in existence. Indeed, little or no extra funding was contained in the programme, even when the initiative was extended for a further two years". Those of us who represent valley communities would heartily endorse that statement.

The study points out that, as things stand, the valleys programme expires next March. The Government have not said that they will introduce a new programme which has anything like the scale of the resources that are being channelled into the Cardiff bay barrage development. There is talk of a new policy being unveiled and we shall have to wait and see what it is.

9.15 pm

The valleys initiative—which, as I said, expires in March next year—was intended to bring 25,000 to 30,000 new jobs to the valleys. In practice, its impact on employment levels in the valleys has been virtually nil. In 1988, when the programme was launched, the male unemployment rate for the valley areas was 18.9 per cent. In 1992, it is 18.7 per cent. Incidentally, those figures are much greater than those for Wales as a whole-—in 1988, 13.5 per cent. and now 13.1 per cent.—and for the United Kingdom as a whole—in 1988, 10.8 per cent. and now 13 per cent. We are talking about a major failure of Government policy.

While we sail blithely on, channelling sums which, in Welsh economic terms, are huge, into the Cardiff bay development, we are ignoring the plight of the valleys. The central valley areas—Aberdare, Rhymney, Merthyr, Pontypridd and the Rhondda—have male unemployment rates of 19 to 22 per cent. As my hon. Friend the Member for Merthyr Tydfil and Rhymney said, the figures are increasing all the time and, with the closure of the pits, they will rise even more steeply. We are talking about an important principle. My major reservation about the Bill—a reservation that the amendment seeks to address—arises from the huge sums that are being channelled into the Cardiff bay development at the expense of other more deserving and urgent priorities elsewhere in south Wales, in particular, in the much-deprived valley communities.

There is another linked issue. Supporters of the Bill—particularly those who represent the constituencies affected, whose view I can well understand—argue that the development will involve a huge injection of capital and of public sector investment which ought to be welcomed. But there is an opportunity cost in all this—an economic factor which it is important to take into account. If one channels investment, whether public or private sector investment—and we are told that, over the years, the bulk of the investment will come from the private sector—into a given area, it will be at the expense of investment elsewhere.

We are advancing that central argument in the context of another argument which I find very worrying indeed: the conventional wisdom surrounding policy making in Wales at present is that we must always talk of a greater Cardiff or a greater Swansea. Although it is understandable that people in Cardiff should seek to defend their interests and attract new investment and capital if they can, I challenge the whole notion of south Wales depending on a greater Cardiff or a greater Swansea. The valleys are forgotten backwaters in all this—at best, dormitories or commuter belts for the greater Cardiff and Swansea areas—and all investment is channelled to the M4 corridor. We have deprived working-class communities hidden at the top of the valleys, with very poor infrastructure and pathetic transport facilities.

Let us address the question of unemployment in the valley communities. My hon. Friends have said that many people who work in Cardiff come from outside it. The logic is that if one channels more jobs and investment into the Cardiff area, there will be more opportunities for workers to commute to it. But many unemployed people cannot afford to commute. Many of the people living in remote villages such as Seven Sisters and Banwen cannot afford to commute because the bus fares are prohibitive—where buses run at all—and they certainly cannot afford to purchase cars. They are locked into a vicious circle of unemployment and trapped in communities from which it is impossible to escape. To my mind, the logical solution to that is not to introduce massive new job and investment opportunities around the M4, greater Cardiff or greater Swansea areas but to invest in valley communities and provide the manufacturing opportunities for those communities that they have traditionally enjoyed.

In support of my argument, I quote again the important study by Morgan and Price. It says: With the long and painful decline of the coal industry the Valley communities have been forced to seek an alternative economic vocation, principally in manufacturing and service industries. This economic transition, which is still far from complete, has triggered enormous changes within these communities. In labour market terms perhaps the two most dramatic changes in the post-war era are the decline of a male-dominated workforce on the one hand and, on the other hand, the growing 'dormitory' status of the Valleys, reflecting the fact that new job opportunities tend to be biased towards the south, in Cardiff and along the so-called M4 corridor." That issue is not being addressed by the Welsh Office, and is certainly being ignored in the context of the enormous investment that is contemplated for the Cardiff bay barrage development. The whole issue is thrown into sharp relief by the threat and the reality of pit closures piling one on top of the other. Taff Merthyr in the constituency of my hon. Friend the Member for Merthyr Tydfil and Rhymney and Betws in the constituency of my right hon. Friend the Member for Llanelli (Mr. Davies) have gone. What future is there for those valley communities? None, as far as the Welsh Office is concerned.

Against the background of the position in the valleys, I now turn my attention specifically to the costs of the Cardiff bay development, about which there is some dubiety. In a debate in the House, the then Under-Secretary of State for Wales, in response to my hon. Friend the Member for Merthyr Tydfil and Rhymney, said: we will ensure that sufficient funding will be made available to enable the corporation"— that is, the Cardiff bay development corporation—

to carry through its task".—[Official Report, 19 December 1989; Vol. 164, c. 308.] That is an interesting statement. I wish that sufficient funding was being made available to valley communities to carry out the necessary regeneration and provide the investment that those areas so desperately need. It is almost as if the Government were willing to write a blank cheque for investment in the prime development by which they have set so much store in Cardiff bay.

The figures have changed and there is a certain mystification around them.

Mr. Rogers

The Government's support for the scheme seems rather surprising. I do not wish to argue the merits of the scheme vis-a-vis the needs of the valley communities. Does my hon. Friend agree that one reason why the Government are investing so much money in the Cardiff bay development may be their close, almost incestuous relationship with Associated British Ports, which owns substantial areas of land which will be developed under the scheme? The company will make enormous profits. Leaving aside the merits of the scheme in housing and social benefits for Cardiff, which I am sure will come, one of the greatest profiteers will be Associated British Ports. It is fairly significant that Lord Crickhowell, a former Secretary of State for Wales, is a director—not the chairman, as I once mistakenly said—of that company.

Madam Deputy Speaker

Order. May I remind the hon. Gentleman again of my previous strictures, which seem to have been forgotten.

Mr. Hain

I found my hon. Friend's intervention most helpful. I would add only that I think that the ports authority to which my hon. Friend referred has been a large donator to Conservative party funds over the years. Perhaps the two factors of its role in the development and the encouragement that the Welsh Office is giving are not unlinked.

I wish to delve more deeply into the costs of the project; they appear rather uncertain. We are told that the latest direct cost of the barrage, at 1991–92 prices, is £152.76 million. As the background documentation provided by the Welsh Office shows, that makes a number of assumptions. For example, it assumes that inflation is based on the gross domestic product deflator at market prices dated March 1992—right the way through to 1995–96. We all know that since March 1992 a great deal has happened to the British economy. Even more has happened in the past month which renders all sorts of forecasts, assessments and calculations dubious to say the least, and it makes those who have been making the forecasts look extremely silly, not least the Chancellor. I am doubtful that that will turn out to be the final cost if the project proceeds. It also assumes inflation at a constant 2.5 per cent. after 1995–96. How can anyone project what inflation will be after 1995–96, especially with the pound bobbing up and down as it is? For the life of me, I cannot understand.

I question whether even the basic ball-park figures given by the Welsh Office stand up. Nevertheless, the figure of £152.76 million is extremely large, although it appears that the total public sector contribution will be nearly double that amount, at about £300 million. Perhaps the Minister can clarify that for me at an appropriate moment. We are talking about a great deal of money for something that offers the Welsh economy—as opposed to Cardiff—very little return.

Let us consider the details of the figures given by the KPMG Management Consulting report, which analyses the costs. My hon. Friend the Member for Merthyr Tydfil and Rhymney has considered that report in some detail. It contains a series of questions that we need to ask. Page 12 of the report gives a figure of £34 million for public utilities with the barrage, and £25.5 million without it. Nowhere in the background documentation made available for the debate does it explain what those public utilities are, although it may be tucked away in files from some years ago. Do they include privatised utilities which are simply described under the generic heading of public utilities, in which case there is presumably no ultimate cost to the Exchequer? Do they include what few genuinely publicly owned utilities we have left, such as the Post Office or British Rail, in which case there would be an impact on the public sector borrowing requirement if nothing else?

There is a great deal to be asked about the detail of the report, which seems flimsy and skimpy to me. If the Minister responds to the debate, as I am sure that he will, will he answer those questions with greater precision than has been provided in the background documentation? We are entitled to question and challenge not merely the total cost involved but how it is made up. We are even more entitled to do so when we consider some of the assumptions in the KPMG report, which has been put before us as a bible on the background information to the discussion.

On page 16, in paragraph 4.15, the report states that in making the assumptions about the return on the investment that the Government are contemplating and that the private sector will be invited to contemplate, Whilst the key projected rental (and land value) growth rates have been adjusted downwards"— over the previous assessment— the scale of this adjustment reflects the fact that Chesterton"— the consultants— do not consider that the current recession in the property market has substantially undermined the growth rates incorporated within the January 1990 economic appraisal. What an extraordinary statement to make. The property market has almost collapsed and property values are spiralling downwards, but KPMG suggests that the Cardiff bay development will somehow pass by that phenomenon. On page 17 of the KPMG report, in paragraph 4.17, the consultants, Chesterton, are cited as saying: The current recession and any decline in property values represents a shortterm downturn in the market and will have only a limited impact on longterm growth rates. I find that assertion absolutely staggering. As my hon. Friend the Member for Merthyr Tydfil and Rhymney has said, that is an ostrich-like approach. The consultants are burying their heads in the sand or the wastelands of the British economy.

Judged by current economic trends in the United Kingdom economy, and certainly in the Welsh economy, the property market has collapsed and there is no prospect of it reviving and returning to the growth levels and the return on investment levels that were predicated in the report. The report is fatally flawed and, therefore, the economic case behind the Cardiff bay development is also fatally flawed.

9.30 pm

In the past few years we have witnessed the end of the grand property development era. Then, one could have a plan based on visionary, large-scale developments that centred on return on property rather than real economic indicators and forces. In this context one need look no further than the example of Canary wharf, which is relevant to the Cardiff bay development in terms of property values—I am not seeking to make wider comparisons about specific characteristics or objectives. Canary wharf carried a total investment of £3 billion. The original prospectuses for Canary wharf that drew in such investors as Olympia and York—at huge cost and its ultimate bankruptcy—contained all sorts of optimistic predictions of the kind now made in the KPMG report and by the Welsh Office on behalf of the Cardiff bay development project.

The banks, predominantly British but some foreign, are now owed £1.2 billion by the Canary wharf developers and they have no prospect of getting it back. How many loan financiers, capital venture sources and banks will be required to put in the significant sums of money, although not of the scale required by Canary wharf, needed to realise the dreams that the architects of the Cardiff bay development have advanced?

It is also significant that 4.5 million sq ft of space is empty on Canary wharf and just 11 per cent. of the site has been filled. That has relevance for the Cardiff bay development when one considers the plans for its wider site. What is the likelihood of the Cardiff bay development filling all the office space that it is providing? That question has even greater importance when one considers the United Kingdom economy. In Cardiff, as much as 30 per cent. of office space is empty now.

The London docklands project is similar in many respects to the Cardiff bay development. An independent corporation was set up which is not directly accountable to local authorities or to the local people. It was pushed through by the Government and displayed much of the same thinking as that for the Cardiff bay development because all the eggs were put in the property basket rather than being devoted to industrial and manufacturing development. The local economy in London's docklands has all but collapsed, with house prices having plummeted. Although the local people need housing, many of the houses provided as part of the docklands development—built at prices far greater than local folk could afford—are standing empty because they cannot be sold. About 40 per cent. of office space in London's docklands is also empty. All in all, we have much to question about the economic and industrial assumptions behind the Cardiff bay development project.

It is also interesting to note that average unemployment in London's docklands now stands at 21.6 per cent., the level of unemployment to be found in the valley communities of south Wales. Yet London's docklands was intended to be a leading pace setter for the new Britain and was going to show the way for developments elsewhere in the country. Newham has an unemployment rate of 21.9 per cent.; Tower Hamlets, 24.4 per cent.; Southwark, 20.3 per cent. That is the position after all that money has been ploughed in through the London Docklands development corporation. When we consider the prospects facing Cardiff bay and the economic investment involved and then weigh up the pros and cons, we see the fundamentally flawed thinking behind it.

I draw attention to an aspect of the KPMG report to which my hon. Friend the Member for Merthyr Tydfil and Rhymney referred. Table 11, on page 26, gives a calculation of direct employment effects. Not only does it show that with the barrage there will be 1,232 fewer industrial or manufacturing jobs, but it suggests that there will be 1,619 more retail jobs and 2,184 more leisure jobs than if the development proceeded without the barrage.

Such prospects are greatly welcomed by local people, but I question the whole economic thinking behind the figures. I refer to the assumption that dominated the Thatcherite years, that is being continued in the Major years and is apparently being followed in the Hunt years in Wales. There is a belief that we can have retail, leisure and service industries without a manufacturing base. That thinking is flawed. It has led us into a situation in which we have a chronic balance of payments crisis throughout the United Kingdom economy and a chronic balance of trade crisis in the Welsh economy.

I do not believe, if the development goes ahead, that we shall achieve the creation of that level of jobs. The figures do not add up. Laid out for us in this initiative by the Government, along with all their other policies, is an attempt to turn south Wales into a low-skill, low-wage, low-quality assembly line service economy, diversified here and there but without any serious attention being given to the desperate need for investment in manufacturing industry which is capable of reviving our economy and providing the essential base and foundation from which all other developments could then derive.

If the Cardiff bay development had been put forward against the background and within the context of a serious industrial strategy for Wales which was geared at reviving the manufacturing base of the valley communities—recognising that they are industrial villages with traditions and skills to offer which, if harnessed by Government support, could build a prosperous new future—I might be taking a more sanguine attitude towards the Bill. I still might have questions to ask about the essential fallacies of the property basis of the economics behind it, but I might be prepared to put such questions on one side because the Government were recognising the needs of the valleys, the need for manufacturing investment and the need to build a real economy as opposed to the flotsam and jetsam economy that is offered to us now.

To find the essential flaws in the economic strategy underpinning the Bill, one need look no further than south-east England. Its economy was said to epitomise the success of Thatcherism, consisting entirely of services and retail and leisure developments—many marinas and peripheral, nice-looking developments but no serious economic development. In the past few years, south-east England has suffered even greater unemployment increases than the valley communities have experienced until now. That has happened because it is an economy built on shifting sand, with no real basis. I fear that the Cardiff bay development project will end up going down the same route.

Mr. Jon Owen Jones

First, I thank my hon. Friend the Member for Neath (Mr. Hain) for his thoughtful contribution in which he tried to set the Bill in the context of the whole Welsh economy. He largely moved away from the beggar-thy-neighbour approach which, unfortunately, I had been hearing. I also congratulate my hon. Friend on holding the Neath declaration in his constituency. I have already apologised for being unable to attend.

I make one criticism of my hon. Friend's approach in Neath and in his speech. I do not believe that it is possible to divorce the economies of Cardiff and Swansea from that of the valley hinterland from which they originally sprung and in which the work force is totally immersed. There must be a south Wales strategy for the economy and, unfortunately, the Government do not have one. It must involve Cardiff and Swansea as well as the valleys. As long as we allow the Government to set communities against one another in the sort of debate that we have been having until now, we are doing our home communities and our party no good. A few comments have been made about deprivation in the valleys compared with that in Cardiff, which, it has been implied, is a wealthy yuppy area—[Interruption.] That has been implied in a number of speeches.

The latest statistics published by the Library on 16 October this year show that, for the past two years, the highest unemployment rate in Wales has been in Cardiff—in Cardiff, West—the second highest has been in my constituency of Cardiff, Central and the fifth highest has been in Cardiff, South and Penarth.

Mr. Ron Davies

My hon. Friend will understand that those figures are based on the Government's present calculation of unemployment. That description of unemployment may show a high rate of unemployment in the Cardiff constituencies, but many unemployed people in the valley communities are excluded from the count by virtue of their previous occupations and because the figures have been massaged. I hope that my hon. Friend will take that point to heart and recognise that it can be misleading to use comparisons based on those figures.

Mr. Jones

I thank my hon. Friend for drawing that to my attention. I was aware of it. My home village of Maerdy is a mining community with 33 per cent. male unemployment, two years after the pit closed. I know very well how depressed the mining communities are and I do not try to show disparities or make comparisons between them. I am trying to develop the argument that the south-west and central parts of Cardiff are in themselves depressed regions. In the Adamsdown ward, in my constituency, male unemployment is more than 30 per cent. In Butetown, in the constituency of my hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael), it is 56 per cent. I do not think that any area in south Wales approaches that level of unemployment. We must not pretend or be fooled into thinking that the valleys are the only depressed areas in south Wales. Hon. Members have spoken about development along the M4 corridor, but the geography of south Wales is such that that corridor lies between Cardiff and the valleys. It is not to the south of Cardiff where it is planned to build the barrage.

9.45 pm

It is projected that the barrage will create 10,000 jobs, not 23,000. I like to think that that number of jobs would be created, but I am sceptical, just as I am sceptical about the number of jobs to be created by any project. However, my scepticism has not in the past prevented me from supporting development in other areas even though I did not think that jobs would be created. If 10,000 jobs were created at the inflated costs mentioned by some of my hon. Friends, it would work out at £200 or £300 a job, which is enormously cheap. Even if 10,000 jobs are not created and costs are much higher, the jobs would still be value for money compared with the £800 million spent on the valleys initiative which has not delivered jobs. Even if the project did not deliver the number of jobs that we would like to see, it would not stop me from supporting any project in the valleys.

Mr. Win Griffiths

I have been listening carefully to my hon. Friend and examining the report's assumptions about direct job creation. I cannot discover whether the jobs are already in the Cardiff bay area. Are they additional to the number of jobs in, for example, south Glamorgan, or will the jobs created in the barrage area be transferred from other parts of south Glamorgan or even south Wales?

Mr. Jones

In so far as I understand the question, when a company locates in an area and creates jobs it tends to attract people who are already in work. But there is a knock-on effect because people who move from one job to take up another leave vacancies.

Mr.Rowlands

Will my hon Friend give way?

Mr. Jones

I shall give way later.

It has been said that the barrage will create jobs based only on property development. Before I was elected as the Member of Parliament representing Cardiff, Central, I was chairman of economic development in Cardiff. In that post, I met many business men and women who were either based in Cardiff or were looking to be based there. For them, as for me, the main argument in favour of the barrage in our negotiations with various companies that we were trying to attract into the city was that, it would give Cardiff the edge that would enable it to attract to the capital of Wales companies that would not otherwise come because other areas would be equally attractive. By that, I do not mean the valley areas to the north. Without the edge given by the barrage, those companies would not locate in Neath, much as I would like them to, or in Merthyr. They would go to Bath, Bristol or Swindon.

Mr. Rogers

It would be incredibly stupid to argue about the valleys versus Cardiff, and I may have something to say about that later. The Cardiff Bay development corporation, the city of Cardiff and the county of South Glamorgan have done an admirable job in redeveloping the derelict area of the Cardiff docklands. My only objection to this project is that we would spend almost £500 million of public money on an exercise that will not accelerate that process, or make available a single square inch more of land. I will leave it at that because my interventions have been rather long.

Mr. Jones

If you had been present earlier, Madam Speaker, you would have heard my hon. Friend make that point twice. I am not arguing for Cardiff against the valleys—quite the reverse. I am trying to counter the argument, put by several speakers already, for the valleys against Cardiff. The two economies are interlinked and cannot be divorced from each other. What would benefit one would benefit the other.

Mr. Rowlands

I was modestly surprised that my hon. Friend gullibly quoted £800 million as the amount that came into the valleys as a result of the valleys initiative. I beg him not to use that figure because it has no basis in reality, truth or fact. It is Walker's figure.

Mr. Jones

The £800 million was not new money coming into the area but money that was spent in the valleys.

Mr. Rowlands

Do not say that. It is not true.

Mr. Rogers

My hon. Friend is right. It is not true. I know that my hon. Friend the Member for Cardiff, Central (Mr. Jones) was born in the valleys. If he analysed that figure and counted the expenditure in the valleys as a result of that initiative, he would see that this talk of £800 million is absolute nonsense. The figure is peddled by Lord Walker to build up his reputation so that he gets jobs such as that which he got yesterday.

Several Hon. Members

rose—

Madam Speaker

Did the hon. Member for Rhondda (Mr. Rogers) make an intervention? If so, I shall call the Minister.

Mr. Morgan

rose—

Madam Speaker

Is the hon. Member for Rhondda seeking the floor?

Mr. Rogers

I am, Madam Speaker. Thank you. I did not realise that my hon. Friend the Member for Cardiff, Central had finished.

I start with an apology. During our debate on these matters on 25 November 1991, I made some remarks about Associated British Ports. I am sure that hon. Members will know that I am not a great fan of ABP. However, I made some statements which were incorrect. Sir Keith Stuart, the chairman of ABP, wrote to me and I telephoned to him and apologised. It is appropriate, even a year later, to apologise to him in the Chamber and so put it on the record. I said that Lord Crickhowell was the chairman of ABP when, of course, he was not. Sir Keith Stuart is the chairman. The former Secretary of State for Wales, who is now Lord Crickhowell, was a non-executive director. My hon. Friend the Member for Neath (Mr. Hain) committed the same sin.

Sir Keith has told me that Associated British Ports has never made any contribution to the Conservative party. Many of us thought at one time that the parties which took place in connection with the development of ports on the east coast and to which Conservative Members were invited were funded by ABP. They probably were, but the company has made no direct contribution to the Conservative party.

Mr. Hain

I take the opportunity to withdraw my earlier remark. I made it because I read the remarks of my hon. Friend in Hansard. As I take everything he says to be the veritable truth and cast in stone, I repeated what he said earlier this evening.

Mr. Rogers

That is why I wanted to put my apology on the record in fairness to Sir Keith Stuart and Associated British Ports. ABP is obviously a company that looks after its own interests. That, of course, is what it is about. That is why it is in business. At least it has the sense not to make contributions to the Conservative party, which is very much to its credit.

I said also—perhaps it was a loose phrase—that the company had its hand in many tills. Sir Keith Stuart felt that that was an allegation that ABP was involved in dishonest dealings. I did not believe that it was involved in any such dealings. I simply wanted to draw the attention of the House to the fact that it was involved in many schemes where it was making a lot of money, one of which was the Cardiff bay scheme.

The scheme was initiated during the reign of Lord Crickhowell, who is a non-executive director of ABP. Oddly enough, he was the new chairman—he is now the old chairman—of the National Rivers Authority, and the job of the NRA chairman is to keep rivers clean. Over the years, during which the Cardiff bay scheme has been developing, many of us have felt that there has been a conflict of interest. So has Lord Crickhowell—he said that his position, on his instruction, was that anyone at the NRA giving advice on Cardiff bay must not refer to him. On the other hand, the dead weight of his authority and his position is there.

One body which will make an enormous killing out of the development will be Associated British Ports. I have always thought that to build the barrage before the houses would drive up house prices. With due respect to my hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael), I have always wondered how he would explain that to his constituents. Recently, as a result of the Government's policies, house prices have been driven down, so that argument is no longer valid. I think that the original proposal was for 6,000 houses, about 1,500 of which were social houses—

It being Ten o'clock, the debate stood adjourned.

Debate to he resumed tomorrow.