Regional Development (Wales)

HC Deb 28 June 1993 vol 227 cc719-57 7.34 pm

Mr. Cynog Dafis (Ceredigion and Pembroke, North)

I beg to move, That this House condemns the reduction in resources for regional development by the United Kingdom Government; notes that this is in stark contrast to the policy of the European Community, which actively promotes regional development in order to improve the infrastructure and economies of peripheral nations and regions; and calls on the Secretary of State for Wales to ensure that the whole of Wales benefits from a wide range of instruments for regional development, including assisted area status. The timing of this debate is particularly opportune, for several reasons. We have a new Secretary of State for Wales—a Secretary of State who inevitably knows little about Wales. There is nothing unusual about that—with the Tories, of course, it is par for the course. The House will know perfectly well Plaid Cymru's remedy for that chronic situation. I shall return to that point later.

It is equally significant, perhaps, that Wales knows little about the new Secretary of State. True, his reputation has come before him—a Thatcherite, as dry as a bone, a non-interventionist free marketeer, so it is said, thus inevitably one who is less than enthusiastic, perhaps highly sceptical, about what is termed regional development policy. However, that might be a completely false impression. Among other matters, the debate provides an opportunity to begin to find out what creature the Secretary of State is. I use the word "creature" in its original and best meaning—a person created. If he wishes, this is an opportunity for him to dispel the image of him that I have just presented.

I make it clear at the outset that, when members of my party speak of regional development policy, we do not mean developing Wales as a region; we mean the development of the regions of Wales. Wales is not a region; Wales is a nation. We in Plaid Cymru say that the prime reason why almost the whole of Wales is in such need of regional development policy is that we in Wales have not taken our nationality sufficiently seriously. We have failed to bring into being the institutions, in particular a properly constituted Government accountable to a democratic Parliament, that would enable the people collectively to take Wales's future into their own hands. That is an interpretation that more and more people in Wales are beginning to accept, and with more and more conviction.

One of the factors that have brought about that evolution of opinion over recent years has been the absurdity and the incongruousness—it would be comical were it not so infuriating—of the fact that three successive Secretaries of State for Wales have been English, representatives of English constituencies and members of a Government pursuing policies that are quite unacceptable to the people of Wales.

We in Plaid Cymru and other hon. Members want national development in Wales, and that entails the economic development of Wales's regions in order to provide prosperity for our people, the material underpinning of our communities with their varied Welsh cultures, opportunities for fulfilment within Wales for our young people, and the encouragement of confidence and self-reliance among the people of Wales. The underlying chronic debilitating problem of Wales has been the continued out-migration of our young people over a long period—a continuous brain drain from Wales. Building a national future for Wales must entail tackling that underlying historic problem.

Of course, the Conservative Government have made some concessions to Welsh distinctiveness, lest, I suppose, the natives become restless. Two of the three previous viceroys have become wets, as they are called. They have made much use of Wales as a laboratory to test and demonstrate the effectiveness of relatively—I emphasise the word "relatively"—interventionist economic strategies. We have been told that that is typical of Conservative administration in Wales recently. It remains to be seen whether the Secretary of State will belie his reputation or prove himself to be of the same ilk as the previous two, or perhaps three, Secretaries of State.

That relative interventionism, as we might call it, has meant that Wales has endured a reduction in Government expenditure on regional and financial assistance of 62 per cent., compared with 79 per cent. for Great Britain as a whole. If that sounds a bit like damning with faint praise, as Pope would have it, that is exactly what it was meant to be. Funds from the Exchequer for the Welsh Development Agency stood at £87 million in 1991–92, compared with £112 million in 1979–80, at constant prices.

Notwithstanding the reduction in funding, the WDA is a powerful agency. I shall be interested to hear what the Secretary of State has to say about its future. It has been suggested that the WDA has trumpeted its own success to such a degree as to imperil its future by, first, arousing envy among the English regions and, secondly, causing some people to believe that its survival is no longer necessary. The WDA is a great success story of the Welsh economy.

That weakness—that peccadillo—of the WDA is less true of the Development Board for Rural Wales. That board has done important work in the rural areas of mid-Wales and is now targeting—as it should—the western seaboard, which includes a great deal of my constituency. That work must continue. We must ensure that the commitment to those areas in Wales is maintained.

Mr. Jonathan Evans (Brecon and Radnor)

Before the hon. Gentleman leaves the issue of the WDA and the Development Board for Rural Wales, perhaps he will recognise that the way in which those organisations have operated recently has led to there being much more in terms of a partnership between private business and the agencies. That is different from the situation that existed at the inception of the WDA. Does he think that that shows that the agencies have a glowing future, in line with the whole approach of Government policy in terms of a partnership between the Government and private business?

Mr. Dafis

I have no objection at all to the principle of a partnership between public agencies such as the WDA and the private sector. Long may such a partnership continue and develop. However, it is not the same as always tying the funds that public agencies should he putting into certain developments to the availability of private moneys in connection with them. Be that as it may—a partnership of that sort must be welcomed.

It is worth considering what exactly has been achieved by regional policy in Wales, including the activities of the WDA over the past decade. I shall leave aside for a moment the pitiful inadequacy of the response in the 1960s and the 1970s—I make no apology for that period—to the massive structural change that the Welsh economy was undergoing. There were serious deficiencies at that time.

There were successes in the 1980s, but they were partial at best. That is not to whinge—it is simply to face the truth. It is important that we do not allow any propagandist self-deception to prevent us from looking the facts straight in the face and examining the current needs of the Welsh economy.

Mr. Alex Carlile (Montgomery)

I agree with the hon. Gentleman's comment that the improvements have been partial. Does he agree that, if the remit of the Development Board for Rural Wales were widened somewhat so that it could take a more active part in both agriculture and tourism, its success might be rather more holistic?

Mr. Dafis

I am grateful for that intervention. An holistic approach is certainly what we need in rural Wales, as elsewhere. Clearly, industrial development needs to be considered, together with the state of the agricultural industry. I go further to say that such developments need to be considered in relation to cultural issues and cultural development. Recently, the DBRW has become more sensitive to such considerations, and I am glad to see that sort of development.

In what way has the achievement been partial? Inward investment has been largely limited to south-east and north-east Wales. I have the figures for the period 1983–88, but I do not think that they would be much different today. At that time, 84 per cent. of inward investment went to the three Glamorgans and Gwent alone. With Clwyd, it added up to 93.9 per cent. Effectively, inward investment has been limited in Gwynedd and it has hardly touched Dyfed and Powys. I do not think that things have changed since then.

Mr. Tim Devlin (Stockton, South)

The United Kingdom as a whole has been lucky enough to attract nearly 30 per cent. of the total amount of inward investment in the European Community. The vast majority of it goes either to Scotland, where it is pooled by the Scottish Development Agency, or to the Welsh Development Agency. Meanwhile, the north of England, which must trundle along with the Northern Development Company, has been successful, but not to anything like the same degree as the WDA.

My hon. Friend the Member for Hastings and Rye (Ms Lait) is here to plead for the sort of assistance that the hon. Gentleman is taking much too readily for granted in southern and northern Wales. Incidentally, the people living in those two parts of Wales need regional assistance.

Mr. Dafis

I am here tonight unashamedly to plead the cause of Wales. That is certainly my priority. In the creaking United Kingdom framework, it is only right and proper that the national nature of Wales and Scotland should be recognised by different agencies. I am not in the business of bandying figures about or making comparisons of that sort—I am simply examining what has been achieved in terms of regional policy in Wales as a result of the activities of the WDA. I am simply saying that inward investment has touched only relatively confined parts of Wales. Even in Glamorgan and Gwent, its effect has been strictly limited in territorial terms.

The south Wales valleys are the cradle of Welsh industrial development—[Interruption.]—with politics of various sorts. We have all read Lewis Jones and we all know about little Moscow, the great tradition of Welsh Labour politics and the rapid growth of Plaid Cymru support in the industrial valleys. I am speaking with great affection about the south Wales valleys, which are so important to the cultural make-up of Wales. Recently, unemployment in those valleys has reached the same level as that in the 1930s. Each year, 1,000 people move from those valleys. Even in south-east Wales, the effect of inward investment and industrial development has been partial. That is my point.

There is also the problem of low pay. During the 1980s, Wales fell from fourth to ninth position among the British regions for male full-time manual earnings, from fifth to 10th for non-manual males and from seventh to ninth for professional women. Activity rates—which are a key indicator of the nature and health of an economy—among males of working age are 9 per cent. below the British average. Dependency rates, reflecting in part the migration of the young, which I mentioned earlier, are high. There are deep structural deficiencies.

Meanwhile, the economy of rural Wales, and therefore of its communities—economies and communities go together—are in a truly perilous state. That is no exaggeration. In agriculture, there has been a rapid reduction in the number of holdings and in full-time employment—a process which is not yet complete, I fear. We see the centralisation of many services, out of rural areas, and out of villages and small towns. Our nuclear power stations, which are important employers, face an uncertain future. In Dyfed, the closure of military establishments is dealing a devastating blow to many areas. There are deep and serious problems in rural Wales. There is widespread cynicism in Pembrokeshire about the Welsh Office's response to the closure of defence establishments there.

The former Secretary of State, in the run-up to the 1992 general election, established a west Wales task force which was charged with drawing up a strategy for the economic revitalisation of the area. Prestigious and able consultants were appointed, and it was announced that the strategy was to be complete and ready for action by September 1992. A seriously inadequate strategy document was made available for a meeting at Gwydyr house at the end of January 1993, several months late.

The key recommendation was that the task force should be revamped and that a new project director should be appointed. That was a key appointment. It was not until 25 April this year that the WDA was told that it was to be given the job of organising the new task force. Not surprisingly, the project director is yet to be appointed. All those months of lost opportunities have been mentioned by people working in the area. It has been a disgraceful affair from start to finish. The task force is, I believe, once more under way, and I wish it well. I have been positive in my response to the existence of the task force all along and I intend to continue to be positive, despite the serious faults in the way in which the matter has been handled.

Fundamental to the recommendations about the task force was the recommendation that the Fishguard travel-to-work area should be granted full development area status. Here we come to an important theme in tonight's debate, which is mentioned in the motion. There must be full development area status for the Fishguard area. It will 13e astonishing if that is not implemented, although such implementation should not be at the expense of the parts of Wales that currently enjoy assisted area status.

Rumour currently tells us that parts of Wales, including parts of my constituency, may lose assisted area status. That is entirely unacceptable. I hope that my remarks so far have highlighted the massive task that remain:; to be carried out in regional development policy in Wales. We need not a rundown, but a strengthening, of regional policy. There is scope for modification, for refinement and for changes in direction. There is a need to pinpoint for special attention the areas, already mentioned, that are suffering severe difficulties. I think especially of the south Wales valleys, areas in my constituency and areas in the north which need special attention.

It is accepted by the development agencies, including the DBRW, that we need greater emphasis on indigenous businesses, on the encouraging of local sourcing and on the creation of networks between businesses within areas. We need more emphasis on skills enhancement, on innovation, and on the availability of information of the highest quality to individuals, to companies and to public authorities. We need such information to be facilitated through the development of modern technology. All those themes need to be pursued more now than in the past, in a general context of strengthening regional policy and especially of maintaining assisted area status for the areas that have it now.

This is no time for downgrading, partly because that would convey entirely the wrong signal to the European Community. That point leads me to the second reason why the timing of this debate is opportune. EC structural funds are currently under review, so the months from now until the end of the year are important. It is vital that European regional development policy should be strengthened, because without a really powerful regional policy—this is perhaps the central issue—the effect of the single European market, the move towards a single European currency and monetary union will be devastating for peripheral and disadvantaged regions such as Wales.

Free trade and open markets can serve the interests of people, in the short term at least, as consumers. Open markets, open borders and free trade can also serve the interests of large, powerful organisations and conglomerates. As such, those developments have an inexorably centralising tendency, favouring areas that enjoy a competitive advantage. People are not just consumers, thank goodness; they are also workers and producers, and they are also members of communities with roots in cultures specific to particular places. Regional policy is a philosophical recognition, among other things, of that second aspect of human need—the need for people to be rooted in communities and to be infinitely more than merely consumers of goods.

The recognition of that need at European level is one reason why resources under the European structural funds were doubled between 1989 and 1993. That is why Maastricht envisages a further strengthening and development of regional policy. Wales is looking increasingly in the direction of Europe, and rightly so. Objective 2 status for regions seriously affected by industrial decline has been important in the industrial south-east and in the north-east. I am sure that hon. Members who represent those areas will wish to elaborate on that point.

As I represent a western constituency, I refer to the crucial importance of objective 5b status for Gwynedd, Dyfed and Powys. The £100 million provided for the integrated development operations programme has made possible road improvements. Regional development fund money has contributed to further education for 10,000 students in Dyfed alone. We have had the excellent Leader programme administered on the borders of my constituency and that of the hon. Member for Carmarthen (Mr. Williams) by Antur Teifi. It is a most exciting development. I was there not long ago at the opening of the new Telemateg centre. That programme was initiated under the Leader programme, and was a consequence of the fact that the area has objective 5b status.

The European regional development fund grant of £2 million will enable Stena Sealink to effect improvements to Fishguard harbour. That will make possible a third crossing, which is a crucial development for that port and for the southern corridor linking the Republic of Ireland through south Wales to the European continent. The fund has made an even more significant contribution to the development of Holyhead, which is crucial for the development of the central corridor.

I have given just a few examples. It is small wonder that Gwynedd, Dyfed and Powys seek to continue objective 5b status as essential to the development strategy. I support, as a person from the south, the wish of Aberconwy, Colwyn and Glyndwr to be included in objective 5b status. Clearly, those areas in the north belong to the same category. Currently the application for the new programme for 1994–99 is under consideration. This time it is a six-year programme. Here, time is of the essence.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)

I dare say that my hon. Friend will be interested to know that, five years ago, Aberconwy satisfied all the necessary criteria for objective 5b status. With the passage of time, Aberconwy has declined in economic terms. Does my hon. Friend agree that it is vital that its application this year should succeed?

Mr. Dafis

That proposal, and any emphasis on it, will have my whole-hearted support. It is good that Gwynedd, Dyfed and Powys are united in their support.

As I have indicated, time is of the essence in considering the application for the new programme. It is crucial that the system be in place by the end of the year so that the local authorities may make timely arrangements for co-financing—which is difficult these days, local government finance being what it is—and so that programmes may get under way promptly at the beginning of next year. The Secretary of State must ensure that progress is not held up in any way.

It seems that one area of dispute concerns the proposal in the Commission's green paper published on 16 June that 10 per cent. of total funding be given to European Community initiatives—programmes initiated by the Community itself in response to specific socio-economic situations. It is reported that the British Government want the proportion to be 7 per cent. instead of 10 per cent. In this regard, my party supports the Commission. We want to see the development of a partnership between the European Community and local authorities. Community initiatives must be given their proper place. I should say, by the way, that I am told that such initiatives are a means of ensuring that additionality actually applies. That is, of course, of great importance to the people of Wales.

In any case, at least three of the initiatives that I want to mention are particularly relevant to Wales. First, as many hon. Members will no doubt want to emphasise, we want a commitment of support for RECHAR 2—something that is very important to former coal-mining areas. Secondly, there is Konver for areas dependent on military installations and suffering the effects of cuts in that field. That is, of course, highly relevant to Dyfed and, in particular, to Pembrokeshire, which are reeling from the effects of the closure of Trecwn and Brawdy.

Applications under the current Konver programme were to have been received by June, according to information that I received earlier this year. However, until recently local authorities were unaware of the criteria for projects, as the information had not been provided. That is very worrying. I hear that the deadline has been extended by a month, and I hope that the Secretary of State will ensure that we shall not lose out. It is important that such funds be targeted at places, such as those in Wales, where defence establishments have been closed and that there be no failure by the Welsh Office to formulate and process applications.

Thirdly, there in Interreg. It is essential that the maritime border between Wales and Ireland be recognised for the purposes of this initiative. Co-operation between local authorities in Wales and local authorities in the Republic of Ireland is growing. I have attended several meetings of representatives of Welsh and Irish authorities. This is a highly encouraging development. Access to lnterreg—a very substantial fund—would enable Gwynedd and Dyfed to benefit from development in the Republic of Ireland.

Indeed, there has been substantial development in the Republic owing to its objective 1 status and its eligibility for cohesion fund money. In particular, the development of the central corridor through Holyhead and of the southern corridor through Fishguard as Euroroutesroad and rail—is of vital importance. The existence of an autonomous European state out there in the sea west of Wales is a factor of major importance and of enormous advantage to Wales, particularly west Wales.

Mention of objective 1 status, which will take 70 per cent. of all structural fund moneys, brings up the question of eligibility for rural Wales. I hope that the Secretary of State will continue to pursue this matter with the utmost energy. Eligibility would be of enormous advantage to Wales because of the size of the fund and because 75 per cent. funding of capital projects with objective 1 status would be made possible. It would be quite unacceptable if rural Wales were not included in objective I status.

I have said little about the nature and direction of the development in Wales that we wish to see by means of regional policy. That has not been my prime purpose today. I have already touched on the need for the so-called peripheral regions to develop co-operation and to become cohesive areas that trade with each other and share the benefits of contacts. I am not very keen on the term "peripheral regions", as so much depends on what one defines as the core. Developments of this kind are to be seen in a very interesting way in the statement of intent prepared by the Irish sea partnership of local authorities.

Policymakers need to be aware of the fact that the principle of environmental sustainability must very soon become the prime consideration in economic development—something of which not many people are yet aware. We need to plan accordingly. The shift towards this kind of sustainability—ultimately the only kind of sustainability—will have massive implications for transport, trade and all other aspects of the pattern of production, distribution and consumption. That is something to which we are just beginning to wake up.

Ultimately, if economic activity is not environmentally sustainable, it is not sustainable at all. We hear these days, in very responsible and well-informed quarters, talk of the future of the planet and of mankind being at stake. This is not empty rhetoric. Coming to terms with that fact will have monumental implications for regional policy in Wales, among other things. That is something of which we must be aware now.

In Wales, there are particularly relevant issues, such as our enormous potential for renewable energy. It is possible that we need new instruments of policy to ensure that those resources are developed in such a way as to strengthen the local economy and to empower the local community and enhance local self-reliance, which is a fundamental tenet of environmental sustainability.

I should like to emphasise a particular principle—that, in the context of open European borders and a completed European market, a strong and effective regional policy is absolutely essential. Naturally, we—I refer not just to members of my own party—believe that by far the best way for Wales to advocate this principle within Europe would be as an autonomous nation directly represented in the Community. Until we achieve that status—and afterwards, of course—partnerships between the Community and Welsh local authorities will have a role. So long as there is a need for such a person, we shall need a Secretary of State for Wales who is a vigorous and a committed proponent of regional development. I hope that the current Secretary of State will confirm tonight that he is such a person and that he will prove it in action over the coming months.

8.9 pm

The Secretary of State for Wales (Mr. John Redwood)

I beg to move, to leave out from 'House' to the end of the Question and to add instead thereof: 'welcomes the progress that the Welsh economy has made in recent years as a result of the Government's policies; and notes with approval that the Government intends to continue to pursue vigorously these same policies that have brought about this success.'. The most pressing priority for Wales and the whole United Kingdom is recovery which will bring new companies and new products, strengthen our industries, raise living standard and, above all, bring more jobs. I agree with the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) about that, but I do not for a moment agree with many of his other points.

He said that we had to cut the Welsh Development Agency budget, but the budget over which I am presiding this year is a record in both cash and real terms. As we have seen in the past few days, it and many other factors about Wales are delivering the goods in terms of many new jobs coming to Wales. I assure the hon. Gentleman and the House that the WDA has a fine future just as surely as it has had a proud track record in recent years.

Mr. Alex Carlile

Will the right hon. Gentleman also assure the House that the Development Board for Rural Wales has a fine long-term future in continuing the work that it has done so well so far?

Mr. Redwood

Our current plans are for a vigorous programme through that body as well as through the WDA.

I am glad that the hon. Member for Ceredigion and Pembroke, North welcomed the idea of partnership, although it is a pity that he almost choked when he used the word "success." He should be proud of the successes of Wales and those of the WDA. It ill behoves him to be jealous of success in the valleys, although I understand his wish to succeed everywhere. But if he is serious about winning votes from Labour in the valleys, he will have to be more enthusiastic about promoting the valleys as well as the other parts of Wales.

Labour's Front-Bench spokesman, the hon. Member for Caerphilly (Mr. Davies) laughs because he does not think that the 'Welsh nationalists could claim votes in the Welsh valleys. There will be more tension between those two parties as they rival each other to paint a portrait of gloom and conduct a Dutch auction of promises that they wil not have to fulfil.

Dr. Kim Howells (Pontypridd)

Is the Secretary of State saying that the Conservatives will not contest the valleys? In the local elections, many votes which would normally have gone to the Conservatives went to Plaid Cymru, but that was because the Conservatives did not put up any candidates.

Mr. Redwood

Of course the Conservatives will contest and win many more seats in Wales at the general election because of our economic success. In the long run-up to that election, there will be many disputes between the Opposition parties.

The west Wales task force was called into question in the introductory dirge by the hon. Member for Ceredigion and Pembroke, North. The WDA director for rural affairs is already acting as the executive on behalf of that task force beause we have not yet made a final appointment. He is doing that because local authorities are involved and wanted the job formally advertised. We are now doing that, but we do not want delay; that is why the rural affairs director is carrying out the task in the meantime.

Today I had the privilege of opening a new business centre at Milford Haven which is making a home for new enterprises in that part of Wales. I hope that the hon. Member for Ceredigion and Pembroke, North welcomes that. I went on to open a remodelled youth hostel at Trevine, which will also bring business and activity to that part of the national park. I want many more such schemes thriving there, based on the partnership that our activities are bringing to Wales. I wish to see maximum local involvetment in schemes funded by the EC, by the Government or by a variety of means. That is because locally driven and locally determined schemes and locally derived ideas are usually the best, and in a true partnership local people are needed to push ideas.

Of course the Government supported the idea of objective 1 status, but unfortunately the EC was not enthusiastic. We proposed it and there was no lack of enthusiasm by the Government; nor will there be any lack of enthusiasm in pressing other joint claims by the House to the EC in its review of regional funds and eligibility.

Mr. Dafydd Wigley (Caernarfon)

Does the Secretary of State agree that the sustaining of objective 2 status in Clwyd, Glamorgan and Gwent is predicated on the maintenance of assisted area status in those areas? Does he also agree that the Government have designated some of those assisted areas to be downgraded? Those areas will inevitably lose the possibility of objective 2 support as a direct result of London Government policy.

Mr. Redwood

I do not agree at all. We shall urge Wales's case upon the Commission for our revised regional map for our own assisted area status and in the wider connection about which the hon. Gentleman asks. Later in my speech, I shall deal with the state of play on the assisted area map.

A dynamic enterprise economy delivers recovery. The luxuries of yesterday become commonplace today. The jobs of tomorrow will be making things which are still on the drawing board or have yet to be invented. In the depth of the 1981 recession, people asked where the jobs would come from. Few predicted the speed or intensity of growth in pharmaceuticals and electronics, in biochemistry and in services, but that growth was the hallmark of the British recovery and growth of the late 1980s.

In the 1950s most homes lacked television, but by the 1980s practically every household owned one. In the 1970s few had video recorders, but they are now regular features of the living room. In the early 1980s, the rich few owned a microwave; today a majority of Welsh kitchens sport one. So it may be, too, with home computers, video cameras, satellite and cable television and a host of new products.

Mr. Rhodri Morgan (Cardiff, West)

They were all invented in Japan.

Mr. Redwood

The hon. Gentleman jibes that all those things were invented abroad. They were not, but I wish to see more such products invented and made in Wales and I hope that he shares that aim.

I trust that in moving this motion Opposition Members want Wales to prosper, but they look at only a small part of the story of how that can be brought about. Grants can help to clinch a deal or tip the balance with the marginal investment, but investors come to Wales or expand in Wales for many other reasons, which we must also encourage and support. Prudential Insurance, Toyota and Dow Corning all came without any regional selective assistance grant and they are all very welcome.

The Government have completed their review of assisted areas and have sent their proposals to the European Commission. If we judged by unemployment alone Wales would see its assisted area coverage fall from 85 per cent. to less than half its population, such has been the success in reducing relative unemployment in Wales compared with elsewhere in the country and in the Community.

Mr. David Hanson (Delyn)

rose—

Mr. Redwood

Perhaps the hon. Gentleman would allow me to complete my point. He might need to hear it all before he puts a question.

I assure Opposition Members that the proposals put to the Commission are a much better deal for Wales than that, but they will have to be patient about knowing the final outline of the map. We shall announce the results when we know the outcome of the EC review. My aim has been to ensure that Wales gets all the help that it needs to continue recovery. I have taken structural change, remoteness from markets and proximity to other assisted areas into account. I have not sold Wales short. I trust that the EC will now back our judgment.

Mr. Hanson

Would the Minister care to comment on activity rates in Wales? An examination of that aspect rather than a statement about the number of people employed shows a far worse picture than the one that he has just painted.

Mr. Redwood

I have explained the factors that I am taking into account. I share the hon. Gentleman's wish to see higher activity rates. I am not satisfied with one person in 10 being out of work. There is much to do, and that is the purpose of all my actions at the Welsh Office.

Mr. Llwyd

The Minister says that he has taken proximity to assisted areas into account. Is that good or bad for Aberconwy, which is sandwiched between two such areas?

Mr. Redwood

I hope that the hon. Gentleman can work that out for himself. I made a simple point and, on reflection, he should be able to answer his question to his own satisfaction.

Why do businesses come to Wales? I have asked business men this while encouraging them to do so. They tell me of many things that persuade them, such as the warmth of the welcome and the fact that Japanese, Americans, German and other people from far afield are made to feel at home.

Those business men are attracted to Wales, above all, by the quality of the work force, who are well trained with an excellent record of Labour relations. Good cost levels and a competitive exchange rate are also attractive, because companies are shifting production from the dearer areas of Europe. Also of significance is the fact that we have the lowest interest rates in western Europe. Other factors cited by business men include the availability of good premises, the beauty of the landscape and the quality of life.

It is worth noting the achievements that the country has put together. According to Cambridge Econometrics, the growth forecasts for 1993 reveal that that of Germany is set to be minus 2 per cent., that of France to be minus 0.6 per cent. and that of Spain to be minus 0.5 per cent. The economy of Wales, however, is forecast to grow by plus 1.8 per cent. Let us hope that that forecast is wrong and that the economy will grow by an even greater amount, as it well could.

The inflation rate in Germany, Spain and Italy stands at 4.2 per cent., and 4.6 per cent. respectively. That of the United Kingdom is 1.3 per cent. The interest rates of Germany and France are around 7.5 per cent. and those of Italy 10 per cent., while in the United Kingdom they stand at 6 per cent. That is the kind of undercutting that I like to do, and that is the way to promote business.

Unit labour costs are also extremely important to manufacturers. In the past year, those of Germany, Spain and Italy have grown by 8.3 per cent., 5 per cent. and 4.8 per cent. respectively. In the United Kingdom, however, they have been falling.

Mr. Paul Flynn (Newport, West)

It is because we are a low-wage economy.

Mr. Redwood

No, it is not because of low wages; it is because we offer high productivity and good rates of growth in productivity. Opposition Members do not like that, but it is true.

Economic recovery is what we want. The long dole queues across Europe are a malignant growth that we must cut out—the patient needs surgery. We want low levels of unemployment and high levels of investment, low levels of business failures and high levels of success, low costs and high productivity.

Cutting interest rates from 15 per cent. to 6 per cent. was the biggest job creation programme of all—£11,000 million of extra spending power was left with United Kingdom companies. That is money for research and development and for new factories. At last the investor. choosing between Britain, France and Germany, comes to us for the cheapest money.

Keeping taxes low gives rewards for success. Opposition Members, peddling the politics of jealousy, want to tax the entrepreneur more. If they had their way, those who create jobs or make profits would be taxed more highly than our competitors. Why, then, would those entrepreneurs stay? Why should new business men come, if more than half of their earnings would be taken by the state? Keeping taxes on profits the lowest in western Europe—33 per cent. corporation tax, with 25 per cent. for small companies—counts with investors and creates the right atmosphere for business success.

The reform of our labour laws has also been telling. Employers and employees alike need to know where they stand. Everybody's rights and interests should be protected in a clear and fair way. Sensible labour laws breed good industrial relations [Interruption.] Opposition Members laugh about everything apart from assisted area status. They obviously do not have a clue about how business works. They do not know what it is that attracts investors and creates jobs. I will tell them more, because I think that they should know.

In recent years, industrial relations have been transformed. Last year, across the country, there were only 253 stoppages—the lowest ever recorded. In Wales, the record is even better. Only 10 days per 1,000 employees were lost through strikes in Wales, compared with 24 per 1,000 in the United Kingdom as a whole and many more in most of our competitor countries.

Business needs freedom—freedom from red tape, from bureaucracy and from the encumbrances of vexatious rules imposed by vexatious minds. We cannot afford to put investors off with all the paraphernalia of the social chapter, as some Opposition Members seek to do. The best social welfare policy is one that delivers jobs. There is little point in extending workers' rights too far if all that results is that they get the sack because their employers cannot afford to keep them.

As the hon. Member for Ceredigion and Pembroke, North almost identified in his speech, underlying all is the need to promote free trade. Backing business in world markets can win orders. We must avoid or remove artificial barriers put in the way of global trading. Countries like ours, with strong manufacturing bases, cannot afford to let themselves be hemmed in by protectionism. Protected trade brings longer dole queues.

Mr. Alex Carlile

It is extremely encouraging to hear the right hon. Gentleman speak with such enthusiasm about free trade, and I agree with everything that he has said about it. Does he agree that one of the greatest encumbrances to free trade in the European Community is the fact that each member state has its own currency? Will he now become a convert to a single currency, which would facilitate free trade in Europe?

Mr. Redwood

No, I do not accept that point at all. People can and do trade in a single currency of their choice—the common currency—and many already do so. The hon. and learned Gentleman has not done enough deals in international markets to know the modest cost of exchange transactions against the overall costs of the deal transacted. If Opposition Members spent more time talking to business men and understood the real issues faced by the wealth creators today, they might make a more constructive contribution to the debate. We should praise the entrepreneur, not undermine him. We should encourage him, not overtax him. We should see him as the job creator, not as the pariah of socialist mythology.

Government can, of course, do a lot to help. Government must provide the roads and railway lines. They must stand up for fair and open markets. They should provide help where high unemployment, massive structural change or remote locations need it. None of that will work, however, if the general policy for growth is wrong.

Wales has been the prime beneficiary of that approach. Let no one have any doubt about the fact that Wales is making it: Wales is leading the United Kingdom out of the recession. The recovery is gathering speed all the time. Unemployment in Wales is now 0.2 percentage points below the United Kingdom average. At the beginning of the recession it was 0.8 percentage points above that average. In May 1986, it was 2.6 percentage points higher. Long-term unemployment in Wales has fallen by 40 per cent. in the past seven and a half years. How I welcome that.

Thousands of new jobs have been created by investors from overseas, who have been attracted by the skills of the Welsh work force, the relatively low taxes and the good communications. My predecessors as Conservative Secretaries of State for Wales made enormous strides in investing in communications, developing strategies to meet particular problems—as the valleys programme demonstrates—and enabling the Welsh Development Agency to play its role in attracting development and promoting the visionary Cardiff bay scheme. I pay particular tribute to their special achievement in generating a spirit of co-operation in developing the economy of Wales which transcends many of the boundaries of politics and ideology. There is a team in Wales which is out to win for Wales, and I am proud to lead it.

International competition is getting keener by the day. I want more skill added to the products that we make. We do not want to be a branch plant economy making low-value products which are vulnerable to any downturn in world markets. We must strive for ever higher quality. Wales should lead in new products and quality goods. We must be at the cutting edge of innovation. We must not concentrate on inward investment success alone and neglect the need to develop industry at home. A great deal has happened and an enterprise culture is emerging in Wales. Between 1979 and 1991, more than 16,000 firms set up business in Wales and manufacturing output has increased by almost two thirds—more than double the increase for the United Kingdom as a whole.

Mr. Flynn

That is fantasy.

Mr. Redwood

How sad it is to hear the hon. Member for Newport, West (Mr. Flynn) say that it is fantasy. He should see what I have seen in recent weeks—great companies in Wales with great ideas.

Mr. Flynn

It has been instructive and enjoyable to hear the wish fulfilment fantasy of the right hon. Gentleman at such length, but can he tell us why the most progressive firm in Wales, at the hard edge of technology, which developed one of Britain's greatest inventions in the past 22 years, has left Wales? That invention—the transputer—is now being manufactured in France and Italy. The transputer, manufactured at INMOS at Newport, has been lost to Wales as a result of Government indolence and failure to invest in it. The French and Italian Governments have been more than happy to invest in it.

Mr. Redwood

I do not accept the hon. Gentleman's analysis. I wish that he had seen some of the firms that I have visited recently, which show how Wales is innovating, has many talented minds and is putting together a great record of success. I intend to give a special push to the work to encourage more entrepreneurship, more innovation and high quality business.

Mr. Alan W. Williams (Carmarthen)

We have listened to 10 minutes of extremely optimistic cliches about the economy. The right hon. Gentleman anticipate that, in the next 12 months, the Welsh economy will grow by 1.8 per cent. Would he care to speculate about what has happened to the growth rate since January 1990? I suggest it has stood at minus 5 per cent. That is what the record says.

Mr. Redwood

We know that there has been a recession. It has been universal across the western world, and it is regrettable. I am discussing how we get out of recession and how Wales will lead the way. The forecast of 1.8 per cent. was independent. I have said that I hope that it will be right. Indeed, I hope that we shall improve on that.

The training and enterprise councils exist to lift the skills and encourage the new businesses of Wales. The Welsh work force has been the single most important reason for success and will be so in the future. I want the TECs to do all that they can to raise skill levels, help the unemployed to get back to work, enable young people to start off on life-time employment, and help deliver a work force that is even better qualified and skilled, and better able to adapt to new demands.

Like many advanced countries, Britain is in the throes of her fourth industrial revolution. The first three saw us change from water power to steam power to electric power; from a dominant textile industry, to a dominant engineering industry, to a strong consumer products industry; from canals and carts, through the age of the railway, to motorways. The fourth revolution takes us on to brain power, from older industries to high-tech industries, from motorways to Telecom's digital highways. Skilling and reskilling Britain is the new imperative.

Excellence in education is central to that task. A good start at school and college is vital. I want the universities and colleges of Wales to develop their links with business so that industry knows what they can deliver and the education world in Wales knows what industry wants. We must encourage joint ventures, initiatives and exchanges of ideas and personnel to maximise the enormous opportunities before us.

I also want working for oneself to be an option. The brightest and best leaving college and university should not automatically want to become journalists, civil servants or commentators writing elegantly about Europe's decline—[HON. MEMBERS: "Or politicians."] No, nor politicians—but some of us were in business and industry before we entered politics. Graduates should want to plunge into business, shaping the future with new ideas for commercial success.

We are now embarked on changing the subject and style of debate in the European Community. After months and years of sterile abstractions and constitutional wrangling, we are turning the focus to the pay packet and life style issues which affect every citizen. The Copenhagen summit began to ask the right questions about jobs and recovery. Our Prime Minister placed Britain and British ideas at the centre of the debate. He persuaded others to confront the reality that during the years in which America created 30 million new private sector jobs the EC managed only 3 million. While Japan has 2.5 per cent. out of work, the EC has almost 10 per cent. EC labour costs are now a fifth higher than in the United States and EC non-wage labour costs are almost twice as high as in the United States.

In Wales since 1988–89, United States firms have created 7,261 jobs; Japanese firms 4,964 jobs, and German firms 3,126 jobs. That is because Wales is better than the EC average in many respects and as such has benefited from more new investment and new jobs. I do not want a low-wage society, but I do want a low-cost economy because that is how to guarantee prosperity. That means high productivity and good ideas.

Britain can now lead the EC debate about restoring competitiveness. I say to many, "Come and see what is happening in Wales." As the dole queues lengthen on the continent, Wales is winning new business and new businesses. In the past week, 1,000 new jobs have been created in Crumlin from ASAT, 480 new jobs in Gwent from Aiwa, a possible 1,000 new jobs from the British Coal Enterprise initiatives, and 240 new jobs from six companies announcing expansion plans. Over the weekend, I announced 58 jobs for Swansea at Addis and another 160 new jobs are on the threshold of announcement as we meet tonight. That is winning for Wales, based on an agenda for a competitive Wales.

Fortress Europe or castle Wales could not succeed. Turning away foreign investors or putting them off with high taxes, strikes or too many regulations is the road to ruin, not the path to prosperity—[Interruption.] I am glad that the hon. Member for Caerphilly think that it is so funny; I am sure that his constituents will be delighted to know that he giggles throughout a debate on how jobs can be brought to the valleys and his area of Wales.

Over a year ago, the United Kingdom persuaded the EC not to outlaw digital technology for satellite television, and not to make the Sky transmissions illegal. Two weeks ago, the United Kingdom quietly scored another important success in Brussels: we stood up for Welsh industrial interests. In so doing, we stood up for wider United Kingdom interests—indeed, for the future success of the consumer electronics industry in Europe as a whole.

Ministers agreed an action plan to help promote wide-screen and high definition television. We were able to secure a valuable commitment that UK-based manufacturers such as Sony will be able to participate fully and without discrimination in future research programmes into digital television technology. There are those in Europe for whom this will not be welcome news, but it is good news for Wales and for the House.

We helped to shape a sensible policy for a vital new tecinology. Companies appreciate that, and many consumers and future employees in that industry will come to thank us. Those who tried to stop Europe developing digital systems were carrying out the industrial equivalent of burning books because the ideas were said to be heresies. It would have been damaging, but it could not have worked.

Mr. Wigley

The Secretary of State has mentioned a significant number of job gains in Wales. How many of those are in the counties of Gwynedd, Dyfed and Powys? Am I right in saying that the answer is virtually none? In view of the difficulties that have been faced in those westerly parts of Wales, can the Secretary of State propose any new strategies to overcome that problem in the near future?

Mr. Redwood

The hon. Gentleman is right to say that the bulk of the jobs were in areas other than those that he mentions, but I have already described what I have been doing in west Wales. I said that I intend to back fully the work of the west Wales task force, and the hon. Gentleman should wait to see developments. I intend to do for west Wales what I am doing for south Wales and for all parts of Wales.

The British Government's case to the EC is the case of Wales, the cause of the whole United Kingdom, and the crusade for jobs throughout Europe: do not damage competitiveness by passing unnecessary laws; do not put investors off with all the paraphernalia of the social chapter; and do not keep out new ideas or technologies just because they were dreamed up elsewhere, but realise that it is a world market and understand that the best social policy for the unemployed is a job.

All those opportunities must be grasped if we are not to fall behind. Europe must wake up, for Asia's tigers are roaring. We must reply. We must do more to curb and then to cure the European dole queues. We must shake off the shackles which still hold the economy back from developing its full potential. Away with restraint, away with petty restrictions, away with the head-in-the-sand thinking which refuses to adopt new ideas or technologies just because they were not invented here—we in Wales must scour the world for the best production processes, the best management ideas arid the best products, and we must make sure that they are produced here in Wales and sent out again across the globe.

Wales at its best is world class, able to hold its own in any company across the globe. Products are better made in Wales and should be better designed in Wales. Wales must be free, dynamic and vibrant, taking on the world—and beating it.

8.37 pm

Mr. Rhodri Morgan (Cardiff, West)

I welcome the opportunity to speak in this debate and thank Plaid Cymru for choosing this opportune subject. The Secretary of State's speech was stronger on ideology than on facts and exhibited no detailed knowledge of Wales or the Welsh economy. I was not sure whether it was his Llangollen Tory party conference speech all over again, or some old material rehash of a Rothschild induction course for junior clerical staff. However, it was a preparation for the great betrayal that is to come over assisted area boundaries.

Until we heard the Secretary of State's speech, we were looking for a commitment to keep the assisted area map of Wales roughly along its present lines, perhaps with some tinkering on the borders. We were not expecting to have the Secretary of State speak for well over 20 minutes without saying whether Wales would lose out from the boundary revision, in which he has been playing a major preparatory part—even if it was mostly before he became Secretary of State—through the alterations that we now expect before the summer recess.

We also expected to hear about the timing and to have a clearer restatement that we shall have an opportunity to debate in the House the specific implications for Wales of the changes. We do not want the announcement to be sneaked in on the last day before the summer recess, only to find that the only opportunity that we get to debate the changes will be in October, during the spillover part of the Session.

That would be wholly unsatisfactory. It is why tonight is a suitable opportunity—there may be another later—for the Government to give a cast-iron promise that the House, and in particular Welsh Members of Parliament, will have the opportunity to discuss the sort of damage that I now expect because of the little hints in the speech by the Secretary of State.

I am sure that the right hon. Gentleman did not mention for nothing, and with great pride, the three firms that had come to Wales in the past few years without any regional selective assistance. He was not telling us that as though Wales had won the triple crown; he was basically saying that if Wales could attract those three firms without regional selective assistance, who needs it?

The three projects include Toyota's new engine plant on Deeside. Because of surplus capacity in the motor industry, the EC would not permit any regional selective assistance for either the engine plant, which came to Wales, or the much larger assembly line, which many people thought would come to Wales, until, in the words of the previous Secretary of State, it was snatched away at the last minute. The assembly plant that Wales did not get is 10 times bigger than the engine plant that it did get. Whether that was also a great betrayal is a matter of dispute between the previous Prime Minister and the previous Secretary of State for Wales but one, Lord Walker.

The Secretary of State also mentioned Prudential Assurance, which is located in my home of Cardiff. He was careful with his words when he said that that firm came without any regional selective assistance. It would be interesting to know whether he is claiming that it came without any Government grant. It received another form of Government grant—I do not know whether it was an urban development grant or some other form of grant, but it certainly had a substitute grant equivalent to regional selective assistance. Therefore, it is wrong to assume that, if Wales loses regional selective assistance, it will still attract a flow of firms.

The third firm that the right hon. Gentleman mentioned was Dow Corning, which is also close to my home. It has a long-standing commitment to Wales and I am pleased that it continues to provide employment in the Barry, Sully and Penarth areas.

The Secretary of State responded to a point made by the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) about the size of the Welsh Development Agency's budget. The right hon. Gentleman contradicted what he thought was an assertion by the hon. Gentleman that the WDA's budget had been reduced, but that was not what the hon. Gentleman had said. In fact, he said that the Exchequer grant to the WDA had been reduced, which meant that it had to fund more and more of this year's expenditure by selling more and more of its family silver. It can continue to do that for only so long.

Obviously, the pearl in the oyster—if I can mix my metaphors—in the family silver of the WDA is the Treforest trading estate in the constituency of my hon. Friend the Member for Pontypridd (Dr. Howells), which is either largely on the way to being sold or has been sold. The WDA has only so many Treforest equivalents that it can sell. Now, half the WDA's expenditure must be funded not just by the sale of the odd piece of land or by producing a bespoke factory for a client and then selling it when it is built, but by selling industrial estates that have been built up over many years—60 years in the case of Treforest.

What the hon. Member for Ceredigion and Pembroke, North said was correct. The amount of money that the Government put into the WDA each year is being reduced, so the proportion that the WDA must find from its own resources is unsustainable. If it continues at the current level, selling Treforest this year, Deeside industrial park next year and Fforestfach the year after, in five years it will have nothing left. It is not in a position to build up the asset base that would allow it to continue disposing of core assets.

Mr. Rod Richards (Clwyd, North-West)

Does the hon. Gentleman accept that selling industrial estates is part of the process of consolidating an economy that is becoming stronger, or does he want Wales always to have a dependency culture economy?

Mr. Morgan

I am not sure that the hon. Gentleman has posed mutually exclusive questions that cover all the possibilities on the waterfront. If both rents and capital values for land become unrealistically high—rents in Wales are now above those in the London area—there will be a major squeeze on the ability of firms to fund expansion. Too much of their money will disappear in rents, which have shot up to £4 or £4.50 per sq ft a year, which is much higher than in the London area. That is frightening because, if the grants are removed but the rents remain high, Wales will become a less competitive area for production. It will lose the low-cost advantage that the Secretary of State spent 25 minutes telling us was its most important asset.

Again, the Secretary of State espouses the message that we must believe in the success of the Welsh economy and that it is incumbent even on Opposition parties to trumpet that. Anyone who doubts that or who believes that there is still a long way to go is somehow a traitor to the marketing effort of the Welsh Office and the WDA—the team Wales, of which he is the self-appointed captain. He was certainly not appointed captain by anyone in Wales; he was imposed from the outside. That makes us sceptical of his desire to lead us in a particular direction, for which most people in Wales did not vote and in which they do not want to go.

We are also sceptical of the tendency of the right hon. Gentleman and his predecessors to overclaim success and to make the figures fit the marketing strategy. They believe that if we keep talking about success, success will come. We should look objectively at the statistics for employment and unemployment and for new factories and the jobs that they create, relative to the number of jobs being lost both through the closure of coal mines and in the steelworks and other traditional primary providers of employment in Wales. It is only by balancing the new jobs being created with the old jobs being destroyed that we can work out how well Wales is doing. During the last eight or nine years, hyping up the success of Wales has become an occupational hazard of being Secretary of State for Wales. We have seen another example of that tonight.

My fundamental case is that the reason why the repackaging of Wales has been one of the great success stories of Europe is not what has been happening in Wales, but simply the choice of marketing strategy by Lord Walker and Dr. Gwyn Jones, the chairman of the WDA in late 1988 and early 1989. It was a deliberate decision to market Wales as the great success story of all Europe's regions. It involved all sorts of tricks of the trade in redefining what was an inward investment project, and the construction of dustbin lists of huge numbers of projects, many of which did not exist or were double counted so that they would appear simultaneously in two counties.

Royal Air Force stations are now being counted as inward investment projects. There are two in the list produced for the past year—RAF St. Athan and RAF Sealand. Those are not conventionally defined inward investment projects. The list also includes brass plate changes in the ownership of firms that do not result in any gain of jobs—but sometimes result in a loss of jobs—being claimed as inward investment projects simply to reach the magic figure of the 201 such projects that apparently came to Wales last year.

Mr. Redwood

Is the hon. Gentleman suggesting that his marketing strategy for Wales would be to say that everything is wrong and nobody comes to Wales?

Mr. Morgan

Absolutely not. We need an objective, balanced figure. We do not want a rapid growth in the statistical physiotherapy service of the Government, massaging the figures and claiming that new jobs are being created when they are not. Those are not my words. Only the other day, I received a letter from one of the most successful counties in Wales about the claim to have 201 inward investment projects in the year from April 1992 to April 1993. Of the 201 projects, 40 were supposed to have come to the county.

I wrote to the county's industrial development unit to ask what it could tell me about the 40 projects and whether it was aware of them. It sent a letter last week to say that it was not aware of 26 of the 40 projects. More than half the projects appear to be unknown to the unit. That is not to say that the projects do not exist, but it is likely that they do not exist given the knowledge base of the local county council.

Dr. Kim Howells

Does my hon. Friend agree that we object to neither the optimism nor the sense of the view that we have to sell Wales? That is not what is happening from my point of view. I am sure that hon. Members of all parties would not want the Secretary of State for Wales to believe everything that he hears from the Welsh Office. He could do worse than read the report of the Public Accounts Committee on safeguarding and creating jobs in Wales.

The PAC exposed a case in my constituency of 1,000 jobs that were said to have been created or protected. In fact, all that had happened was that British Airways had sold the factory to General Electric in America. No new jobs were created. I am glad that the factory was sold, because the new owners look like being good employers. In that sense, the factory was safeguarded. But we shculd not play games with statistics. That is dangerous because it undermines the authority of the Government and of the Secretary of State among the people of Wales.

Mr. Morgan

My hon. Friend makes a powerful point about General Electric's takeover of the extremely successful British Airways engine overhaul plant. The factory was set up at Nangarw during the war as a shadow factory and has been an exceptional success ever since. That is typical of the kind of firms that we want to see in Wales. However, no new jobs arose from that takeover. It was brass plate investment.

Another example is when, through compulsory competitive tendering, a hospital got rid of its local catering staff and employed Gardner Merchant. That was classed as inward investment. No additional jobs were involved. Health authority or local authority staff lost their jobs, and Gardner Merchant had a contract. That was one of the inward investment projects in West Glamorgan that was claimed by the Welsh Development Agency and Welsh Development International last year.

Mr. Richards

One proposed project which the hon. Gentleman has campaigned against viciously is the development of Cardiff bay. The Government are to put £160 million into that project, which has been marketed throughout Europe. It will create thousands—probably tens of thousands—of jobs and make assisted area status unnecessary in south Wales and many parts of the valleys. How can the hon. Gentleman tell the House that he wants to bring jobs to Wales when he has campaigned so hard against the biggest and most important development in any city in Europe?

Mr. Morgan

I am terribly pleased that I gave way to the hon. Gentleman on that point. He said that I had campaigned viciously against the Cardiff bay barrage project. I must defer to his expertise in matters of viciousness. We are talking about whether the assisted area map of Wales is to be changed. The hon. Gentleman has ideas that that project could take the Cardiff area out of the assisted area map and mean that it would not need that status. I am sorry, but I think that assisted area status is needed in Cardiff and the other areas of Wales where the status presently applies.

Mr. Richards

Will the hon. Gentleman give way?

Mr. Morgan

No. I must get on.

We are trying to work out objectively whether the jobs coming in equal the number of jobs going out. We are extremely pleased when substantial new employers move in. I cite the Bosch development at Pontyclun, the British Airways developments at Rhoose airport and Llantrisant on the way to Tonyrefail" the Trico development in the constituency of my hon. Friend the Member for Torfaen (Mr. Murphy), the Sony expansion at Pencoed, the Toyota engine plant at Deeside and obviously the two new plants at Crumlin which were announced by the Secretary of State last week at or near Welsh Question Time. Those are eight extremely important new pillars of the 'Welsh economy. I am sure that they will provide hundreds of new jobs in the next few years.

Those eight projects are the only ones of which I am aware that have been set up in the past three years that have the prospect of employing more people than a typical coal mine. I accept that Welsh coal mines are smaller on average than pits in Yorkshire and Nottinghamshire. Welsh pits employ about 400 or 500 people. The problem is that we see coal mines closing and balance the job losses against the new projects of coal mine size that have come in.

Is the hype justified? Is the success story that has put at risk so much of our development area status justified? Two points arise. If one packs out the inward investment to produce, say, the 201 projects last year, it has a depressing effect on encouragement of local business in Wales, to which the Secretary of State referred many times. If the Government keep emphasising the importance of one statistical indicator—inward investment—they make self-generated investment seem second-class.

The Government's emphasis on inward investment has had a depressing effect and the Secretary of State should examine it. We now have a new chairman of the Welsh Development Agency and he should examine the psychology of encouraging the local business culture.

We must also consider how unemployment is calculated. When the United Kingdom Government decide whether to reduce the number of areas covered by assisted area designation, 75 if not 80 per cent. of the weighted factors that they take into account relate to the headline count of unemployment. When the European Community draws the map of regional development and assisted areas, it looks much more at gross domestic product per head.

Headline unemployment was a reasonably reliable indicator until about 10 years ago. It is decreasingly so. People might argue that the attacks on the validity and objectivity of the unemployment count should apply evenly across the regions and that, therefore, the relative status of Wales should not be affected.

However, we can see by comparing the level of employment with the level of unemployment in Wales that taking so many people off the unemployment register and putting them on to the sickness benefit register has had a particularly strong impact in Wales. It has not had such a strong impact on the south-east of England, largely because unemployment is so new that the area does not have a comprehensive employment service to get hold of the unemployed and say. "Wouldn't you rather sign on sick instead? It will get you off the register and give you more benefit."

The ultimate hypocrisy of the Government is that, having successfully persuaded so many people in Wales to sign off the unemployment register and go on to the sickness register, the Prime Minister says that he cannot believe that so many more people are sick in the light of all the money that they are spending on the NHS; so he then attacks sickess benefit. People will then be pushed back on to the unemployment register in the autumn after the changes which we fear will come. That would be seen badly in Wales.

The Government may have wanted to reduce the headline count of unemployment in the first three months of this year because they thought that it would make confidence lift off. It will be pretty tough if the Government push those same people off the sickness register back on to the dole once they think that the reduction in unemployment has taken off. We want objective data on sickness and unemployment benefit, so that there is an accurate measure across the country of which regions are doing well and which are doing badly and need assistance.

Mr. Flynn

Another feature of the Welsh Office statistical massage parlour is that we arc told that we are the beneficiaries of economic miracles in our constituencies, whereas unemployment has increased 20 per cent. in my constituency and 22 per cent. in Monmouth. I asked the Government for figures on the number of jobs lost by outward divestment, through jobs moving overseas. The Welsh Office says that it cannot provide such figures because it does not collect them. It measures the jobs coming in, but not those moving out.

Mr. Morgan

This is the good news only Government. They believe in purveying anecdotes as if they were objective statistics. My hon. Friend cites a classic example of the Government choosing not to consider outward divestment because it does not fit in with the marketing strategy. We want a statistically objective count of unemployment and employment, so that we may identify which areas need assistance.

Mr. Walter Sweeney (Vale of Glamorgan)

Does the hon. Gentleman accept that manufacturing output in Wales has increased 25 per cent. since 1986? Is that not a general statistic rather than a detail plucked out of the air?

Mr. Morgan

The hon. Gentleman is right, in that it is a general manufacturing statistic—but one can always pick out a favourable statistic as though it were a general principle. Is the hon. Gentleman suggesting that the travel-to-work area that he represents can dispense with assisted area status? I will not press him to respond immediately because that could be embarrassing for him.

We understand that Newport is in peril of losing its assisted area status, despite the statistic that the hon. Gentleman gave.

We further understand that it is possible that the Cardiff travel-to-work area will be split in two, along European regional development fund objective 2 lines, so that southern Cardiff and the southern part of the vale of Glamorgan will remain an assisted area, whereas the northern part will not. Presumably, the splitting of travel-to-work areas will occur in London, and that would set a precedent.

We want to know how much assistance will be transferred out of Wales to the southern coastal towns. I see the hon. Member for Hastings and Rye (Ms. Lait) lurking on the Conservative Back Benches, and I do not imagine that she is doing so for no purpose. I do not think that it is out of her interest for Wales; rather, it is for what she can grab from Wales. Naturally, that worries us.

Wales has a long way to go before it reaches the economic self-sufficiency that will enable it to do without subsidies. We noted all the exciting announcements made by the Secretary of State and his predecessors, and all the claims that Wales can be safely attached to the four great motor regions of Europe—Catalonia, Baden-Würtemberg, Lombardy and Rhone-Alpes. If they are the wheels of the Europe's motor regions, Wales is the exhaust pipe. We are getting there, but we have a long way to go. We cannot afford to leave it to a Secretary of State who is a bird of passage and who will be looking for promotion away from Wales. We need a Secretary of State who represents Wales and who is completely committed to the interests of Wales.

9.2 pm

Mrs. Jacqui Lait (Hastings and Rye)

It is with some temerity that I intervene in a debate chiefly relating to Wales, but the motion makes reference to regional development in the United Kingdom and in peripheral regions, and the hon. Member for Cardiff, West (Mr. Morgan) said that the southern coastal towns are quickly turning into peripheral regions.

I am a great supporter of regional development. Coming as I do from Scotland, I remember when, 30 years ago, Rootes came to Linwood—two miles from my home at the time—and the destabilising effect that that had on the local economy. I remember also IBM moving to Greenock and providing jobs for many women whose husbands were working in the shipyards that so signally failed to compete.

Later, there were road, motorway and other infrastructure developments, new factories, high-quality communications, land reclamation, tax breaks, rate relief and seedcorn capital—just the same as in Wales. The policy was very successful, despite the whingeing from the Opposition Benches.

A graphic measure of regional development policy success is that historically, Scotland and Wales were the first to enter a recession and the last to emerge from it. This time, it is reckoned that, in general, Scotland and Wales were the last in, suffered less drastic recession than elsewhere, and are emerging from it earlier. Because of the success of the regional development policy, half the personal computers sold in Europe are made in Scotland.

It takes about an hour to drive the 60 miles from Glasgow to Perth. On a good day—perhaps I should not admit it—I can drive from London to Cardiff in under three hours. The train takes two hours.

Unemployment throughout Wales is 10.2 per cent. There are only three constituencies where unemployment is above 13 per cent. In Hastings and Rye it is 13 per cent.; in Sittingbourne and Sheerness 14.6 per cent.; in Thanet 16.5 per cent.

A comparison of the coastal towns of the south-east with Wales and Scotland is dramatic. For instance, Hastings is 67 miles from London, a little further than it is from Glasgow to Perth. During the day, it takes a minimum of two hours to drive those 67 miles. It often takes two and a half hours. The train takes an hour and a half—about the same time as it takes to get to Doncaster. The southern half of the A21 is still single carriageway. The A259, the route to the channel tunnel, the continent and prosperity, would be recognised, bar the tarmacadam, by the smugglers of the 18th century.

Hastings has some home-grown companies, but it was a branch plant economy, which is how the Secretary of State described Wales historically. When the recession hit, there were the inevitable closures. Our biggest employers are the local council and the health service. While both are vital, neither can be called a wealth creator.

We have high levels of drug and alcohol abuse, many single-parent families and alarmingly high levels of child abuse. Wages are well below the national average—reminiscent and indicative of inner-city problems. one of the indicators for assisted area status. The bleak s. atistics are similar to those in Scotland and Wales 30 years ago, when they embarked upon their regional development policy. We have seen that policy work. We must help other areas which need it now.

While I understand and appreciate that the Welsh, the Scots and other regions like the north-east and the north-west would like to hold on to what they already have, places such as Hastings, Sittingbourne and Thanet need to benefit as well. We are not asking for much when we ask for assisted area status. We can only get selective and enterprise grants, help with industrial premises and the consultancy services of the Department of Trade and Industry.

There are new poor areas in the United Kingdom. The south coast towns are part of them. We must adjust our development policies to take these changes on board. We must ensure that it is not only the United Kingdom Government who are aware of the empty factories, the length of the dole ques and the harm that is being done to the good and honest people we see around us.

The EC Commissioner, who provides so much of the money now, needs also to be aware of those changed circumstances. Karel van Miert, the commissioner responsible, should visit the rich south-east, the area that he says is structurally and economically strong, and see the problems for himself. He must take on board the successes of the traditional development areas and learn about the difficulties of the new ones.

We must change our regional devlopment policy, so that it recognises the new realities and enables areas such as the south coast towns, which are weak, to become as economically strong as, dare I say it, Wales and Scotland. We must refocus our regional development policy so as to enable all the British Isles, as they need it, to benefit from it.

9.8 pm

Mr. Denzil Davies (Llanelli)

I shall be brief, because others want to speak in this short debate.

The speech of the hon. Member for Hastings and Rye (Ms Lait) was one of the best critiques and condemnations I have heard of 13 or 14 years of Conservative rule and of the kind of ideology that the Secretary of State—I do not want to be rude to him—has espoused since the early 1980s.

Ms Lait

When the Labour party was in power many years ago, what did it do to help peripheral towns on the south coast?

Mr. Davies

I find that interesting, but I do not think that unemployment was as the hon. Lady described. I mean no disrespect, but apparently Hastings and Rye are now on the periphery. That shows the general decline in the British economy, vis-a-vis the European economy, in the past 13 or 14 years. I cannot see how that decline will be arrested, but I shall return to that point later.

I shall concentrate on assisted area status for my constituency and the effect that removal of intermediate status would have on it and on much of west Wales. I shall try to argue briefly that we deserve an uplift to the full assisted area status that we enjoyed until the early 1980s when, in his review, Sir Keith Joseph, as he then was, removed Llanelli's full development area status.

A few months later—I am not arguing cause and effect—a large private steel works, which had operated for a long time, closed for various reasons, with the loss of 1,200 jobs and ancillary jobs. Llanelli never regained its full development area status. The map that was drawn by Lord Joseph seemed to he cast in stone, and no changes were allowed to it.

Mr. Richards

Will the right hon. Gentleman confirm that, when he was a Treasury Minister in the late 1970s, overmanning in the British steel industry was at crisis point—not unlike, perhaps, the present overmanning of the German steel industry?

Mr. Davies

I do not dispute that many sections of British industry were overtnanned for a considerable time, and much had to be done to reduce that overmanning, but the point that I am making is that, in 1980–81 my constituency lost assisted area status. We have not recovered from the closure of the steel works, which was privately owned rather than nationalised—I do not want to waste time on an argument over its ownership, because it is not important.

In 1979, fewer people were unemployed in my constituency than they are today, and income per head was higher. Economic activity rates were higher and—perhaps overmanning was a small part of this—40 per cent. of the work force in the Llanelli area were employed in production. The Secretary of State says that Wales is making it. That may be so, but in Llanelli they are making less of it today than they were 14 years ago. I accept that the statistics are somewhat simplistic, but the figure is now down to about 30 per cent.

Since 1979, the standard of living in my constituency has declined. That industrial decline is mirrored in Wales, which is the poorest region of Britain, with the lowest income per head. Unemployment is higher than in 1979. Activity rates in Wales are lower than in 1979.

That also mirrors the decline in the British economy relative to western Europe, which was shown by the speech of the hon. Member for Hastings and Rye. There has been a consequent effect not only for our economy and our industry but for our public services, with a breakdown in community discipline and family values and disciplines.

The M4 motorway has brought great benefits, but the theory was that it would have a trickle-down effect. I see the Secretary of State nodding. In the 1980s, the teenage radical right advocated the trickle-down theory in the economy.

I do not wish to be rude—not as rude as my hon. Friend the Member for Cardiff, West (Mr. Morgan)—but I do not know whether those on the teenage radical right have grown up or whether they still believe in the trickle-down theory, which has largely been discredited. In any case, it has not worked with the M4.

There has been little investment west of Swansea in places such as Llanelli, which has a great manufacturing, engineering and mining tradition. As we have heard, most of the investment has gone further east, so the M4 trickle-down theory has not worked. It was always argued that more factories would come to Bridgend, until all the land was taken, and that they would then go to Neath and Port Talbot—or vice versa—and then Swansea. My constituency has not received minor, let alone substantial, new investment in manufacturing since 1979.

I do not believe that assisted area status, or inward investment, as it is called, is a panacea. We should begin by examining local industry in terms of sub-contracting, because many major firms, especially motor firms, sub-contract. Llanelli contains quite a few motor manufacturing and component firms. We should consider ways of improving the quality of what is produced by Welsh sub-contractors.

Assisted area status is not a panacea, but it is of enormous help to a constituency like mine in obtaining manufacturing and engineering investment, which would not only provide jobs and hope for our young people but would preserve the many skills that we still have. Those skills will not last much longer unless we have the investment to enable us to take advantage of them.

The Secretary of State will no doubt say that I am whingeing and offering nothing but doom and gloom. lie made great play of his years in the City and his time at Rothschild, which I am sure was valuable experience. However, I do not think that anyone from Rothschild or any other merchant bank who was considering the world economy would be too optimistic about inward investment to my part of the United Kingdom. The world economy does not look very good, and the unification of Germany does not encourage inward investment from Europe to the west of Britain.

Perhaps the Secretary of State secretly agrees that the combination of a single market, the Maastricht treaty and the channel tunnel—the latter involves Hastings and Rye—will make it even more difficult to attract the investment that I believe we need, certainly west of Swansea and perhaps west of Bridgend.

To me, the treaty means the centralisation even further away of economic and monetary power. It takes power from politicians and puts it in the hands of technicians. It means that politicians are unable to react to the problems caused by the marketplace. I shall not continue with that argument, because we have said it all before.

The hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) did not seem to know where the periphery was. The hon. Member for Hastings and Rye believes that it is in Hastings. I can tell the hon. Gentleman where it is—he is in it. Aberystwyth is the periphery; beyond Aberystwyth is Ireland and then the United States. We usually consider Britain in terms of north and south, but let us consider it in terms of east and west. East Britain does quite well but, if one draws a line down the middle, west Britain—especially parts of Wales—will find it extremely difficult to compete.

The nationalists' motion states that the European Community is interested in the periphery. The Maastricht treaty is concerned only with the periphery in Ireland, Spain, Portugal and Greece but not in Wales. Wales does not feature in the infrastructure money, which, in any event, amounts to very little. It is no good the hon. Member for Ynys Môn (Mr. Jones) waving a document at me. I am perfectly capable of reading the Maastricht treaty, and I know that the motion would do nothing to alleviate the treaty's centralising tendencies. I would have thought that the fact that we are on the periphery is a strong argument for not changing our assisted area status.

With great respect to the hon. Member for Hastings and Rye, if I was a young person at Rothschild carrying out an analysis of economic development, I would have examined the south and south-east of England. The President of the Board of Trade has advocated the east Thames development—which no doubt the Secretary of State considered in his previous position—quite rightly and logically in the context of the south-east of England. It is clear that that area will develop and benefit because it looks towards Europe, whether it looks east or south.

In terms of the European Community, I would not be too worried about the south and south-east of England. It also has the channel tunnel. Boulogne is much closer to London than Llanelli. The problem is that the south-east will develop, as an economic area, as part of the Pas de Calais. Eventually, people will live in France and come to work in England or vice versa. That area will become partly English and partly French.

We must consider the development of Europe and the centralisation that will inevitably take place as a result of the internal market and the Maastricht treaty. I accept that there is high unemployment in the south of England, but that is mainly due to a debt-ridden service economy which is no longer producing. Only about 5 per cent. of the people who work in the south of England actually make things, and that 5 per cent. are mainly engaged in armaments factories. The rest do not make anything.

Although I have sympathy with the constituents of the hon. Member for Hastings and Rye who may be out of work, we should not argue from the particular or on a short-term basis. The south and the south-east will develop as Europe develops. However, the areas that my colleagues and I represent will find it more difficult to develop.

I make no special pleas for my constituency. However, I believe that we have a very good case for bringing back the full development area status to my constituency which we lost in 1980 before the major steelworks closed. The situation changed completely, and it has not returned to what it was in 1979. We should at least retain our intermediate status. I believe that there is a very strong case to upgrade that to full development area status, so that we can obtain the investment to allow us to continue to make things and to make more things to contribute to the economy of Britain.

9.22 pm

Mr. Walter Sweeney (Vale of Glamorgan)

I was surprised that Plaid Cymru chose this topic for debate, in view of the central plank of its policy—that Wales should leave the United Kingdom. It seems to me that if that were to take place, investment in Wales would be decimated. It is very easy for a party with no prospects of forming a Government to argue for increased resources without saying where those resources will come from.

The hon. Member for Cardiff, West (Mr. Morgan) described Wales, in his usual belittling fashion, as the exhaust pipe of the motor of growth. It would have been better if the hon. Gentleman, who has not stayed in the Chamber—[ Interruption.] I apologise to the hon. Gentleman. He seems to have woken up. Would it not have been better for the hon. Gentleman to describe Wales as a fiery dragon on the bonnet? That is far closer to the reality of the current performance of Wales relative to other European countries.

Unemployment in Wales is lower than the United Kingdom average for the first time since 1924. Is not that good news? Is not that something that the hon. Gentleman should mention so that the people of Wales will be encouraged to build on success?

Since 1979, self-employment in Wales has increased by more than 36,000 to 158,000 people. During the 1980s, Wales gained an average of 1,400 new businesses a year, making a current total of 87,000 businesses. All that we hear from Opposition Members is about jobs lost. We do not hear about the jobs that have been created or that the number of employees in manufacturing has increased by 5 per cent. since 1986. We do not hear from them that manufacturing output is up by more than 25 per cent. since 1985. We do not hear from them that there are 800 new manufacturing plants in Wales since 1980, providing more than 50,000 new jobs, and we certainly do not hear from them about the 1,100 inward investment projects that have been created since 1983. Let us have an end to their doom and gloom and let us start fighting for Wales.

9.25 pm

Mr. Alex Carlile (Montgomery)

I, too, congratulate Plaid Cymru on choosing this subject for debate. It gives us a valuable opportunity to discuss some serious points affecting the future of Wales. I intend to make more of a plea than an attack because, first, I believe the new Secretary of State to be a serious man who will understand serious points. Secondly, there might be some advantage in the fact that the new Secretary of State was not familiar with Wales. He might be able to take a fresher view of the development of Wales than has hitherto been the case—we shall see, but I shall be optimistic for the purposes of my short speech.

We have heard much about infrastructure. I suggest to the Secretary of State that there are still serious problems with the infrastructure in Wales. There is much development to be done. I share the right hon. Gentleman's aspirations for Wales and his view that Wales should be inventive and that the best designs should come from Wales. Like the Secretary of State, I believe that Wales has the best possible work force. However, we need to be able to build on the potential of that work force by ensuring that work can get to them and that they can do the work that is available.

If I asked the Secretary of State how much freight is carried across central Wales by rail on the line from Shrewsbury to Aberystwyth, would he know the answer? It is a very easy answer—absolutely zero. Petroleum used to be carried on a weekly train from Stanlow in Cheshire to Aberystwyth. British Rail put up its price by 50 per cent. I do not blame Shell for leaving that line when it faced a 50 per cent. price increase; it was a normal business conclusion that, it should transfer its fuel on to the road. However, the fact that it happened does not show a commitment by the Government to a rail infrastructure for Wales which central Wales deserves.

Indeed, I suggest to the Secretary of State that there is a clear illogicality between the work that has been done by the Development Board for Rural Wales and the fact that the rural railway line that crosses central Wales appears to have been put in deliberate decline by British Rail and is no longer able to offer competitive freight rates.

Mr. Redwood

indicated assent.

Mr. Carlile

I am delighted to see the Secretary of State nodding in agreement.

The Development Board for Rural Wales has done an excellent job over the years within its terms of reference. I was glad to hear the Secretary of State endorse the future of the DBRW when I intervened on him. The DBRW has not had as full terms of reference as it should. Over the years, I have regretted—I have repeatedly made this point in the House—that the DBRW has not been directly involved in agriculture or in tourism. If the DBRVV had been able to build advance hotels, for example, just as it built advance factories, we should have seen a more suitable range of hotels in rural Wales. The development board appreciates the lack of hotels, especially those for people who want to do business in rural Wales, but the board has not been given the opportunity to take the initiatives that it might otherwise have taken in this context.

It is wrong to look at tourism and industrial development as different species. I hope that the Secretary of State shares the view that they are both part of the same effort. I hope that he will regard it as logical to develop the rail infrastructure so that people wishing to go to those hotels when they are built, or those wishing to open research facilities in the great university town of Aberystwyth will be able to use a decent rail route to get there. At present, there is no such route.

I endorse the remarks of the hon. Member for Ceredigion and Pembroke. North (Mr. Dafis) about the need to ensure that economic development is sustainable and consistent with an environment which is acceptable to both the people of Wales and the Government's international treaty obligations.

I ask the Secretary of State, especially in his appellate role with regard to planning matters, to ensure that, while the development of non-fossil fuel energy generation is a good thing, we do not face a future in which every hill top throughout Wales will have dozens of windmills on it. That matter is causing great controversy in my constituency and, indeed, in neighbouring constituencies. There is still room for more wind power development—we have not yet reached saturation point—but I ask the Secretary of State to be conscious of the fact that we may reach saturation point soon and that that must be borne in mind as an aspect of the future of rural Wales.

Mr. Dafis

I suggest to the hon. and learned Gentleman that, with only a few wind farms in existence, we are far from reaching saturation point. Does he accept the principle that we should be encouraging the establishment of small-scale wind farms of up to five turbines, which would blend in well with the landscape and make it possible for local companies to be involved in their development?

Mr. Carlile

I suspect that it may be more realistic for developments of wind turbines to be economically based on somewhat larger wind farms than those to which the hon. Gentleman referred. But for the purposes of this point, I emphasise that I care not so much about the size of wind farms as the potential proliferation of them.

Mr. Richards

Will the hon. and learned Gentleman give way?

Mr. Carlile

I will not give way to the hon. Gentleman, because he has already taken up a lot of time with interventions.

A further point that I wish to make in my short speech relates to the agriculture industry. Agriculture is still the biggest industry in my constituency and, indeed, throughout rural mid and north Wales. But it struggles from crisis to crisis. Prices in the markets are a little higher at present, so the farmers are less pessimistic. However, they take it for granted that there will be another crisis around the corner and they are approaching that corner quickly.

I have already made the point that I should like to see the Development Board for Rural Wales more directly involved in agriculture. The principal reason is that, for farmers living in rural mid and north Wales, diversification is difficult to achieve. There are only so many places where one can make love spoons and sell them to passing trade. There are only some parts of north and mid-Wales where one can grow pick-your-own strawberries, and even that season is short. There are dozens of country hotels and pubs on the market, so the potential for turning a farm into a holiday enterprise is strictly limited.

We need to improve our road communications as well as rail communications to enhance the tourist potential. I ask the Secretary of State to see whether he can bring forward the development of a bypass for Newtown as quickly as possible to ensure that people have quicker access to those parts of Wales where tourism is especially attractive. I am not asking for a motorway. The last thing that we want is a dual carriageway to scar central Wales. We want adequate road communications proportionate to the problem.

Some farmers are in a state, of desperation as they look for ways to diversify into tourism or otherwise. In my constituency, there has been an extremely sad and regrettable increase in suicides among farmers who face potential bankruptcy as the banks see the equity available against their loans diminishing.

I hope that it is music to the ears of the Secretary of State to hear that the answer lies with him and the Welsh Office. They should be leading the fight to begin considering the common agricultural policy all over again.

As I go around farms in my constituency, I wonder whether the present system of delivering grants and subsidies, many of which are substantially defrauded—not in Wales, but in other countries—is the best way in which to sustain farming. I hope that, as Lady Thatcher has said on many occasions, the Government will encourage the expansion of the European Community to include countries in central and eastern Europe, those formerly in the Soviet bloc, and countries such as Romania, which I visited in the past week, and to give them a share of Europe's development. That may give us the opportunity to start with a clean sheet of paper for a new agricultural policy that could benefit Wales.

I am fast coming to the conclusion that we could bring the price of food down and make contracts with farmers that would mean that, at the worst, farmers would not be worse off, and would mean that the housewife or the man who buys the weekly groceries would pay less for them. I see the future of a prosperous agriculture in Wales as one based on contracts with the farmer to produce the food needed and to sustain the environment that we love, not the situation in which we flounder between subsidies, arguing year after year about small changes up or down.

I have raised three principal points about which I feel strongly. They are all worth considering as one tries to take a bird's eye view of the economic future of Wales. There are many other issues I would like to raise but there is not time. If we hear the Secretary of State or the Minister saying something positive in response about those three issues, I shall feel encouraged.

9.38 pm

Mr. Jonathan Evans (Brecon and Radnor)

I shall follow my neighbour from Powys, the hon. and learned Member for Montgomery (Mr. Carlile) by reacting to a couple of the points that he mentioned. He urged the Secretary of State to seek to take some role in the planning process of wind farming development. On the contrary, local democracy should decide where wind farms are placed and I applaud my right hon. Friend's predecessor for deciding that the decision in Radnorshire should be made locally.

I endorse much of what the hon. and learned Gentleman said about the work of the Development Board for Rural Wales, and about the strong role of the development board throughout my area and in the constituency of the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis). If I have a criticism of the development board, it is that it is rather more active in the hon. Gentleman's constituency than it is in mine, but I hope to work on that in the years ahead.

One change I urge my right hon. Friend to make is in the role of inward investment, which is rightly highlighted by Conservative Members. At present, inward investment goes primarily to north and to south Wales, not only because of the population, but because the WDA is the agency bringing in international investment. Although the WDA brings in investment on behalf of the DBRW, the board ought to have had more of a role in international consultation and in developing inward investment.

My next observation is important in the context of this debate. Conservative Members are sometimes criticised for being too positive by Opposition Members who adopt too gloomy a view. The motion has been tabled by Plaid Cymru. Recently, we had a debate in the Welsh Grand Committee. Since the debate took place, unemployment in the constituencies of Plaid Cymru Members has dropped by 2,331. I am sorry that they have not found time to mention that in this debate.

Today is the day that David Kerns, the chief economist of NatWest, says that we may see very much stronger employment growth in Wales than in any other region of the United Kingdom. We might have waited too long to hear that news from the Opposition. Yet again, it has had to be said by Conservative Members.

9.40 pm

Mr. Ieuan Wyn Jones(Ynys Môn)

As my hon. Friend the Member for Ceredigion and Pembroke, North (Mr. Dafis) said, this debate is opportune. It has been an excellent debate because it has given hon. Members from Wales and from outside an opportunity to discuss the important issue of regional development. In the time allotted to me, I shall not be able to refer to all the contributions. However, there are two points to which I wish to respond.

First, the Secretary of State said that we in Wales must be ready to recognise that good ideas sometimes come from outside Wales. Let me put the Secretary of State right. We accept that point. Over all the generations, the Welsh people have accepted influences from outside. In the great tradition of Welsh culture and language, we have always accepted outside influences and have assimilated them.

Mr. Redwood

The hon. Gentleman misunderstood what I said. I said that the European Community, when framing technology principles and policies, should understand that point. It was not a criticism of Wales; it was a specific remark about high-definition television.

Mr. Jones

I am grateful to the Secretary of State for correcting my impression.

Secondly, I shall respond to the point made by the hon. Member for Vale of Glamorgan (Mr. Sweeney). He said that he was surprised that my party wanted to discuss issues of regional development and he posed the question of where the money would come from. Increasingly, the money is coming from the European Community. The problem is that if the hon. Gentleman had had his way and the House had voted against the Maastricht treaty, Wales would have been cut off from a valuable source of investment and resources.

Mr. Richards

Will the hon. Gentleman give way?

Mr. Jones

I will not give way to the hon. Gentleman. He has made a number of interventions. Indeed, he has almost made a speech through interventions.

We believed when we set the topic for tonight's debate that it would be an important and timely debate. It is an important debate because of the European Community's recognition of the fact that countries such as Wales need assistance if they are to compete against the Community's core areas. The problem with the contribution by the right hon. Member for Llanelli (Mr. Davies), who unfortunately is not in his place, is that the Community recognises the fact that Wales is a peripheral nation. That is why the structural funds, which are currently being reconsidered, recognise the need to reduce that peripherality. It is because the European Community recognises that that we want to put the Secretary of State on the spot by asking him whether he agrees with that analysis.

The debate is also timely because the Commission is currently considering the plans of the Department of Trade and Industry—not the plans of the Welsh Office—to ditch parts of Wales from assisted area status and to replace them with areas in the south-east of England. During Welsh Question Time, I referred briefly to an article in The Sunday Times on 20 June. The article says: Brussels officials studying the proposals"— the proposals submitted by the DTI— said yesterday they did not believe any area south of Birmingham should qualify for aid: 'I can see little reason that the British government should include any southern region, even if they have been particularly touched by the recession,' said one Brussels source. A spokesman for Karel van Miert, the Belgian EC commissioner responsible for competition policy, said: 'We feel the money should be concentrated in areas of maximum need. We want the weaker regions to get the money to enable them to move up to the national average. If they finish up getting less, the aid scheme is no longer viable.''' Can the Secretary of State for Wales tell us who speaks for Wales? Is it the European Commissioner, the Welsh Office or the Department of Trade and Industry?

Mr. Richards

It is not the hon. Gentleman.

Mr. Jones

I can only say, in reply to that interruption, that we are making the strongest possible argument that it is not the Welsh Office.

What does the Commissioner mean when he says that he wants the weaker regions to get the money so that they may be enabled to move up to the national average? He means that the money that is earmarked for regional development should go to those areas whose economies have traditionally been weak and have needed support. I do not subscribe to the view that an economy can be improved only by pumping public money into it. I accept the analysis that there must be a partnership between the private sector and the public sector. However, I do not accept that parts of Wales should be ditched as the Department of Trade and Industry tries to save some Tory skins in the south-east of England.

This is also a very important debate because it puts into sharp focus the need for the Welsh Office to speak in the Cabinet for Wales. Will the DTI succeed on this occasion'? The Secretary of State has told us that it will. He has said that, on the basis of unemployment rates in Wales, half of the assisted area status would be lost. Even if it were less than half, Wales would still lose. Can the Secretary of State give us an assurance that no part of Wales will lose assisted area status? I am afraid that he is not prepared to give such an assurance. Brussels is sending the map back to be redrawn. We believe that this is an opportunity for the new Secretary of State to tell us where he stands on the issue. May we expect a response from his hon. Friend who will wind up?

This is also an important debate because the Secretary of State could have told us whether he is personally committed to regional development. Does he support the notion that, owing to the disadvantages of location and infrastructure, areas must be given assistance to compete? If he believes that that is so, and if he rejects the notion that the market can deliver everything—the notion with which he came to the House in 1987—he has moved substantially along the road to the position taken up by his predecessors. My hon. Friend the Member for Ceredigion and Pembroke, North highlighted the problem: if the marketplace, and the marketplace only, were to determine where industry should go, the social and cultural upheaval in Wales would be enormous, and the result would be catastrophic. To succeed, Wales has always relied on a partnership between the private sector and the public sector. We want to see that continue.

The Secretary of State said something like, "If only Opposition Members would spend time talking to business people …" But we do spend time talking to business people.

Before he came to this place my hon. Friend the Member for Caernarfon (Mr. Wigley) spent his life in industry. We speak to industrialists in our constituencies and we understand the problems of industry in Wales. The Secretary of State should recognise that.

We gave the Government a test and they have failed it. [Interruption.] The Secretary of State chided the Labour party's spokesman for laughing, but now the right hon. Gentleman is laughing. He must listen to what hon. Members have to say. First, the Secretary of State failed to reassure us about his commitment to regional development. He failed to give guarantees about assisted area status and he failed to persuade us that the Welsh Office speaks for Wales in the Cabinet when it is faced with a challenge from the DTI. That is why we have no alternative but to challenge the Secretary of State in the Lobby.

9.51 pm

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

Inevitably, debates on Welsh affairs follow the traditional pattern. As my right hon. Friend the Secretary of State said last week, the Government side has been winning and the Opposition side has been whingeing, not least by way of the speech by the hon. Member for Ynys Môn (Mr. Jones). Where failure is, failure sits—on the Opposition Benches.

The debate was opened by the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis), who started with the usual cheap shots about my right hon. Friend. I suppose that I could congratulate him, because for once he outdid the hon. Member for Cardiff, West (Mr. Morgan), who concentrated instead on doom and gloom. The hon. Member for Ceredigion and Pembroke, North wanted to play down the successess that even he had to admit have taken place under the Government. The hon. Gentleman said, "That is not to whinge," and that shows that the point has struck home. But that was exactly what he did throughout his speech.

The hon. Gentleman spoke twice about the significance of any closure or rundown of military establishments in Wales. That is in contrast to his apiration for an autonomous nation of Wales. If that came about, he would make sure that all military bases were closed without any regard for the consequences for the people of Wales.

His protestations are totally hollow. My right hon. Friend the Secretary of State dealt with a wide range of positive and practical measures for the economic development of Wales. That is in stark contrast to the position in Wales in 1979, when it was not just dependent but dangerously over-dependent on a handful of basic industries that were rapidly declining. It had a legacy of problems that were not addressed but deferred; that was confirmed by the past-tense remarks by the right hon. Member for Llanelli (Mr. Davies).

In Wales, we have a range of different programmes underlying the economic measures that we have consistently'and successfully pursued for 14 years. We do not propose to abandon them. My right hon. Friend's speech should have left hon. Members in no doubt that we are continually seeking to improve and adapt our programmes to meet the needs of the 1990s and beyond. Our objectives are clear: we want to broaden our recovery, widen our industrial base and build on our strengths in Wales.

I welcomed the intervention by my hon. Friend the Member for Stockton, South (Mr. Devlin), who endorsed exactly what we have been doing by asking that more of the same should be done in his area. It is remarkable that the hon. Member for Cardiff, West belatedly welcomed the announcement of new jobs for Crumlin. He is a week late, and he kept his remarks to the singular.

I remind the House that, in the past week, there have been 1,000 new jobs for ASAT, 480 for Aiwa, a possible 1,000 for British Coal Enterprise, 240 from six companies announcing expansion plans, 58 for Addis in Swansea, and another 160 are on the threshold of being announced. With the exception of the hon. Member for Cardiff, West, who made a remarkable admission, no Opposition Member welcomed any of those announcements.

I should record another positive contribution—from the right hon. Member for Llanelli, who suggested that more should be done to encourage sub-contracting in the motoring industry. I reflected on this when my right hon. Friend was talking about his vision and goal that Wales should lead in new products, quality goods and be at the cutting edge of innovation. But what did we hear from the hon. Member for Newport. West (Mr. Flynn)? He dismissed that goal as fantasy. He does not care.

Mr. Flynn

Will the hon. Gentleman give way?

Mr. Jones

Many hon. Members referred to the reveiw of assisted area status. My hon. Friend the Member for Hastings and Rye—

Mr. Flynn

On a point of order, Madam Speaker. The subject of this debate is assisted area status for Wales. I have listened very carefully to the Minister, but he has not mentioned it from the word go.

Madam Speaker

The hon. Gentleman is well aware that that is not a valid point of order.

Mr. Jones

The hon. Gentleman is obviously not listening, because I had begun to talk about the assisted area review.

I was reminding the House that my hon. Friend the Member for Hastings and Rye (Mrs. Lait) has stated a plain and good case for assisted area status for her constituency in the south-east of England. I am sure that she will understand why I cannot respond specifically to her case, but I know full well that the representations she has made will be given the fullest consideration. I acknowledge her point about inviting Commissioner van Miert to visit the south-east of England.

At least my hon. Friend spoke positively about the need for extending assisted area status, unlike the hon. Member for Cardiff, West, who radiated gloom and doom in predicting that damage would be forthcoming for Wales.

The Government's proposals were submitted to the European Commission 15 June. The Commission's initial criteria are based on local unemployment rates over recent years, compared to national and EC averages. The Commission will also be concerned with the overall coverage of any new map, compared with similar coverages in other member states.

Our proposals for the new assisted areas map are based on a balance of all the factors—for example, unemployment, urban problems and, as Opposition Members have requested, activity levels. We hope that the Commission will feel able to approve it. The hon. Member for Ynys Môn asked me to respond to that point, but it has been covered by what my right hon. Friend said earlier. We have sought the right deal for Wales.

The only issue now is the Commission's proposals. We cannot anticipate how long it will take it to complete its consideration. In order not to prejudice negotiations with the Commission, and to avoid uncertainty, no information on the proposed map will be made available until EC approval has been received. We must await EC clearance, but we are aware of the difficulties caused by continuing uncertainty, and we hope to make the announcement before the summer recess.

As with earlier assisted area maps, measures of employment were the main criterion, although other factors were taken into account. While the exercise cannot be wholly statistical, we shall ensure that decisions are fair and consistent. There will continue to be two tiers of support—development areas and intermediate areas—and the travel-to-work areas will continue to be the main area unit. Once the announcement is made, the Government will set out clearly the basis for our decisions.

The contribution of the hon. Member for Cardiff, West dwelt on his disappointment that unemployment has fallen and continues to fall. He dragged in the red herring that people were being made to go on sickness benefit instead of the uemployment register. He then accused us of trying to push people off the sickness register. Opposition Members cannot have it both ways.

I contrast his remarks with those of my hon. Friend the Member for Vale of Glamorgan (Mr. Sweeney), who spoke of the success in the reduction of unemployment figures. Unemployment in Wales is less than the national average. He rightly said that that good news should be acknowledged.

In a telling intervention, my hon. Friend the Member for Clwyd, North-West (Mr. Richards) pointed out that, through our proposals for Cardiff bay, we seek to achieve more than 20,000 new jobs. He referred to the "vicious campaign" of the hon. Member for Cardiff, West against that. Significantly, the hon. Gentleman had no answer to that.

We have had a varied debate. In the short time left for me this evening, I am afraid that it is not possible for me to respond to every point that has been made. Opposition Members have had their say, but actions speak louder than words. The Government will not be—nor would we wish to be—judged on our rhetoric. We want to be judged on our performance.

We now have the lowest inflation for nearly 30 years, the lowest interest rates for 15 years, the fastest growth of manufacturing productivity for more than six years, the best performance on unit wage costs in manufacturing and high business confidence, particularly in Wales. There can be no doubt that Wales is in a position to make the most of recovery and to continue the very real progress that has been made.

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

The House divided: Ayes 43, Noes 150.

Division No. 309]	[10.00 pm
AYES
Ashdown, Rt Hon Paddy	Kilfoyle, Peter
Bayley, Hugh	Kirkwood, Archy
Bruce, Malcolm (Gordon)	Lynne, Ms Liz
Caborn, Richard	Mahon, Alice
Callaghan, Jim	Meale, Alan
Campbell, Menzies (Fife NE)	Michael, Alun
Campbell-Savours, D. N.	Morgan, Rhodri
Carlile, Alexander (Montgomry)	Pike, Peter L.
Clwyd, Mrs Ann	Rendel, David
Cryer, Bob	Simpson, Alan
Dafis, Cynog	Skinner, Dennis
Davies, Ron (Caerphilly)	Steel, Rt Hon Sir David
Dixon, Don	Taylor, Matthew (Truro)
Eagle, Ms Angela	Turner, Dennis
Eastham, Ken	Tyler, Paul
Etherington, Bill	Wallace, James
Flynn, Paul	Wigley, Dafydd
Golding, Mrs Llin	Williams, Alan W (Carmarthen)
Hanson, David	Worthington, Tony
Harvey, Nick
Hogg, Norman (Cumbernauld)	Tellers for the Ayes:
Jones, Ieuan Wyn (Ynys Môn)	Mrs. Margaret Ewing and Mr. Elfyn Llwyd.
Jones, Jon Owen (Cardiff C)
Kennedy, Charles (Ross,C&S)

NOES
Aitken, Jonathan	Carttiss, Michael
Arbuthnot, James	Cash, William
Arnold, Jacques (Gravesham)	Clappison, James
Arnold, Sir Thomas (Hazel Grv)	Clarke, Rt Hon Kenneth (Ruclif)
Ashby, David	Clifton-Brown, Geoffrey
Atkins, Robert	Congdon, David
Atkinson, Peter (Hexham)	Conway, Derek
Baker, Rt Hon K. (Mole Valley)	Coombs, Simon (Swindon)
Baker, Nicholas (Dorset North)	Cope, Rt Hon Sir John
Bates, Michael	Day, Stephen
Blackburn, Dr John G.	Devlin, Tim
Booth, Hartley	Douglas-Hamilton, Lord James
Bottomley, Peter (Eltham)	Dover, Den
Bowis, John	Duncan, Alan
Brandreth, Gyles	Dunn, Bob
Brazier, Julian	Emery, Rt Hon Sir Peter
Bright, Graham	Evans, David (Welwyn Hatfield)
Brown, M. (Brigg & Cl'thorpes)	Evans, Jonathan (Brecon)
Browning, Mrs. Angela	Evans, Nigel (Ribble Valley)
Bruce, Ian (S Dorset)	Evennett, David
Burns, Simon	Fabricant, Michael
Burt, Alistair	Fishburn, Dudley
Butler, Peter	Forman, Nigel
Carlisle, John (Luton North)	Forsyth, Michael (Stirling)
Carlisle, Kenneth (Lincoln)	Fox, Dr Liam (Woodspring)
Carrington, Matthew	Freeman, Rt Hon Roger

French, Douglas	Paice, James
Garnier, Edward	Patnick, Irvine
Gillan, Cheryl	Porter, David (Waveney)
Goodson-Wickes, Dr Charles	Powell, William (Corby)
Gorman, Mrs Teresa	Redwood, Rt Hon John
Greenway, Harry (Ealing N)	Richards, Rod
Griffiths, Peter (Portsmouth, N)	Riddick, Graham
Hague, William	Roberts, Rt Hon Sir Wyn
Hamilton, Neil (Tatton)	Robinson, Mark (Somerton)
Harris, David	Rowe, Andrew (Mid Kent)
Hawksley, Warren	Ryder, Rt Hon Richard
Hayes, Jerry	Scott, Rt Hon Nicholas
Heald, Oliver	Shaw, David (Dover)
Hendry, Charles	Shepherd, Colin (Hereford)
Horam, John	Skeet, Sir Trevor
Hughes Robert G. (Harrow W)	Smith, Tim (Beaconsfield)
Hunter, Andrew	Spencer, Sir Derek
Jack, Michael	Spink, Dr Robert
Johnson Smith, Sir Geoffrey	Sproat, Iain
Jones, Gwilym (Cardiff N)	Stanley, Rt Hon Sir John
Jopling, Rt Hon Michael	Stephen, Michael
Key, Robert	Stern, Michael
Kilfedder, Sir James	Stewart, Allan
Kirkhope, Timothy	Sumberg, David
Knapman, Roger	Sweeney, Walter
Knight, Mrs Angela (Erewash)	Taylor, Ian (Esher)
Knight, Greg (Derby N)	Taylor, John M. (Solihull)
Kynoch, George (Kincardine)	Thomason, Roy
Lait, Mrs Jacqui	Thompson, Sir Donald (C'er V)
Legg, Barry	Thompson, Patrick (Norwich N)
Lidington, David	Thurnham, Peter
Lilley, Rt Hon Peter	Trend, Michael
Luff, Peter	Twinn, Dr Ian
MacKay, Andrew	Viggers, Peter
McLoughlin, Patrick	Waller, Gary
McNair-Wilson, Sir Patrick	Wardle, Charles (Bexhill)
Malone, Gerald	Waterson, Nigel
Mans, Keith	Wells, Bowen
Marlow, Tony	Wheeler, Rt Hon Sir John
Martin, David (Portsmouth S)	Whittingdale, John
Merchant, Piers	Widdecombe, Ann
Milligan, Stephen	Wilkinson, John
Mitchell, Andrew (Gedling)	Willetts, David
Moate, Sir Roger	Winterton, Mrs Ann (Congleton)
Moss, Malcolm	Winterton, Nicholas (Macc'f'ld)
Needham, Richard	Wood, Timothy
Nelson, Anthony	Young, Rt Hon Sir George
Neubert, Sir Michael
Newton, Rt Hon Tony	Tellers for the Noes:
Oppenheim, Phillip	Mr. David Lightbown and Mr. Sydney Chapman.
Page, Richard

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments) and agreed to.

Question accordingly agreed to.

MADAM SPEAKER forthwith declared the Main Question, as amended, to be agreed to.

Resolved, That this House welcomes the progress that the Welsh economy has made in recent years as a result of the Government's policies; and notes with approval that the Government intends to continue to pursue vigorously these same policies that have brought about this success.