Development Board for Rural Wales

HC Deb 07 July 1994 vol 246 cc463-74

4.3 pm

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

With permission, Madam Speaker, I should like to make a statement concerning the Development Board for Rural Wales and related issues concerning the Welsh Development Agency, the Cardiff Bay development corporation, the Land Authority for Wales and the Wales tourist board.

Some non-departmental public bodies in Wales have been criticised in recent years by the Public Accounts Committee and by Parliament for the way in which they have conducted public business. Those bodies have revealed a number of irregularities that should not have occurred. I, for my part, have sought to be open about the problems, to report to the House and to take sensible action for a better future.

I announced to the House on 14 March a review of the future of the DBRW. I have since consulted widely and considered carefully the representations received. I have now reached my conclusions and wish to tell them to the House before anyone else. I have certainly not made any indication of my intentions to journalists before making today's statement.

The DBRW was established in 1977. Over the past decade, there [...]has[...] been significant improvement in the economy of mid Wales. Unemployment has fallen and is significantly lower than that for Wales as a whole. The number of jobs has increased by 19 per cent. over the 10 years to 1991, compared with only 1 per cent. for Great Britain. The number of employees in manufacturing has increased by 16 per cent. compared with a fall of nearly a quarter for Great Britain as a whole. More people now move into the region than move out of it. Nevertheless, there are still the special problems that affect some rural districts. Some young people do not think that there is enough opportunity, and leave. Jobs continue to be lost from farms. There is worry about the future vitality of some smaller towns, villages and hamlets.

In my review, I have been anxious to promote four broad principles. I believe that local authorities should be important in deciding local issues and meeting many of the public needs of their communities, that agencies should concentrate their activities in areas where they can make an effective and distinctive contribution to regeneration and where the market needs help. I believe that agencies should see themselves as servants, not as masters, working on behalf of central and local government, and that our policies should be fair to the different communities of the whole of rural Wales. I intend to apply those principles to the different functions of the DBRW.

The House knows that the housing stock of the board will transfer in 1996, when we have completed the arrangements. Tenants are being consulted on whether they would prefer to become tenants of a local authority or a housing association. I think that those new landlords could offer a better solution for all involved.

The board makes a number of social and economic grants to local authorities and others, which are highly valued in the localities. I wish local authorities to have direct control over how that money is spent. I therefore intend from next year to transfer that responsibility to the local authorities involved. My current plan is to transfer £2.4 million—the present level of expenditure—but I wish to consult on that and on the best mechanism.

The DBRW and the Welsh Development Agency offer a range of grants to assist investment in the region by existing and new businesses. I believe that those functions, which deal mainly with very small businesses, could be better delivered by local authorities. The schemes that I have in mind would include the mid Wales development grant, rural buildings conversion grants, DRIVE grants and community enterprise projects. A total of £3 million is involved. I have also instructed my officials to discuss with the local authority associations the details of how to route money to the local authorities for those activities.

The board contributes to tourism marketing and development in mid Wales. The Wales tourist board has an all-Wales responsibility in that sector and, from 1995–96, it will take over the DBRW's tourism activities and expand its own marketing and other operations in the area by an amount equivalent to the DBRW's spend of £500,000.

Housing apart, the main amounts of money and the central tasks of the DBRW are in the spheres of property development and business services. Both are designed to help small and medium-sized businesses grow and to work with inward investors once they have decided on Wales for their commitment. There is a case for those activities to be done by the WDA everywhere. During consultation, I discovered that opinion was divided, but there is, naturally, considerable support in the DBRW district for the continuation of its special work. A total of £14 million is involved.

I have, therefore, decided that those main tasks will remain with the DBRW. Within this framework, the board's property development activities—making available serviced sites and premises for existing and new businesses in the area—will continue to form an important part of its role. Financial support for these operations will be fully maintained. I expect the board to liaise closely with the Welsh Development Agency, particularly to ensure a well co-ordinated approach to opportunities and developments along their respective boundaries.

In order to do this, I propose changes to the DBRW board which I hope the House will welcome. In order to ensure more co-ordination of effort between the WDA and DBRW, which many think desirable, I am appointing today Mr. David Rowe-Beddoe as the new chairman of the DBRW.

Because I wish to strengthen working between the DBRW and local authorities, I propose to appoint two extra councillors to the board, making a total of five. This will take the board to its permitted maximum of 13. I wish to see each of the five constituent historic shires represented at the earliest opportunity.

I do not think it helps Wales to be represented abroad by more than one agency with more than one story, or by a multitude of local authorities each vying with the other. There is a danger of losing the main message that "it is better made in Wales". While I normally favour competition, this is one case where concentration of effort and one song from one song sheet is better. The WDA will take a strong lead in this work.

The board will also continue its research and marketing activities in the United Kingdom, promoting its own services and the facilities available in the area. As now, the DBRW will continue its support of the WDA in responding to the needs of potential inward investors in the area.

The board has long had an influential role in arranging provision of a wide range of services and advice to local businesses, especially small firms, through a strong network of business centres. These are run in conjunction with local authorities, training and enterprise councils and local enterprise agencies. I have recently issued a prospectus inviting proposals by the autumn for the co-ordination of business services in Wales. I expect the board, together with its partners, to be fully involved in responding to this invitation. I want a good-quality service to continue for the business community in mid Wales.

I have been impressed by the way Mr. Rowe-Beddoe and his new team have gone about honestly unearthing irregularities from the past at the WDA. We are all sad that there were any. We should now unite in wishing to see the good work of the WDA and DBRW continue.

Doubts have been raised about past land deals by the WDA in the Cynon valley. At my request, the new team at the agency has launched an inquiry. Doubts have been raised about the propriety of ministerial actions in approving certain loan and grant schemes. I can assure the House from the evidence I have seen that there is no question of Ministers setting out to break the law. I do not wish there to be any doubts about any scheme; I wish to ensure that there are no doubts about the way we proceed. My arrangements ensure that these schemes will in future be run by local authorities, which I hope the House will welcome, as I do, for the wider benefits that that will bring.

It will be for the new chairman and the board to assess the effects of my statement today and its impact on the board's running costs. I would hope that changes in employment will be achieved through natural wastage or voluntary redundancy, but I would obviously expect the overhead to reduce.

I believe that there is a role for non-departmental public bodies; but I want to see that role very clearly defined. I do not expect them to ignore the wishes of local authorities and local communities. I do expect them to work wherever possible in harmony and co-operation. I do not want them to become large property landlords. I have asked the development agencies and the Land Authority for Wales to dispose of fully let properties where the money can be reused for new projects, and of land holdings which can be used for economic development and housing.

The Cardiff Bay development corporation has now begun work on its major project: the construction of the barrage. This should be completed by 1998. All development corporations have finite lives. I expect that it will be possible to wind up the Cardiff Bay development corporation by the end of 1999, at which time responsibility for the further development of the area will pass back to the local authorities.

There is no reduction in my commitment to the well-being and regeneration of mid Wales or the rest of the country. Opposition Members should welcome the very positive message that I am sending today to local government in Wales—to play its part in promoting and assisting enterprise in Wales. I believe that with these arrangements, which will ensure the same level of funding for rural Wales, we will attract more business from abroad, reclaim more derelict land and help many more indigenous businesses to set up and expand. I commend these proposals to the House.

Mr. Rhodri Morgan (Cardiff, West)

May I first apologise to the House and to you, Madam Speaker, for the absence of my hon. Friend the Member for Caerphilly (Mr. Davies) and for my presence, which is due to the pressing domestic personal difficulties of my hon. Friend the Member for Caerphilly, which I have explained to you, Madam Speaker, and to the Secretary of State.

The Secretary of State opened his remarks this afternoon by referring to the irregularities among quangos in Wales, but there was a certain amount of confusion in his statement as to whether he is shrinking the mid Wales development board back to its core functions because it is an economic success or because of its compliance and accountancy failures.

The confusion continues in respect of the transfer of grant-making powers to local authorities. If the Secretary of State is interested in clearing up the legal difficulties that were raised with him in early May by my hon. Friend the Member for Cardiff, Central (Mr. Jones), who did not receive a substantive reply for more than six weeks, it is a matter of some concern that he is now attempting to transfer that grant-making power to local authorities with the legal difficulties still unresolved. Can he, therefore, tell the House whether he plans primary legislation to clear up the unresolved difficulties that have occurred—probably over the past 12 years—particularly in respect of the legalities of making the mid Wales development grant? Before he transfers the grant-making power to the local authorities, will he confirm that he will ensure that there are no legal doubts about the powers to pay that grant?

The right hon. Gentleman also mentioned contempt of the House by way of briefing the press on the matter two days ago. I accept his statement today, but is it not a contempt of the House that the Welsh Office suspended payment of those grants by a letter to the Development Board for Rural Wales three weeks ago? Officials had been instructed to cease payments of the mid Wales development grant, the DRIVE grant and the conversion grants before the House had had any chance to discuss the scheme. That raises a question of contempt of the House which I hope the Secretary of State will answer.

There is some confusion in the Secretary of State's mind about whether he is penalising the Development Board for Rural Wales by truncating it because of its financing irregularities, thereby causing it to be taken over in part by the WDA by merging it at chairman level. Will Mr. David Rowe-Beddoe—fine figure though he is—be earning two salaries as chairman of the Development Board for Rural Wales and of the Welsh Development Agency?

As the Secretary of State referred to job losses, albeit achieved by voluntary methods possibly, what job losses does he anticipate will occur? Most important of all, is it really his intention in truncating the Development Board for Rural Wales that it should then wither on the vine, or does he intend it to have a stable function? Is it is not true that, in splitting the grant-making power from the business services, property development and factory letting power of the Development Board for Rural Wales—handing one to the local authorities and causing the core Development Board for Rural Wales to keep the others—business people thinking of moving into mid Wales will become extremely confused? Is that really his intention? If he means to penalise the Development Board for Rural Wales for being a bit naughty, is that not the equivalent of finding that Beethoven was drunk on the night he wrote the Emperor concerto and, instead of telling him to stop drinking, telling him that he should never write a note of music again? The Secretary of State should be able to tell the House whether his real intention is that there should be a stable future for the Development Board for Rural Wales.

Regarding the right hon. Gentleman's wider remarks about quangos in Wales, we want to know in what direction he is seeking to move them. Is he democratising them and, if so, what about the education quangos and the housing quangos which have taken over from local authorities? Is he to return those education, housing and urban regeneration powers to the local authorities from which they have been progressively taken over the past 15 years?

Finally, the Secretary of State will be about as popular in mid Wales as a rugby league scout in a valleys rugby club, and, what is more, one who left his cheque book back in Wigan.

Mr. Redwood

I think that those remarks were prepared before the hon. Gentleman saw my statement. The proposals will be welcome in mid Wales. The councillors will be delighted and local people will be delighted that their elected representatives will be involved in some of the decisions and that the important work of the board will continue.

The answer to the hon. Gentleman's main question is easy. My prime reason for making the changes was that I wanted to review the body well before any legal doubts arose because I wished to develop the policies in a new direction. I have set out those principles clearly today and those are the principles which I had in my mind at the beginning of the review and which I have now made plain to the House.

I have no plans for primary legislation to deal with what the hon. Gentleman thinks are legal difficulties. Of course I will ensure that, in working out the scheme with local authorities, they have clear powers under legislation so that they can grant the moneys. That is essential. I do not wish them to get into any difficulties over legal doubts. We wish to ensure that all schemes are soundly based, and of course I shall take proper legal advice in establishing the schemes so that they are soundly based.

The hon. Gentleman asked whether Mr. Rowe-Beddoe will receive two salaries. He will be paid for the time that he works for the WDA and for the DBRW. He will receive a salary for each body which reflects the time that he works. When I have finalised the arrangements with him, I will ensure that I tell the hon. Gentleman the details in so far as it is proper for me to do so.

The hon. Gentleman should know that I expect Mr. Rowe-Beddoe to put in a reasonable number of hours for both bodies and it would be unreasonable not to remunerate him for doing that. He will be remunerated at the usual scale and there is no question of his working more than a normal week. With his great skill, he can do the job for both with an executive team supporting him who will, of course, carry out most of the day-to-day work.

The hon. Gentleman seemed at one point in his speech to be objecting to local authorities having such involvement. I had better disabuse the hon. Gentleman of that notion. They are already deeply involved because, for example, they happen to be the bodies that grant planning permission for many important projects. It does not add another complexity to have the local authorities involved, but I think that they will welcome having more involvement in the process, particularly with small businesses, which they know and should be able to assist in their areas in the proper way.

As to the general question of what directions I wish to set for the bodies in general, my statement today is primarily about the DBRW. I have ranged over several other bodies involved in economic development. I have made clear my principles and the way in which I wish those bodies to go. It is a way that Opposition Members should welcome, and the absence of any really good questions from them shows that they do in practice welcome it and that they are rather surprised by the direction in which the DBRW is going.

Mr. Rod Richards (Clwyd, North-West)

I congratulate my right hon. Friend on his statement today announcing the rationalisation of some of the functions of the DBRW, the WDA, the tourist board and local authorities which, as he has said, will lead to lower administrative costs. I also congratulate him on leaving the well-known windbag, the hon. Member for Cardiff, West (Mr. Morgan), with nothing to say. However, will my right hon. Friend confirm that the proposed headquarters of the WDA in St. Asaph business park in my constituency in north Wales will go ahead as planned?

Mr. Redwood

I have no announcement to make today on any changes, but I shall talk to the new chairman of the DBRW about his requirements both for the WDA and the DBRW and I will make sure that my hon. Friend's strong interest in the matter is known. Mr. Rowe-Beddoe will obviously see the exchanges.

Mr. Alex Carlile (Montgomery)

Will the Secretary of State dispel the ever-increasing impression that mid Wales is a distant country of which he knows little by telling the House, first, how many of the 126 employees of the DBRW in my constituency he expects to remain employed in the public sector and in the DBRW and, secondly, why he believes that the handing over of the mid Wales development grant and the social grants to local authorities will improve the already high quality of delivery of those grants?

Thirdly, will the right hon. Gentleman tell the House how on earth he can ensure that the Cardiff-based chairman of the WDA can exercise an independent role as chairman of an independent DBRW when inevitably there will be conflicting competitive interests?

Fourthly, will the Secretary of State answer the question of the hon. Member for Cardiff, West (Mr. Morgan)? Does the right hon. Gentleman expect the DBRW to wither on the vine, or is telling the House with his usual confidence that the board can be foreseen to have a long-term and important future in the economic generation of rural mid Wales?

Mr. Redwood

The hon. and learned Gentleman's first remarks did not do him credit. I know mid Wales extremely well. I visit it and talk to people there frequently, and a great deal of information comes into my office by virtue of the post that I hold. The employees' future is a matter for the chairman and the board to settle with the employees. I made it clear in my statement that I do not favour compulsory redundancies and do not believe that there should be any need for them.

Mr. Carlile

How many?

Mr. Redwood

I cannot say how many employees will be there in one or two years. I am asking the new chairman and the board to review that aspect in the light of the policy that I announced. I have not gone around Wales telling people about the policy before informing the House. Now is the time to work out the details by asking the people concerned—the chairman and the board—to say how many staff they need to perform certain functions, and how other functions that are best transferred to local authorities can be performed.

I am surprised that the hon. and learned Gentleman wants to do down local authorities in his area. When he returns there, he will find that local authorities welcome my announcement. I am sure that they will work closely with the board and the Welsh Office to ensure a smooth transfer of functions and duties for next year, when the system will be fully up and running.

I believe that Mr. Rowe-Beddoe, in chairing the two bodies, will be entirely fair in his dealings with rural and urban Wales. As chairman of the WDA, he already makes decisions about areas of Wales most eligible for projects that he is winning in his role as one of the Principality's principal salesmen abroad, in attracting inward investment. Many hon. Members who represent areas of Wales not covered by the DBRW will be reassured to know that there will be fair judgments between different parts of Wales and parts of rural Wales—some already covered by the WDA and some by the DBRW, where there are sometimes boundary issues between the two.

I have announced my DBRW policy. The question about withering on the vine was foolish, because I made a clear statement on the board's purposes and functions. That is where the matter rests.

Mr. Jonathan Evans (Brecon and Radnor)

Is my right hon. Friend aware that, unlike the churlish remarks of the Opposition, his statement will receive a warm welcome in many parts of mid Wales—not least in my own constituency? Representations that I made to my right hon. Friend were geared to the idea that social development and other grants ought to be transferred to local authorities. Does not my right hon. Friend think it remarkable that there is so much objection from Opposition Members to local authorities and democratically elected councillors having more say?

As to my right hon. Friend's proposals for the development board's property assets, he will know that when that issue arose recently, I requested that if assets were to be disposed of, it should be done at market value to sitting tenants. Can my right hon. Friend confirm that will remain the board's policy?

Mr. Redwood

Yes, of course I favour sitting tenants having a fair opportunity to buy their properties at a sensible price. I wish to encourage that policy. I am grateful for my hon. Friend's support. He has read the mood of mid Wales correctly, in a way that Opposition Members have not. Like him, I am astounded at Labour's performance. We are always hearing from Labour that we do not give enough to, or believe enough in, local government. When I offer local government something, Labour Members say, "Don't give it to local government—it can't do the job."

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

The Secretary of State mentioned the unearthing of past irregularities in the WDA. Will he confirm whether any more are to come into the public domain, or do we know about them all—including the land deal to which the right hon. Gentleman referred? Am I to understand from an earlier answer that the Secretary of State can do all that he proposes by administrative fiat and that legislation is not required?

Mr. Redwood

My advice is that more than adequate powers exist among different public sector bodies, including local authorities, to do what is required. When we complete the detail, I will make clear how that is being done. As to irregularities, I cannot give the hon. Gentleman the categorical assurance that he seeks and that I should like to give. I can never be sure that all past irregularities have been found, but I hope that they have. I have asked people to search extremely assiduously so that I can inform the House. If any further irregularities come to light, I will report them as soon as I know of them. I have reported those that I know about.

Mr. Walter Sweeney (Vale of Glamorgan)

May I say how much I welcome my right hon. Friend's statement? I am particularly pleased that my constituents will be given an opportunity to purchase their own properties, but I also welcome the transfer of grant-making powers to local authorities. I find it strange that Opposition Members have not been more welcoming, given the number of times that some of them have accused the Government of having centralising tendencies. Here we have an example of their transferring powers to local authorities: surely Opposition Members should welcome that, as I do.

Mr. Redwood

I am grateful to my hon. Friend. I think that he is quite right, and I am delighted that he agrees with my policy.

Mrs. Ann Clwyd (Cynon Valley)

I welcome the Secretary of State's announcement about an inquiry into past land deals engaged in by the WDA in Cynon valley. There have been many rumours, and it is time that they were laid to rest. What will be the terms of reference for the inquiry, and can the right hon. Gentleman assure us that its results will be published in full? Nothing less will satisfy my constituents.

Mr. Redwood

I have asked the chairman to satisfy himself about what happened in the land transactions, with the commissioning of an independent investigation. I shall want to know from him what he subsequently discovers, and I shall tell the House either way—that is, I shall tell the House if nothing improper has come to light, or if something improper has come to light. In the latter event, action will be needed.

Mr. Paul Flynn (Newport, West)

Has the Secretary of State noticed that no Opposition Member has objected to the increase in the number of democratically elected representatives? On the contrary. The right hon. Gentleman, however, seems to be so devoted to yah-boo politics that he cannot resist giving his "boo" when we have not given our "yah".

It is some comfort to Opposition Members to know that at least the Government have started to cleanse the stables that they themselves have fouled, but would it not have been better if the Secretary of State had appointed as chairman someone who was respected in Wales as a non-political figure rather than a card-carrying member of the Conservative party who earned his living by collecting money for the party in a tax haven abroad? Cannot the right hon. Gentleman put across his sincerity in trying to cleanse the stables further by appointing more democratically elected members and genuinely independent chairpersons?

Mr. Redwood

I am suggesting the appointment of the maximum possible number of democratically elected people within the maximum permitted number of directors on the board. It so happens that that would take the number to five, which I think is a good number because it is the number of historic shires in the area concerned.

I am pleased that the hon. Gentleman has at last welcomed the proposals. However, I have listened carefully to all the comments that have been made, and no Opposition Member had said anything kind about them until he made his point.

As for the hon. Gentleman's remarks about Mr. David Rowe-Beddoe, I found them very disappointing. Mr. Rowe-Beddoe has developed a great reputation in Wales for the straightness of his dealing, his enthusiasm for the task and his considerable business skills, which were the reason for his appointment. I know that he is always happy to meet Opposition Members as well as Conservative Members so that he can understand their concerns and ensure that he does a good job for all parts of Wales.

Mr. Dafydd Wigley (Caernarfon)

The Secretary of State stressed that the policies were relevant to the whole of rural Wales; he then referred to the transfer of social and economic grant-making powers to local authorities. He also said that that would be the responsibility of the local authorities concerned. Can he clarify the position of parts of rural Wales that are outside the DBRW area but are none the less rural? Will local authorities in those areas have the social and economic grant-making powers to which he refers?

Mr. Redwood

I believe that they have the powers. Money may be the issue, which I shall consider in the light of the hon. Gentleman's comments. The intention is to make social grants under existing local authority powers. As I explained, I shall consult on that and report to the House when I have had a clear answer on the best way of making payments. Of course, I wish to ensure that all parts of rural Wales have access to fair treatment both under a grant scheme and any other scheme that we may develop. For example, it may be possible to develop the strategic development scheme, which is already of great benefit to many parts of Wales.

Mr. Peter Hain (Neath)

The Secretary of State said that he would transfer current spending of, I think, £2.4 million to local authorities. Will he confirm that that excludes overheads and administrative and managerial costs, which therefore will fall as additional costs on local authorities? Will that money be ring-fenced by way of allocation to local authorities, or will they have to carry the cost from their broader finances, as has happened on many previous occasions, of which community care is a classic and disturbing example?

Mr. Redwood

The hon. Gentleman makes two good points. I want my officials to discuss such points with local authority associations and representatives so that we can reach a fair solution to the transfer and handling of these grants. We have a little time in which to do so, because I propose that the changes should apply from the next financial year.

Mr. Alan W. Williams (Carmarthen)

Will the Secretary of State say something about the future funding of the Welsh Development Agency and the DBRW? At present, a large fraction of their expenditure results from the sale of property, which will continue for only two or three more years. What will happen in 1996–97, when there will be a black hole in future funding?

Mr. Redwood

Some time ago, I set out to Parliament in the general expenditure figures what the position will be, and I do not propose to change those figures today. They will be reviewed in the normal way in the autumn for subsequent years. I do not accept the gloomy analysis that there will be a great black hole after three years. Opposition Members forget that the agencies are not only selling completed properties, thereby gaining moneys from those sales, but are creating new assets. They will not suddenly run out of assets. The idea is that they should not become great land owners and property holders but should be interested in new business and development, reusing the money time and again.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)

The Secretary of State said earlier that the hon. Member for Brecon and Radnor (Mr. Evans) had read the mood of the people of mid Wales. I obviously did not read the mood of the Western Mail yesterday. The Secretary of State said that I would probably be negative about his proposals, but I welcome some aspects of his statement. I appreciate the extension of the role of local government, which was debated during discussions of the Local Government (Wales) Bill.

I should like to raise one or two small points for clarification. First, I take it that the smaller grant approach will still apply under the new system, because there is a difference almost in culture between the WDA and DBRW. Smaller ventures in mid Wales are important. Secondly, will the Minister confirm that EC grant funding will be available under the new set-up? I presume that it will be, but such funding is vital. I echo other hon. Members' comments: I expect that the DBRW will retain a strong presence in mid Wales, where its headquarters will remain.

On a small but technically important point, the Secretary of State is aware of my concern about rack rents and the letting of units. I wrote to him about that, and in reply he said that he would consider it. Will he in due course, please, forward instructions to the new body about high rents, which in the past have dissuaded people from taking units?

Mr. Redwood

I certainly want the rents to be sensible so that we can fill the space because we want the businesses. Rents should be at market levels so that we can let the space. I have always made that clear to the development bodies; that is the policy that I am asking them to follow. We must continue grants for smaller ventures. They are important to mid Wales, where the scale of most enterprises is smaller than in the more industrial south. I do not think that it will in any way trouble the EC grants regime. That is not the intention; I want that to carry on.

I have already answered the point about office accommodation and headquarters. I am not announcing any changes today. I will listen to what the new chairman has to say. I do not visualise any major changes at the moment, but I will listen to what he suggests.

Mr. Nick Ainger (Pembroke)

Will the Secretary of State accept that his announcement will be greeted with some disappointment in those areas of rural Wales which are not currently covered by the DBRW? A opportunity that has been missed, especially in Pembrokeshire, Carmarthenshire, parts of Clwyd, parts of Gwynedd, and even in those areas that were formerly part of the south Wales industrial heritage which, sadly, are now becoming rural areas. A great opportunity has been missed for giving the social remit—which, as it would appear from the statement, is continuing in one form or another by local authorities—to rural areas to be exercised by the WDA in the rest of rural Wales. Will the Secretary of State reconsider that point while he is reconsidering other details? If that is changed, I suggest that there will be a great welcome in some of the hillsides of Wales that are not currently covered by the social remit.

Mr. Redwood

I am pleased to look at what can be achieved under existing local authority and national government powers in the way I have described. We will now consult with local authorities and, of course, I will reflect carefully on what hon. Members have suggested during today's exchanges.

Mr. Jon Owen Jones (Cardiff, Central)

Will the Secretary of State return to the legal dubiousness of spending the money in the way in which it was spent throughout the 1980s? In 1982, the WDA advised the Welsh Office that it was illegal to spend the money in the way that it was being directed. How does the Secretary of State intend to clarify that position? It is extremely important that mid Wales lost grant status according to DTI criteria and the money was redirected through the WDA into mid Wales.

We have yet to find out—and other hon. Members have asked this question in other ways—how the Welsh Office will justify, through economic criteria, as the DTI justified, giving grants to certain parts of Wales but denying grants to other parts of Wales which may be just as deserving or even more deserving. How will you justify that? How will you clear up the legal minefield in which the Welsh Office has got you?

Mr. Alex Carlile

Madam Speaker?

Mr. Redwood

Madam Speaker—I will do that bit for the hon. Gentleman as well—he is right. There have been doubts cast on the legal base. Some of those doubts apply to the loan scheme set up by the Labour Government in February 1979 and similar ones apply to the 1982 scheme, in which the hon. Gentleman is obviously interested. I have made it clear to the House that I have proposals here which I think can be done without any doubt at all. I think that that is the best way forward because I do not like recommending to the House things about which doubts can be voiced.