HC Deb 10 July 1996 vol 281 cc336-58

11 am

Mr. Dafydd Wigley (Caernarfon)

I am grateful to Madam Speaker for giving me a chance to raise this important issue.

It falls to me, as a Welsh Member of Parliament, to welcome this morning's good news about the LG company from Korea, which intends to build two new factories near Newport in south-east Wales. I understand that the factories will cost £1.7 billion and are likely to create more than 6,000 jobs. This is the largest inward investment project ever to come to the United Kingdom, and possibly anywhere in the world. I unreservedly congratulate the Welsh Development Agency, the Welsh Office and everyone else concerned.

Perhaps we should schedule debates of this kind for every Wednesday, so that announcements such as that can be made. To conquer unemployment in Wales, however, we should need 18 such Wednesday mornings in succession. That calculation is based on the official unemployment figure—between 60,000 and 70,000 people are not officially recognised as being unemployed. We welcome the news, although one swallow does not make a summer.

Unemployment—the reality or the threat of it—has been a scourge in Wales since the first world war. Between the wars, Welsh unemployment ran at well above 20 per cent. In 1935, it rose to more than 55 per cent. in my old home area of Merthyr Tydfil, and to 80 per cent. in the north end of the valley in Dowlais. No one pretends that the current problem is anywhere near as bad, but it is a serious problem in most parts of Wales, and it is substantially worse than the Government are prepared to admit.

The continuing problem of endemic unemployment is the key to why Wales has a lower income per head than any other country or region in Britain. What is the current unemployment level in Wales? The Government claim that it is about 107,000—8.4 per cent.—but that is after all the massaging of figures that has taken place during the past 17 years of Conservative government. The labour force survey statistics published by the unemployment unit suggest that the true level is nearer 168,000. The survey covers everyone who is out of work and wants to be in work, including elderly workers whom the Government have removed from the register, and married women who want to return to work but who are excluded from the Government's statistics. A number of other groups have also been excluded by the Government.

A generation ago, Plaid Cymru warned that, owing to the rundown of the coal and steel industries, there was a danger that 176,000 people in Wales would be unemployed. We now face a figure of that order. Unemployment is not just a general problem; it is a chronic problem in certain Welsh localities. In Aberdare, the unemployment rate is 13.4 per cent. That is the lower rate, relating to the total work force. In Merthyr and Rhymney, it is 12.1 per cent.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

That is an underestimate.

Mr. Wigley

All the figures are underestimates. They are probably around 60 per cent. of the true figures.

In south Pembrokeshire, the figure is 12.3 per cent.; in Holyhead, it is 11.8 per cent.; in my home area of Caernarfon and Bangor, it is 10.6 per cent. In Ammanford, 1,400 people are registered as unemployed—a quarter of the unemployed population of Carmarthenshire. Those figures disguise other changes, such as the fall in the number of workers in full-time employment.

Some of the figures are staggering. In 1981, there were 37,000 full-time employees in the constituency of my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands); by 1992, the figure had fallen to 29,900. In Aberdare, the figure fell from 12,400 to 9,500. In the Pontypridd and Rhondda area, it fell from 47,700 to 41,200. In Llanelli, it fell from 23,500 to 19,800. Over the same period, there has been a fall in full-time employment, an increase in unemployment and an increase in part-time working. The drop in full-time employment is serious, and is one of the factors that contribute to the low level of income in Wales. Statistically, however, it is offset by the increase in part-time working.

The fall in employment has a depressing effect on average incomes. It is also a serious social problem. Unemployment causes hopelessness, particularly among young people. Youth unemployment is a critical problem in Wales. A third of those claiming unemployment benefit in Wales are under 25, and they are almost evenly spread throughout the country. In Port Talbot, the figure is 38 per cent.; in Rhondda and Merthyr, it is 36 per cent.; and in Rhuddlan in north-east Wales, it is 34 per cent., as it is in Cynon valley and my own area of Arfon. Throughout Wales—north, south, east and west—a stark problem confronts young people.

Long-term unemployment is another depressing factor. In Merthyr, 46 per cent. of unemployed people have been jobless for more than 12 months, and in Rhymney valley the figure is 40 per cent. In Newport, Cardiff, Swansea, Cynon valley, Ynys Môn and Arfon, it is 39 per cent. The problem exists in large conurbations as well as in less populous areas, and the pattern is remarkably similar throughout Wales.

Wales has youth unemployment, long-term unemployment, widespread unemployment and persistent unemployment. That has led to social exclusion and the creation of an underclass. It affects behaviour patterns, and reduces the standard of living and the quality of life. According to the 31st edition of "Regional Trends", which has just been published, it has also had an effect on average gross weekly household incomes. The figures are stark, and I hope that the Minister will note them.

In England, the average gross weekly household income is £376. It is £363 in Scotland, and £326 in Northern Ireland. In Wales, it is £283—25 per cent. below the English figure. Those statistics are in a Government publication.

Mr. Rowlands

Two other figures are worth noting. In 1981, the Welsh figure was 91 per cent. of the average; it is now down to 75 per cent., and that figure disguises even greater discrepancies. I have a sneaking, horrible suspicion that in most of our valley communities it is down to 70 per cent. of the English level. I do not think that the average in my community is anything like £283.

Mr. Wigley

My hon. Friend anticipates what I was going to say. I was going to quote Wales's being 10 per cent. below the English level in 1980 and the figure worsening to 25 per cent. below by 1994.

The drop appears to have been caused by more than one factor. The reduction in wages and salaries as a component of household income is clearly significant. They have decreased from 68 per cent. in 1980 to 56.7 per cent. in 1994. That reduction is clearly a major contributory factor to the problem.

Mr. Martyn Jones (Clwyd, South-West)

I do not want to spoil the hon. Gentleman's flow, but are not incomes falling because many of the jobs that come to Wales are attracted from countries that want cheap labour, and we have screwdriver jobs that mean Welsh people being paid poor wages?

Mr. Wigley

I will come to that as I take my argument forward. I am grateful to my hon. Friend for his intervention.

Not only have wages and salaries gone down as a component of household income, but social security benefits, as a component, have increased noticeably—from 17 per cent. in 1980–81 to 22.5 per cent. by 1994–95. The social security element ties into the problem of long-term illness, which afflicts so many parts of Wales, particularly the old industrial parts—the old coal mining areas and the slate-quarrying regions that I represent—where industrial lung diseases have been one of the causes of long-term illness among the work force.

The 1991 census showed that, of the 10 counties with the highest number of households with long-term illnesses, eight were in the old coalfield regions of south Wales. That again contributes to the problems of higher dependence on social security payments and lower household income.

Those factors coincide with the fact that some parts of Wales have the lowest gross domestic product per head. In Mid Glamorgan, in 1993, GDP per head was only 62.5 per cent. of the UK average, the lowest of any county in Britain. It declined from 69.6 per cent. in 1991 to 62.5 per cent. in 1993. That is a staggering rate of deterioration. Those are Government statistics. GDP per head in Dyfed-Powys was 76 per cent. of the UK average and in Gwynedd, my own county, it was 77.9 per cent. of the UK average. That level is just not acceptable.

Understandably, the relative GDP per capita has decreased as a direct result of the factors that I have mentioned. In 1993, the GDP factor for Wales as a whole was 82.7 per cent. of the UK average—the lowest of any region or nation in Great Britain. That compares badly with our European partners, with which the Welsh Office has worked hard to try to develop links. In Lombardy, one of our motor region partners, average income per head is 31 per cent. above the European average, in Baden-Wurttemberg, it is 28 per cent. above the European average, and in Rhone Alpes, it is 8 per cent. above the European average. In Catalunya, it is 6 per cent. below the average, but in Wales, it is 16 per cent. below—the worst figure of all the motor regions by a mile.

In 1995, for the first time, Wales's GDP per head fell behind that of the Republic of Ireland. That was no doubt because of the success of the Irish economy and of the Irish Government, not only with their policies for industrial development, but in the way in which they have been able to use the European Union. There must be lessons for us in Wales.

The British Government have an almighty legacy of mismanagement of the Welsh economy. Wales has dropped to the bottom of the league table. Today's good news about the LG project may slightly improve the position. It will take six years to complete, I understand, so we must wait some time for the improvement. I hope, however, that, because of the success of the project, there will not be any pressure from the Treasury, such as we have read of in recent weeks, to take powers away from the Welsh Development Agency or from Locate in Scotland, which would stop them working to secure such projects coming to Wales or Scotland.

Some people argue that Wales receives an unfair share of inward investment, but the Welsh work force's record is one of the reasons why we attract such companies. The grants that are available in Wales are on a par with those available in other regions of high unemployment. If such projects do not come to Wales, there is no guarantee that they will go to England—they could go to continental Europe or to the Irish Republic. I hope that the Minister will give a categoric assurance that there is no question of the WDA losing any of its powers in this sector.

I also ask for an assurance that, although financial resources will, understandably, be swallowed up by the LG project—which I do not decry—adequate financial resources will be available to the WDA to ensure that there is the necessary support for projects in other parts of Wales, where unemployment remains high and where we need support.

It is worth noting that pay levels are higher in Korea than in Wales—here I come to the point made by my hon. Friend the Member for Clwyd, South-West (Mr. Jones). That may have been a factor in the decision to locate the project in Wales. So be it if that is the reason. We desperately need the jobs. It is sad that the location is regarded as a low-wage location, but jobs are necessary.

Wage levels in Wales are below the British average in some sectors. It is worth considering in what sectors. Perhaps I can carry the Minister with me on this. There is not all that much difference in average wage levels in the manufacturing sector as between Wales and England. The main difference is in the non-manual service sector, particularly in relation to men. In 1995, in the non-manual service sector, the Welsh average weekly wage for men was £375 and the British average was £441, a difference of £74 a week or 20 per cent. That is one of the key elements in the problem—37 per cent. of men working full time in Wales are paid below the Council of Europe's decency threshold of £228 a week. That again brings the problem into perspective.

The failure to develop producer services in Wales has led to a large element of the problem of low incomes and low wages. We have not been able to develop the producer services that should accompany new manufacturing projects. It is an important element in the depressed service wage levels that I have referred to. By producer services, I mean financial, computing, advertising and design—particularly computer design—services. There is an associated lack of investment in research and development in Wales, which could do much to improve the average.

Mr. Rowlands

And the servicing of manufacturing.

Mr. Wigley

My hon. Friend mentions the servicing of manufacturing. The producer services involve all services relating to the manufacturing sector. We are getting many of the manufacturing jobs, but when companies need the services that sustain manufacturing jobs, they go outside Wales, and often those services offer the best-paid jobs. Industry in Wales is paying for those jobs in England, and that is not helping our economy.

Reversing the low concentration of producer service industries in Wales is one of prerequisites to raising incomes and creating more jobs in Wales. That is important in terms of identifying employment growth sectors. The Minister may care to study a recent Cambridge Econometrics publication, which analysed growth potential by sector between 1994 and 2000. It is revealing. In manufacturing, the growth in output does not mean a growth in jobs. That is important for the WDA's and the Welsh Office's strategy. For example, in the electronic sector, Cambridge Econometrics projects a growth in output of 40 per cent. over that six-year period, but a decline in jobs of 2 per cent. It projected an output growth in instruments of 23 per cent., but a 3 per cent. decline in jobs and an output growth in pharmaceuticals of 22 per cent., but a decline in jobs of 6 per cent.

It is not enough to look only at such manufacturing sectors, albeit they are growth sectors. They may not be delivering the jobs that we need, and existing companies may not sustain current jobs. Part of the analysis that was undertaken by Cambridge Econometrics was to contrast that with the producer services that are relevant to those industries. Computer services have a projected output increase over the six years of 33 per cent. and a jobs increase of 15 per cent. Professional services will have an output increase of 23 per cent. and a jobs increase of 17 per cent. while other business services will increase output by 22 per cent. and jobs by 20 per cent. A priority for Wales must be to develop those producer services and not just the manufacturing sector.

I should like to repeat words attributed to Brian Morgan, chief economist at the Welsh Development Agency, in the summer 1996 issue of "Agenda". He said: If Wales is to continue its recent growth performance, we need to ensure that the innovation process is extended to encompass the high value added service sectors such as computer-aided design and software engineering. The distinction between manufacturing and service sectors is becoming ever more blurred, with the industrial sector outsourcing all but its key functions and employing increasing amounts of services. In working towards an integrated manufacturing and service economy, it will remain important to encourage more original research and development expenditure from existing firms and to speed up the diffusion rates of new technologies. That is an important statement, and, given its source, I hope that the Welsh Office will apply itself to seeing how such lessons can be learnt.

The problem is that the Industry Acts are mainly related to developing manufacturing jobs, but the distinction between manufacturing and services, as Mr. Morgan stated, is becoming more and more blurred. We need a change in the industrial incentive system to enable the Welsh Office, the WDA and other job creation agencies to help with financial and other infrastructure development incentives to secure the manufacturing services that Wales needs. There will probably be a need to change industry legislation. I hope that, before the election, or certainly after it, that change will be made.

I shall draw the House's attention to other aspects of the Welsh Office and WDA job development strategies. The first concerns targeting policy as laid down by the Welsh Office. It has published a map showing two target areas for securing new jobs and inward investment in Wales. One of them is the M4 corridor which runs through south Gwent and ends at Bridgend; the other is the A55 corridor, although that is a misnomer because it runs only from the border into parts of Flintshire and around Wrexham. Only 10 per cent. of the land area of Wales is within those two target areas, while 60 per cent. of the unemployed of Wales are outside them.

My hon. Friend the Member for Newport, West (Mr. Flynn) has just arrived in the Chamber, and I welcome him in view of the successful project that we have heard about today. There is now a need to direct more than 20 per cent. of the jobs coming to Wales to areas in the west such as Gwynedd and Dyfed or to the western parts of the old coalfield valleys if we are to overcome unemployment. Week after week, new projects come to the Newport area. I congratulate Newport—the best of luck to it—but we never hear about projects coming to the west. There has been a massive failure to attract inward investment projects to the old counties of Gwynedd and Dyfed.

In 1994–95, some 46 inward investment projects came to Wales. Only three came to Gwynedd, and one came to Dyfed, and the total number of new jobs for both counties was 55. That is inadequate, and there must be a change of emphasis. That is equally applicable to the old coal mining valleys such as the Rhondda valley, Cynon valley and Amman valley, which are missing out. Sometimes we are told by those who are involved in attracting jobs to Wales that the western parts are too far from the markets, but Ireland has succeeded in getting 56,000 new jobs in two years and it is further from the markets. It is a matter of determination, and of ensuring that jobs come to areas in which unemployed people live. Wales can learn some lessons from Ireland, and I hope that we will learn them.

There is a danger that finance by the WDA and the Welsh Office will go into those two small pockets and that adequate resources will not be available. Am I being too cynical when I say that those two pockets are conveniently placed to help not only the jobless in those areas but jobless people in Bristol in the south and in Liverpool in the north? It is easier for people in Liverpool to travel to the target area in north-east Wales than for unemployed people in Holyhead to get there and, equally, it is easier for people in Bristol than for the unemployed people of Ammanford to come to Newport. I hope that I am not being too cynical, but I wonder.

The WDA must start to redirect its efforts. I emphasise that inward investment should be only a part of the armoury of job creation and sustainable economic development in Wales. We must maximise the creation of indigenous companies. Much of that has occurred in my area where, according to a Bangor university study, the television and film industry has created 2,000 jobs over the past 10 years. More help is needed for those with ideas, such as people who want to start small companies but who cannot get capital. I had an example only last week in my surgery. A person with an invention, which was a good idea, had a fair amount of support and some capital, but he needed another £50,000 risk capital and could not locate a source. We need to help small people as well as the big fish in the international seas.

Another example of which the Minister is aware is the coal mining project in Carmarthenshire where, for an additional £100,000, about 20 new jobs could be created. The Government are unable to deliver such a small sum to get a worthwhile project off the ground. Small companies must be helped to expand. I sometimes get the impression that the WDA is much more interested in attracting the big names and the big headlines that go with them than in helping some of the smaller companies in Wales. I hope that that will be redressed.

Companies in Wales will need to source more of their purchasing there so that there is a better spin-off in the local economy. That leads me to public sector investment. Wales needs to be fibre-optic cabled to bring jobs to the rural areas and to cut unnecessary travel costs. It needs new schools, community hospitals, leisure centres and railway infrastructure. The roads also need to be made safer and all that requires public sector investment. Such projects can create jobs and improve the quality of life. However, the Government do not seem to be capable of making that happen. Road improvement schemes and water and sewerage schemes are often undertaken in areas of high unemployment, but the people who undertake them bring their workers with them from areas of lower unemployment. That scandal needs to be addressed by the Government.

There were redundancies recently in my local brickworks in Caernarfon. The labour force was virtually halved because there was a massive stockpile of bricks. How can that happen when there is a crying need for more bungalows for elderly people and for more starter homes? Wales produces bricks, windows, slates, timber and cement, but 20,000 building workers are unemployed. Do we not have the wit to solve one problem through solving the other?

I must warn about the possibly devastating dangers that face the rural economy as a result of bovine spongiform encephalopathy if the culling programme continues to the extent that has been talked about. Thousands of jobs could be lost in rural Wales, and the Welsh Office must find a way to help small farmers in these difficult times. One way to do that is to have a beef promotion campaign, perhaps in association with the Meat and Livestock Commission. There must also be support for farmers who are not necessarily losing animals through culling, but for whom prices have dropped, causing cash flow problems.

There is a challenge to maximise full-time jobs in tourism, yet because of the nature of our industrial development Acts, when there is a service—such as a laundry service in my constituency—with the potential to offer a couple of dozen new jobs and to do work in our area rather than send it out, financial assistance is not available so that the service can expand and provide those jobs. We must break down the artificial barrier between manufacturing and service.

What else needs to be done to remove the unemployment cancer that has affected so many communities in Wales? Plaid Cymru believes in full employment. I hope that Labour Front Benchers will tell us that they also are committed to a full employment programme—I have been a little concerned about their seeming to have stepped back from that commitment recently. We believe that it is possible to make massive inroads into the unemployment problems in Wales, and that it should be a social priority to do so.

Last year, we published a blueprint of a scheme called "One Hundred Thousand Answers", showing how 100,000 jobs could be created in Wales. We started from the assertion that work needs to be done in every community in Wales and that potential jobs are staring us in the face. There is a need to provide adequate community care, to improve the physical environment and to control pollution. There is a need for energy conservation schemes and to insulate homes, which would not only reduce energy consumption but reduce bills for pensioners and disabled people.

We need to improve our public transport and to reduce dependency on cars. There is a need for lengthsmen in our rural areas to keep the roads tidy, and a need to develop training and apprenticeships. We need more help in our schools, hospitals and doctors' surgeries, where staff are grossly overworked.

We need help for our police forces. People in every part of Wales say that they want to see police on the beat in villages and towns, but they are not available. Jobs need to be done in the paramedical services—in physiotherapy, speech therapy and occupational therapy. We need more community nurses, bath nurses and home helps.

Work is available all around us. The Minister is aware that people from the voluntary sector were at Westminster yesterday to lobby us. They told me how they could create jobs that would be of benefit to the people with whom they work.

The fact is that there is work to be done in every community, and it is mainly labour-intensive work. The problem is that those who need the services do not have the financial resources to pay for it. Pensioners cannot afford to insulate their homes, disabled people cannot pay for more home help and voluntary organisations do not have the resources to employ more workers.

As a community, we are paying perhaps £80 a week to keep people on the dole. If we could pay them £160 a week at a minimum wage level, they could be doing that much needed work in all our communities. Yes, it would cost money. It would cost £4,000 a year per head in labour costs to bring them in to work. I accept that that could mean a couple of pence on income tax, although there are some other taxes—environmental taxes—that would help to finance such a programme. There is certainly a need for a reduction in employers' national insurance.

Mr. Cynog Dafis (Ceredigion and Pembroke, North)

My hon. Friend has touched on a point that has been given increasing prominence by the most progressive thinkers: the need to shift the burden of taxation away from taxation on employment to taxation on pollution and the waste of resources. Is not that really the key to designing an economy and a society in which employment is enhanced and a far more environmentally sustainable system is encouraged? Is not it also astonishing that that point was conspicuous by its absence from the Labour document that was published last week, "The Road to the Manifesto"?

Mr. Wigley

I am grateful to my hon. Friend for that intervention. I, too, was surprised that that document contained so little reference to that point. My hon. Friend is well aware that an Institute of Public Policy Research document has described the approach of introducing environmental taxes. The IPPR believes that 700,000 new jobs could be created in the United Kingdom with the introduction of such policies.

Work needs to be done, and there are people available who can do it. People require training, and that means more public expenditure. It means a couple of pence on income tax and some environmental taxes, but we believe that that price is worth paying to conquer unemployment, which is a cancer in our communities.

There is a stark choice facing Wales today. As a community, either we are prepared to pay a little more in tax so that we can pay people to work—rather than paying them to rot on the dole—or we accept the current cancer of unemployment, which is biting into every community in Wales, with all the concomitant problems of squalor, drugs, wasted lives, lost potential and decaying towns and villages. There is a price to pay, but there is also an enormous price if we ignore the problem. It is a moral choice, and Plaid Cymru is prepared to make it.

11.34 am
Mr. David Hanson (Delyn)

I congratulate the hon. Member for Caernarfon (Mr. Wigley) on securing this debate. It is a valuable exercise for us to discuss unemployment and low income in Wales. I shall much welcome the Minister's reply. I am pleased to see that the Minister in the Chamber. It is a pity that some other Conservative Members could not make it to the House to discuss an issue that is important for Wales.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)

There are not that many of them.

Mr. Hanson

As the hon. Gentleman says, there are not that many of them, and I presume that some of them are on official duties.

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

I think that the hon. Gentleman is being a tiny little bit unfair. My colleagues are out winning for Wales—most obviously, my right hon. Friend the Secretary of State is in Seoul today.

Mr. Hanson

I was not referring to the Secretary of State for Wales, because he is not a Welsh Member. I was referring to the Welsh Members—but there we go; not to worry.

I agreed with a great deal of what the hon. Member for Caernarfon said. I was particularly interested in some of the capital projects he mentioned, which could be carried out and would be of benefit to Wales. Certainly in my own area, the electrification of the Crewe to Holyhead railway link would create jobs, improve the level of investment and provide greater attractions for inward investment to north Wales, in particular.

My own county of Flintshire is one of the few areas in Wales that does not have assisted area status, which causes us some difficulties. The fragility of the local economy is a fact that we must face daily. Only last week, Kimberley-Clarke, which is a major manufacturer in my constituency, announced a reduction in the Flint work force by 65 jobs. The economy of north-east Wales is still fragile and requires attention.

I was also particularly interested in the point made by the hon. Member for Caernarfon on housing investment. There are 2,200 people on housing waiting lists in my constituency. Many people in Wales have the skills to build houses, and, as he said, there are companies there that make building materials, but still we cannot release capital receipts to build houses for local people, which would create local jobs and build a strong local economy. So much of what he said is valid.

Because we have so little time for the debate, it may be helpful if I focus on two specific issues: the need for a minimum wage and the increasing casualisation of work in Wales.

The hon. Member for Caernarfon and my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) mentioned income levels in Wales. There are now at least 12,000 people in Wales who earn less than £1.50 per hour for jobs done on a full-time or part-time basis, and at least 42,000 people earn less than £2.50 per hour for jobs done on a full-time or part-time basis. Women are hit hardest by low incomes.

The abolition of wages councils in 1993, in Wales and across the United Kingdom—a move that I opposed in Committee and in the House—has made the situation dramatically worse. We face a situation, as described by the hon. Member for Caernarfon, in which unemployment has been rising, wages have been forced down, part-time and casualised work has been growing and real incomes have been dropping because of cuts in wage council work.

An excellent survey done for the Low Pay Unit by Huw Edwards, the former Member of Parliament for Monmouth, has recently been circulated to some hon. Members from Wales. I should like to give one example from it and to hear the Minister's comments on it. It concerns a job advertised in a jobcentre in south Wales, for a shop assistant manager earning £2.70 an hour. Before the abolition of wages councils, the minimum for the same job had been £3.15 an hour. That is just one example of a real fall in wages in a typical job, taken from a jobcentre in Wales. I should like to hear from the Minister some explanation of why we were told during the passage of the trade union legislation that the abolition of wages councils, rather than forcing down wages, would increase them, when we have example after example of poorer levels of salary.

My constituency of Delyn in north Wales depends greatly on tourism, the catering industry and hotels and residential homes. Many of those sectors were covered by wages councils and people working in jobs in them have increasingly lower incomes because of the reduction and abolition of wages councils.

That same survey shows that in Wales a large number of jobs are extremely poorly paid. I should like to hear from the Minister why a minimum wage cannot be implemented in Wales. I can give two examples of jobs taken from jobcentres in Wales in May this year. There was an advertisement for an experienced security guard at a rate of £2.19 an hour for a 72-hour week. Another advertisement was also for a security guard at £2.20 an hour, with the hours to be arranged. There are many examples of valuable jobs at low pay, which could be improved by a minimum wage.

Mr. Paul Flynn (Newport, West)

Was my hon. Friend's confidence boosted by today's magnificent announcement that the LG group is coming to Wales in the full knowledge that we shall have a Labour Government, a Welsh Assembly, a social contract and a minimum wage? Does not that contrast with the fact that INMOS, another splendid hi-tech company, left Wales and is now settled in a country which has a minimum wage and a social contract? Should not we congratulate everybody on this achievement, including the Government, the Welsh Development Agency and Newport borough council, and not divide over petty party points as some people have done this morning?

Mr. Hanson

As hon. Members would expect, I agree with my hon. Friend. We are looking for partnership between the Welsh Office, Labour local authorities and the Welsh Development Agency, which was established by a Labour Government. We all welcome the jobs in Newport. However, Newport is a long way from my constituency in north Wales and we need to ensure that there is an even distribution of employment and that investment takes place all round.

My hon. Friend the Member for Newport, West (Mr. Flynn) talked about the obvious lack of fear of the future. I suspect that a large company would assess what is likely to happen in the future and see that there is the potential, under a Labour Government, for the social chapter and a range of other measures. That company has taken the decision to invest in Wales having considered all those issues. That is important.

As the hon. Member for Caernarfon said, the Council of Europe's decency threshold is £228.68 per week. Income levels in Wales are grossly below that figure. A total of 30 per cent. of the males in my constituency and 63 per cent. of the women employed in my constituency earn less than the Council of Europe threshold.

Figures show that, under the Conservative Government, wages have been driven down even further. Household incomes compared to those in England—my constituency is only 10 miles from England—are in dramatic decline. In 1981, the wage level for people in Wales was 91 per cent. of the English average. Last year, it was down to 75 per cent. of the English average. The average income for a Welsh household is £282 a week compared with £375 in England and £435 in the south-east—35 per cent. lower.

I should genuinely like to hear from the Minister what action his Government intend to take in their dying days to try to reverse that, and what action they have taken in the past. The Opposition have some positive proposals to try to raise the level of real incomes. According to the family expenditure survey, 31 per cent. of Welsh households now have an income of under £175 a week. There is no getting away from the fact that people in Wales are more poorly paid, and that is having a real impact on their quality of life.

My party wishes to establish a minimum wage. I should like to hear from the Minister the genuine reason why he is opposed to that. I suspect that all Opposition parties, which, in effect, means the people of Wales, believe that a minimum wage should exist.

Mr. Nick Ainger (Pembroke)

Has my hon. Friend seen the report in today's newspapers that President Clinton has made an agreement with the Senate to increase significantly the national minimum wage in the United States from $2.70 per hour to $3.30 per hour? He will be aware that the United States has the biggest growth in job creation in the Organisation for Economic Co-operation and Development countries. Does my hon. Friend agree that, in the United States, the national minimum wage is no barrier to job creation and therefore there is no reason why it should be a barrier in the United Kingdom?

Mr. Hanson

My hon. Friend has made his case clearly. Like him, I believe in a minimum wage. Many western democracies—not just the United States but countries in Europe—believe in a minimum wage. There is no evidence to prove otherwise. A minimum wage would ensure that the work force were brought on board in a partnership so that they felt part of the organisation. Individuals would feel motivated to work. A minimum wage would put money into the local economy. In my constituency, those whose wages were increased would not buy foreign holidays or imported goods but would be pumping that money back into the local economy and local employment.

The Minister must realise that low pay costs every taxpayer money. Family credit and housing benefit are all being paid by the taxpayer to subsidise poor employers who pay low wages. The Minister should address the problem for good employers who pay decent wages but find themselves undercut by those paying low wages for similar jobs. There is a need for a minimum wage and I want to hear him defend his opposition to it on the record.

I know that other hon. Members want to speak, so I shall deal briefly with the casualisation and contractorisation of employment. I want to draw the House's attention to the experience of one of my constituents who is not alone in Wales in facing the downside of the changing economy and employment market. My constituent ha, been employed by an agency for three years. He has worked on a contract for an insurance company. There is no doubt that the insurance company gets a good deal because it has a flexible employee and no hassle over terms and conditions of employment, and it pays a fixed fee to the agency for my constituent. It has, effectively, outsourced some of its activities to the agency. My constituent receives poor pay and has poor conditions, no security and no rights at work. I received a letter from my constituent's father. It said: It is not just the threat of dismissal which is the problem. He can have no sick pay, no holiday entitlement, no bonus or fringe benefits, no pension, no grievance procedure—nothing other than a salary which is still below any of the minimum levels now being mooted, and the fear of being kicked out if he so much as squeaks in protest. There is a growing feeling that people in Wales are facing casualisation of employment. Contract labour is being brought in and individuals face temporary, casual employment and a reduction in their terms and conditions of service.

Employment figures for the United Kingdom—of which a proportion relates to Wales—show that some 308,000 people work under similar employment conditions to those of my constituent. Although he is involved in training and team building, he receives no company benefits as he is under contract to an agency. The House needs to examine the problems in more detail and to address them.

Coupled with the insecurity of unemployment are the low levels of income and the continual casualisation of work. Wales faces a bleak economic future unless the Government take positive steps to encourage secure employment, improve the economy and provide a minimum wage and real employment rights for all workers, no matter where they work and whatever their terms and conditions.

11.49 am
Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)

I congratulate my hon. Friend the Member for Caernarfon (Mr. Wigley) on securing today's debate. I regret that, as a result of the posturing of the Conservative and Labour parties, the Welsh Grand Committee was unable to discuss such an important issue. It is quite unacceptable that they are prepared to put narrow party political points before the needs of Wales.

My hon. Friend referred to the document "One Hundred Thousand Answers", which I commend to the House as a considerable step forward and an important contribution to the debate. It comprises a practical set of measures. I am sure that if even a quarter of them were implemented, the Welsh economy would soon turn around.

Rural Wales suffers severe disadvantages. Recently, my hon. Friend the Member for Caernarfon and I met the Secretary of State for Wales. There was a strong case for establishing an enterprise zone in south Gwynedd. However, when he took office, the Secretary of State denied the people of south Gwynedd the opportunities that would have resulted from enterprise zone status. He said that it would be of no assistance to the area. Hon. Members can imagine my shock some weeks later when I heard the Prime Minister, in one of his silly answers to his Back Benchers, extolling the benefits of enterprise zones, of which there are now some 10 or 12. I find such politicking quite unacceptable as it affects the lives of ordinary people who deserve better.

I find it astonishing that the glossy documents produced by the Welsh Office, including the rural White Paper, do not mention youth unemployment. Mention has been made of the sweatshop economy. Of course we need jobs, but I should make a further comment, although the Welsh Office will deny it. Last year, I went on a visit to Germany with the Select Committee on Welsh Affairs. A couple of German industrialists who had set up factories in Wales freely admitted that they had come to Wales because they could pay far lower wages. However, as my hon. Friend pragmatically said, Wales is desperate for jobs and I am sure that today's announcement about LG will be most welcome throughout Wales.

The "Real World Action Programme for Government" which is supported by several important groups including the Town and Country Planning Association, Poverty Alliance and the Employment Policy Institute, sets out some important initiatives for political parties to consider. They include the implementation over 10 years of a £1 billion annual programme of public investment in local, community and voluntary enterprises; to create work opportunities and attempt to meet social needs. An 'ecological' restructuring of the tax system, in the first instance through a phased replacement of employers' National Insurance contributions by taxes on pollution and the use of environmental resources. Establishment of a timetable for achieving within 10 years the UN development aid target of 0.7 per cent. of national income with at least 0.5 per cent. to be achieved in the first term of office, and increasing to at least 20 per cent. the proportion allocated to social and environmental priority areas such as basic health, primary education, water and sanitation. As my hon. Friend said, the document proposes A housing strategy to provide at least 100,000 affordable homes in the social housing sector each year for the next 10 years. An integrated transport programme with the target of reducing road traffic by 10 per cent. from 1990 levels by the year 2010, as a first step towards deeper reductions. It also proposes Regular publication of a new measure of economic welfare which includes social and environmental factors; together with annual published assessment of the contribution made by government economic and social policy towards it. None of those simple, straightforward and obvious answers appears on the Conservative agenda or on the Labour agenda, but they all appear in the Plaid Cymru manifesto. Plaid Cymru Members are thinking constructively and not sitting back and allowing circumstances to direct us.

There is no doubt that poverty in the United Kingdom and in Wales has risen and the gap between rich and poor has grown ever wider. Poverty has a profoundly damaging effect on people's lives, contributing to worsening health and lack of opportunity. Rising inequality damages social cohesion, leading to rising crime. We are all aware of the symptoms.

The long-term goal of employment policy should be to redistribute employment, allowing everyone access to work—including voluntary work, child care and education—at different stages in their lives. Long-term unemployment could be reduced through a job subsidy provided to employers who take on those who have been unemployed for more than a year.

By reducing employers' national insurance contributions, an "eco-tax reform" would create significant numbers of jobs. In addition, employment could be created through a public expenditure programme directed at meeting social needs. Such a programme should be used specifically to strengthen the social economy of voluntary and community-based organisations and enterprises both by direct investment and by attracting additional finance through the creation of community and regional banks. That, above all, should symbolise the next Government's commitment to reducing poverty and increasing social cohesion.

As we have heard, there is a considerable problem in rural Wales. Nearly three out of 10—or 27.4 per cent.—of men working full time in Wales earn less than the Council of Europe decency threshold. The figures for Gwynedd, however, show that as many as 33.5 per cent. of men working full time earn less than that poverty threshold. Only two other counties in Britain—Dyfed and Cornwall—have a higher proportion of low-paid workers. The incidence of low pay for women is even more severe. More than half of all women working in Wales are low paid. That includes nearly five out of 10 women in non-manual jobs and eight out of 10 in manual jobs.

Poverty in rural areas is not always as apparent as in urban areas. The settlement patterns of people in towns and cities often mean that the poverty is concentrated in housing estates or in particular wards. Therefore, it is visually and statistically apparent. Population in rural areas can often be dispersed over several wards and involve smaller numbers. The infrequency of public transport, comparative isolation, greater reliance on the car and distance from services often worsen the position in rural areas.

Poverty and the state of the economy are interlinked. Economic and social deprivation result from unemployment and low pay. In Europe, there are now 12 million people unemployed and an estimated 52 million people with incomes of less than half the average income per capita in each member state. The worst levels of poverty are concentrated in the northern and southern peripheries of the European Union. The United Kingdom has the largest growth of poverty in the northern periphery as a result of de-industrialisation and economic restructuring.

In Gwynedd, high unemployment is a key player, contributing to the lack of social cohesion. I am desperately worried about the horrible, endemic unemployment among young people under 25. Undoubtedly, those unemployed for more than one year will suffer most from social exclusion. Those people have never worked full time and will therefore find it difficult to enter the labour market. People who are unemployed for more than one year will suffer a whittling down of financial and material resources, confidence, and often health.

As a percentage of total claimants, unemployment among people under the age of 25 in Caernarfonshire, Merionethshire and Ynys Môn is higher than it is for older people. That corresponds to the general trend in Wales, Britain and the European Community. Of the 37 districts in Wales, however, Arfon, in the constituency of my hon. Friend the Member for Caernarfon, has the sixth highest percentage of unemployed people in that age group. Of all unemployed people in the district, 33 per cent. are aged 25 or under. That is a disgraceful figure. Ynys Môn and Arfon have the seventh and eighth highest levels of people who are unemployed for a year or more of all districts in Wales. That may be an underestimate of the true figure, because of the importance of seasonal employment, which lowers the claimant count because people who register after summer employment are regarded as new claimants.

The strength of the economy is usually shown in terms of numbers of men working full time. That number has fallen below the 1981 level, which reflects the decline of manufacturing and other male-dominated areas of employment. On the other hand, the number of men working part time has almost doubled in Caernarfonshire, Merionethshire and Ynys Môn over the past 10 years. Many of those may be working in more than one job. Nevertheless, the traditional social and economic pattern, whereby the male is viewed as the main household earner, has been undermined.

Female part-time employment has continued to increase and numbers of women working full time have also increased, which suggests that, whereas the opportunities for full-time employment for men have fallen, opportunities for women have increased. That may in part be due to greater acceptability of women who apply for jobs that were traditionally carried out by men. Alas, women, too, often accept low wages, which may also be partly due to greater employment opportunities for women in the service sector—jobs for which men do not normally apply. Those changing patterns have given rise to a new set of needs. They have enforced changed roles on men and women. Unemployed men might have to learn to be the care givers to enable women to work. However, family incomes may be lower since women's wages tend to be lower.

I know that other hon. Members want to speak. I desperately believe that some urgent action is necessary. It grieves me that nobody in Wales, apart from Plaid Cymru, is talking about this agenda. I only wish that all parties would enter the domain. There is nothing of any comfort in Labour's latest document, assuming that it is not changed radically without consultation as other policies tend to be. Indeed, I would welcome a U-turn.

The overall position is desperate. There is rural poverty and urban poverty, and nothing is being done to address the important problems. All the suggestions that my hon. Friend the Member for Caernarfon has made in this debate and the answers that I suggested earlier have two things in common: none of them appears on the agenda of the Tories or Labour, and none of them could be addressed by a toothless talking shop of a Welsh Assembly.

12.3 pm

Mr. Rhodri Morgan (Cardiff, West)

I join in congratulating the hon. Member for Caernarfon (Mr. Wigley) on securing this debate on unemployment and low pay in Wales. I couple that with congratulations to Welsh Office Ministers, local authorities, Newport borough council and all the other agencies, bodies, individuals and consultants who have been involved in helping to land the LG project for Wales, as was announced in the early hours of this morning. It is a superb project—possibly the largest inward investment project in Wales for 20 years, and perhaps the most important since the BSC Llanwem steelworks 40 years ago in the same town of Newport.

It is unusual, although not unique, for such a mega-investment project to be announced right at the end of a Parliament. It shows that LG is investing in Wales regardless of the outcome of the next election. Obviously, the bulk of the public expenditure needed to bring the project to fruition will be required after the election. All the jobs that will arise from the project will arise after the election, too. I say to Welsh Office Ministers who are present, all others and any Korean listeners that Labour's Welsh Front-Bench team gives an absolute commitment to bring that mega-project to fruition should the responsibility fall to us after the election.

We shall all have to get used to words such as "chaebo"—the Korean word for large industrial conglomerates, of which LG is one. Indeed, we shall have to get used to the name LG, since the company has changed its name from Lucky Goldstar in the past 12 months. In Wales, LG used to mean one thing: the initials of this country's only Welsh Prime Minister. Those initials now have a new meaning for all in Wales, and one which is very welcome because of the subject of this debate. Never has such a mega-investment been more urgently needed by Wales or, perhaps, any other part of the United Kingdom. The deterioration in the Welsh economy has been caused largely by the absence of such mega-projects over the past 20 years.

The Government's Invest in Britain Bureau conveniently produced a list of mega-projects in a press release issued yesterday by the President of the Board of Trade. I was very pleased to read the list because it was identical to a list that I gave in a previous debate. That is not a boast; one does not need to be a rocket scientist to work out which projects are needed. The list is highly relevant to this debate. I absolutely agree with the press release when it says: Companies such as Siemens, Fujitsu, Toyota, NEC, Samsung, Honda Chunghwa and Nissan make a vital difference to the local economy wherever they choose to set up operations. We should remember that Siemens and Fujitsu are going to the north-east of England, Toyota has already gone to the east midlands, NEC has gone to Scotland, Samsung to the north-east of England, Honda to the south-west of England, Chunghwa to Scotland, and Nissan to the north-east of England, but none has gone to Wales. The absence of such mega-projects is probably the reason why unemployment and low pay are such problems for Wales. Thank goodness, at long last, for the first time in 20 years, a mega-project has come to Wales—the first since the Ford engine plant went to Bridgend in 1976.

Sir Wyn Roberts (Conwy)

I should like to make two points. First, the hon. Gentleman said that Lloyd George was the only Welsh Prime Minister. There was also, of course, James Callaghan. Secondly, the Toyota engine plant is in Deeside. I apologise for not being present for the whole of the debate, but I heard it from afar. My problem was that I could not lose a couple of minutes of the speech of the hon. Member for Caernarfon (Mr. Wigley).

Mr. Morgan

I am grateful for the right hon. Gentleman's attempted correction. His arrival in the debate on unemployment and low pay is better late than never on a day when I half expected all three Conservative Back Benchers to be present to help to welcome the good news for Wales today. I am grateful that the right hon. Gentleman has entered the Chamber halfway through the debate. He was right in one sense: James Callaghan represented a Welsh seat—"indeed, the one that adjoined mine—for 40-odd years, but we tend to think of Lloyd George as having a special place because, although I believe that he was born in Manchester, he was brought up in Wales. He was Welsh in a very specific way that I am sure Lord Callaghan, who is now a distinguished Member of the other place, would not claim.

As yesterday's DTI press release said, investment in such a large project can almost on its own lift the relative position of a region such as Wales in the league table. Failure to attract any of the projects listed by the DTI, until this morning's news from Seoul, has caused the relative deterioration in Wales's position in the United Kingdom league table. That deterioration is starkly illustrated in the 1996 edition of "Regional Trends", published a fortnight ago. As the hon. Member for Caernarfon has already given figures similar to those that I intended to cite, I shall not repeat them. "Regional Trends" gives us the figures for Wales up to 1 April 1995 in most cases, and shows how extraordinarily badly Wales has been doing over the past 15 years.

According to Government figures for gross domestic product or household income per head, in 1980–81 Wales came ninth out of the nine English regions plus Wales, Scotland and Northern Ireland. We are now at the bottom of the league table—12th out of 12. That is a sad state of affairs and I am grateful to the hon. Member for Caernarfon for this debate, which helps us to focus on the difference that the LG project will help to make to Wales's position in the league table. Table 8.1 of "Regional Trends" shows that in 1994–95 not only was Wales bottom of the table on household income per head, but the gap between it and the next lowest region—northern England—was enormous. In northern England, average gross household income was £345 per week while in Wales it was £282.70.

Wales's deterioration compared with Northern Ireland is also extraordinary. In 1980–81, Wales in ninth position had an average gross weekly income of £138.60 and Northern Ireland was almost £20 worse off at £119.20 a week. By 1994–95, Wales, now in 12th position, had an average gross weekly income of £282.70 while Northern Ireland had an average gross weekly income of £40 more than Wales at £326.30 per household. It is serious enough to drop from ninth to 12th place, but even more serious to be hopelessly behind in 12th place. That is what is so depressing about the picture for Wales.

There seems to have been not merely a relative deterioration but an absolute deterioration. For instance, in 1992 average weekly expenditure per person reached £101.60. Two years later, it had dropped to £96 40. The same is true of income per head. That absolute deterioration then feeds through to other parts of the economy. If a family has a low weekly income, its general expenditure will not create extra jobs in the service sector. It will not create a demand for new shops and other specialist services because it simply does not have the money to lash out on all manner of services. So low wages create a poor provision of wages in multiplier service industries and, as a result, there tends to be a low demand for labour, which then depresses incomes. That vicious cycle has impacted on Wales since 1992.

The importance of this morning's news is that it gives the Welsh economy an opportunity to improve its position and surpass some of the other regions which tend to depend, as Wales does, on manufacturing industry. It will increase demand for labour and therefore increase relative wage levels. It was ironic to hear on the 8 o'clock BBC television news this morning, announcing the LG project, that one of the reasons why the Koreans were investing in Wales was that they had a strong manufacturing economy and strong trade unions. Strong trade unions were forcing up wages, so they were coming to Britain. That is good news for Britain, but it is ironic when we compare the history of Great Britain and Korea over the past 30 or 40 years.

Never have we so greatly welcomed investment which might generate demand for highly qualified staff and which will have a chain reaction throughout the economy in south Wales. My hon. Friend the Member for Delyn (Mr. Hanson) was right to say that people in his area had no chance of getting jobs there, but at least half the population in Wales resides within a reasonable travel-to-work distance—20 or 25 miles—of the Duffryn site in Newport. We hope that, at least in that area, there will be a step change. However, it must be accompanied by a step change in the number of qualified engineers, scientists, technologists, supervisory staff and quality control technicians. We must step up our output of such people. Otherwise, as the BBC said this morning, given the size of the investment and the fact that it will be Wales's first silicon chip factory, LG will take highly qualified staff from other electronics components factories rather than from the unemployment register.

I hope that the Minister will take the opportunity this morning to explain how the Welsh Office will handle all the knock-on decisions that need to be made. What additional resources will be made available to the training and enterprise councils and the modern apprenticeship scheme to ensure that skilled labour and supervisory and technical staff—the shortage of which prevents this country from growing as quickly as it should—are made available? What will happen to the Euro-freight terminal only three or four miles away from the Duffryn site to ensure that transportation blockages are not caused by the gigantic new LG investment? How will the Minister ensure that, if and when a Labour Government come to power, we shall be able to complete a project that is running smoothly and on time without causing problems to other employers, and therefore ensure that it will have the maximum impact on unemployment and low pay in Wales?

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

In the short time left to me, I shall try to answer all the questions that have been posed. First, I thank the hon. Member for Caernarfon (Mr. Wigley) for providing us with an opportunity to debate all the good things that are happening in Wales. He will agree that this is a great day for Wales, although others looking on would not necessarily believe it from most of what they have heard in this morning's debate.

My right hon. Friend the Secretary of State has today signed not Wales's or the United Kingdom's but Europe's biggest ever investment deal in Seoul. It will bring 6,100 jobs to Wales. After much speculation, I can now confirm that the Korean-based international group LG will invest £1.7 billion in electronics and semi-conductor plants on a 250-acre site at Imperial Park, Newport.

That is the biggest vote of confidence the Welsh economy has ever had. No other inward investment project in Europe has created so many jobs. It is a tremendous boost for the south-east valleys of Wales and the United Kingdom as a whole and will transform employment prospects. It is good news for the people who will work for LG. It is good news for their families and for all the businesses that will supply LG. As well as the 6,100 jobs that LG will create, at least as many again will be generated in supplier and support industries.

The £1.7 billion project will create 6,100 new jobs in a series of developments. LG Semicon will build a plant to make, test and package semi-conductor wafers. LG Electronics will make monitors, colour-picture and colour-display tubes and cathode ray tube components, later expanding to make electron guns and large, wide-screen colour televisions.

I am very grateful for the welcome and for the congratulations that the hon. Members for Caernarfon, for Newport, West (Mr. Flynn) and for Cardiff, West (Mr. Morgan) have extended to my right hon. Friend the Secretary of State and his team on what has been achieved.

Sir Wyn Roberts

Will my hon. Friend convey our congratulations to my right hon. Friend the Secretary of State and to the Welsh Development Agency? We know that he and the agency have been active, not only last night but in the past nine months or so, in attracting this great acquisition for Wales.

Mr. Jones

I will pass on my right hon. Friend's congratulations, and I believe that he spoke for the whole House. My right hon. Friend the Secretary of State will by now be flying back from Seoul, and will be in the House tomorrow.

The hon. Member for Caernarfon asked me about any possibility, relating to media speculation, of changes in the arrangements for inward investment, and I can tell him plainly that neither I nor my right hon. Friend has any plans to make any such changes. He also mentioned the implications for resources for the Welsh Development Agency; I can assure him that the agency will receive the resources that it requires to ensure that this project proceeds.

This is an example of what team Wales has achieved, and it will enhance the reputation of Wales and its work force throughout the world. As such, I contrast the comments by the hon. Member for Newport, West, the separatist tendencies of the hon. Member for Caernarfon—although he made no mention of them today—and the Labour party's centralist tendency, represented by its Welsh Assembly proposal, which was at least a live proposal until the referendum was imposed on it.

What better example can we have today of what can be achieved now under the present arrangements, and what clearer warning can there be for Wales that, if we were to be over-governed, with an extra tier of government, extra bureaucracy, and the burden of extra taxation, if a regional assembly were imposed on the people of Wales, Wales would not be the winner that it is today but the loser?

Mr. Wigley

The Minister tempts me and I draw to his attention, as I did in my contribution, the remarkable performance of the Irish Republic in creating 56,000 new jobs in two years, with a per capita gross domestic product which has passed that of Wales. Now that we have had this success in the Newport area, how will the Welsh Office strategy ensure that there are similar developments in the westerly parts of Wales, in Gwynedd, Dyfed and in the westerly valleys of the old coalfield?

Mr. Jones

I accept the thrust of the hon. Gentleman's question, and I shall return to that subject in more detail.

I wish to take the opportunity to nail the claim referred to by the hon. Member for Clwyd, South-West (Mr. Jones). I am glad that it was essentially refuted by the hon. Member for Caernarfon. All too often, it is put about that the Government are succeeding in attracting Korean and Taiwanese companies to Wales only because wages in Wales have fallen to coolie levels. That is a myth. It is ridiculous to say that inward investors are attracted by low wage rates and continue to pay low wages, or that there are lower pay rates for the same day's work in Wales than in England. I wish to take time to lay these fallacious and malicious ideas to rest, lest anyone outside the House should start to believe them.

Mr. Walter Sweeney (Vale of Glamorgan)

Last week I visited Ford at Bridgend, which recently announced that it intends to create 450 new jobs, and Bosch, also in the vale of Glamorgan, which intends to create 100 new jobs. Does my hon. Friend agree that that is a good illustration of the fact that South Wales is a high-wage economy for many workers, and that this is not a flash in the pan? This wonderful new announcement is symptomatic of an enormous amount of economic success in Wales. Is it not time that the Opposition stopped running down the record of the Government and the Welsh Development Agency and sang up the praises—

Mr. Deputy Speaker (Sir Geoffrey Lofthouse)

Order. The Chair does not encourage mini-speeches in interventions. That is what we are getting from the hon. Gentleman.

Mr. Jones

I thank my hon. Friend for his intervention. He makes my points for me.

Since April 1990, average wages have increased faster in Wales than in Great Britain as a whole. The evidence is that, job for job, there is little variation in pay between the regions of the UK, with the possible exception of the south-east of England. It is not true that inward investors pay low wages. Inward investors generally pay above UK average rates. In Wales, in some sectors, average rates for inward investors are a good deal—20 to 40 per cent.—above the UK average.

There is a difference between low wages and low labour costs. Inward investors are attracted to the UK and Wales in part because of low wage costs, employers' social security costs, pensions and health contributions. Rightly, these costs are lower in this country than elsewhere in Europe. For every £100 in wages, employers pay extra non-wage labour costs of £44 in Italy, £41 in France. £34 in Spain, £32 in Germany but only £18 in the United Kingdom.

Average Welsh earnings fell behind those in other UK regions in the wake of the coal and steel closures, but we are now developing the skills of our work force and the strengths of the Welsh economy and reaping the benefits. Since 1990, the decline has been reversed, and manual workers in manufacturing now have earnings close to the UK average. I can tell the hon. Member for Caernarfon that gross domestic product per head in Wales grew faster between 1993 and 1994 than in any other region of the United Kingdom.

The hon. Members for Caernarfon and for Delyn (Mr. Hanson) extracted figures from the family expenditure survey in the recent edition of "Regional Trends". To make realistic comparisons, we believe that data from the regional accounts should be used. Those show Wales in a markedly different position, with income per head of 88 per cent. of that for England, but that can be reconciled with other figures such as per capita GDP.

A better picture of relative spending power is given by disposable income per head. Welsh disposable income is 92 per cent. of the English figure. There are no separate price indices for Wales, but I think that the hon. Member for Caernarfon would find it hard to deny that many things cost less in Wales than they do in London, so this level of disposable income probably goes further in Wales than it would in England.

It is clear that, with per capita disposable income of only 92 per cent. of that in England, Wales has a significant way to go, but I cannot endorse the counter-productive remarks that have been made. They do no good because they distract from the real issues and needs.

I am seeking to set out the Government's strategy for improving the prosperity of Wales, and the single main cause of low income is unemployment, not low pay. A recent European report found that, in the UK as a whole, low pay is a relatively minor element. Lower-paid workers, including women, do not generally live in low-income households. Most are second or third earners in those households. [Interruption.] I thought for a moment that the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) was trying to intervene.

Mr. Rowlands

I am. In many cases in our communities now, the woman's income is the only income coming into the household.

Mr. Jones

On this point about low pay, I should tell the hon. Gentleman that I have been able to find only one case of low pay being cited as an example of an advantage for inward investment. It was brought to my attention by Alun Cairns, the Conservative prospective parliamentary candidate for Gower. He told me about a video that was sponsored, showing that in Swansea earnings were on average 11 per cent. less than in the rest of the UK and 25 per cent. lower than in the south-east of England. I am sure that the hon. Gentleman will want to know who put out that video in promotion of inward investment. Perhaps the hon. Member for Swansea, East (Mr. Anderson) will want to confirm that it was done by Labour-controlled Swansea city council.

Mr. Donald Anderson (Swansea, East)

That was no boast—it was the reality of low pay in south-west Wales. Does the Minister accept that one of the real problems in Wales is that the south-west will have the same relationship to the south-east as the north and other regions of England have to the south-east? The Welsh Office needs to do something to redress the balance.

Mr. Jones

We are seeking to address that. However, the fact is that a Labour-controlled authority used that reference in an attempt to secure inward investment, and that is the only time I have seen such a reference in a video.

The hon. Member for Caernarfon made the point that industrial wage rates in Wales are on a par with the rest of the United Kingdom. We want to see higher wages brought to Wales not on the industrial side but on the support and white-collar side. We need to expand that range so that we drag up the average. We have to deal with the facts, but they should not be cited in the way that they have been cited. The hon. Member for Clwyd, South-West dared to suggest that it was in line with this myth that has been maliciously peddled for political purposes—

Mr. Deputy Speaker

Order. Time is up