Welsh Development Agency Bill

HC Deb 10 February 1997 vol 290 cc72-114

Order for Second Reading read.

7.1 pm

The Secretary of State for Wales (Mr. William Hague)

I beg to move, That the Bill be now read a Second time.

I wish to set out the purpose of the Bill; to refer to the success of the agency in its use of the existing financial limit; and to set out my priorities for expenditure within the limit proposed by the Bill.

The purpose of the Bill, as set out in clause 1, is to increase the statutory financial limit for the Welsh Development Agency from the present level of £950 million to £1,350 million. The limit was last raised by the Welsh Development Agency Act 1991. On the basis of current estimates, the present limit will be reached during the 1998–99 financial year. It is necessary to raise the limit to permit continued public expenditure to finance the agency's activities so that it can continue its excellent work for the benefit of Wales and the Welsh economy.

Mr. Alex Carlile (Montgomery)

rose—

Mr. Hague

The hon. and learned Member for Montgomery (Mr. Carlile) already wishes to intervene, so I shall give way.

Mr. Carlile

Can the Secretary of State confirm that the proposed increase in funding for the Welsh Development Agency does not contain within it a hidden agenda to abolish the Development Board for Rural Wales? Will he confirm that the Development Board for Rural Wales is still considered to be a valuable part of Welsh economic development and that it would be viewed as a serious mistake if anyone were to propose its abolition, either now or in the near future?

Mr. Hague

I can assure the hon. and learned Gentleman that I see a continuing and important role for the Development Board for Rural Wales. He will be reassured that the Bill has nothing to do with that, but I know that Labour Members—who have designs to abolish the Development Board for Rural Wales—will have taken note of his pertinent point.

Mr. Ron Davies (Caerphilly)

It never takes long for the Secretary of State to start discussing Labour policies; it would make a pleasant change if he started defending his own record. As it has been suggested that I have designs to abolish the Development Board for Rural Wales, let me make it clear that I have no such designs.

Mr. Hague

The discussion precipitated by the hon. and learned Member for Montgomery has turned out to be most useful because, after all that we have heard about super-quangos and so on, it turns out that it is not Labour's intention to abolish the board after all. No doubt, as the debate continues, we shall be able to enlighten ourselves about many other aspects of Labour policy as well as about the purpose of the Bill, to which subject I return.

Under section 18 of the Welsh Development Agency Act 1975, the financial limit to which I have referred applies to the total cumulative amount of the sums granted to the agency by the Government. The limit includes: the total of all grant in aid and public dividend capital, less repayments by the agency and excluding administrative expenses; the agency's outstanding borrowings; the third party loans guaranteed by the agency; and any sums issued by the Treasury in consequence of its guaranteeing agency borrowings that have not been repaid to the Treasury.

Mr. Matthew Taylor (Truro)

The Secretary of State is outlining the considerable sums that pass to the agency from the Treasury. Today's Western Morning News confirms that several businesses in Cornwall have been approached by organisations using Welsh Development Agency money to encourage them to relocate in Wales. Will the right hon. Gentleman confirm that it is not Government policy to allow such development agencies to poach—especially from poor areas such as mine—and will he personally seek to ensure that such poaching is not repeated?

Mr. Hague

I can categorically assure the hon. Gentleman that it is not Government policy to poach companies from elsewhere in the United Kingdom and that it is not the policy of the Welsh Development Agency to do that. I would deprecate very strongly poaching from elsewhere in the United Kingdom. However, companies that are already located somewhere in the United Kingdom sometimes propose an expansion project or have definitely decided to leave their particular location, and that is a different matter. I know that that is not what the hon. Gentleman means by poaching; what I understand him to mean by that is certainly not the policy of the Government, or of the Welsh Development Agency or of the Development Board for Rural Wales.

Mr. Tom King (Bridgwater)

rose—

Mr. David Harris (St. Ives)

rose—

Mr. Hague

The west country Members are most welcome at this debate on Welsh matters. I give way to my right hon. Friend the Member for Bridgwater (Mr. King).

Mr. King

I do not wish further to disrupt my right hon. Friend's speech, but I should like to welcome what he has just said because a firm in my constituency relocated to Wales with the benefit of substantial grants. We recognise the excellent work being done by the Welsh Development Agency and the serious problem of unemployment in Wales, with which the Government's policy has helped so significantly. Will my right hon. Friend give an assurance, however, that he will be vigilant in ensuring that firms that have not considered going to Wales are not attracted to do so when they might otherwise continue and expand in parts of the country that contribute through their taxes to the benefits that the Welsh Development Agency is able to offer, but which, despite having their own unemployment problems, do not have any particular inducements to offer?

Mr. Hague

Of course, we want to attract as much new investment to Wales as we possibly can, but that must not be done through poaching or in a way that destroys jobs in other parts of the United Kingdom. That, of course, would not be a proper use of taxpayers' money. I am satisfied that the Welsh Development Agency and the Development Board for Rural Wales pursue that policy as rigorously as I would intend them to, which is very rigorously. Sometimes, one or two advertisements or statements have been misinterpreted, but I will certainly give the matter every consideration and be as firm in the future as I have been in the past to make sure that we are not poaching from or destroying jobs elsewhere in the United Kingdom.

Mr. Harris

My right hon. Friend will be aware of the job losses that Cornwall has encountered in the past few weeks. Does he appreciate the anger that is felt in Cornwall when it suffers job losses, and an apparently well-documented example is given in today's Western Morning News of attempts to poach jobs and firms from Cornwall to Wales, and to south Wales in particular? Will he do what the Minister with responsibility for the south-west, our right hon. Friend the Member for Skipton and Ripon (Mr. Curry), has promised to do, which is to look into specific examples? If he finds that there have been attempts to poach, will he put an immediate end to the practice?

Mr. Hague

I am interested to hear what my hon. Friend says. If there are well-documented examples—[Interruption.] Of course it remains to be seen. I have recently read many things in newspapers that I would not describe as well documented, but if there are well-documented examples, I shall consider them.

There should not be poaching from other parts of the United Kingdom, but I say without apology that where there are new investment projects that could go to anywhere in the United Kingdom, the Welsh Development Agency and the Welsh Office will fight very hard for them to come to Wales.

Some situations are open to misinterpretation. The right hon. Member for Kingston upon Hull, East (Mr. Prescott)—I apologise for mentioning him in his absence, but I had not foreseen this point arising—criticised the agency for securing for Wales several hundred jobs in a company that was previously located in Hull. In fact, the company was closing in Hull anyway and was deciding whether to go to northern France or to Wales. The agency was right to fight for those jobs, but that is different from the poaching to which the hon. Member for Truro (Mr. Taylor), my right hon. Friend the Member for Bridgwater and my hon. Friend the Member for St. Ives (Mr. Harris) referred.

Mr. Rhodri Morgan (Cardiff, West)

I am sure that the Secretary of State will recall that what the deputy leader of the Labour party actually said was that the incident constituted one of the best arguments that he had ever heard for the English regions, including Yorkshire and Humberside, having regional development agencies of their own.

Mr. Hague

We continue to receive clarification of Labour party policy. I believe that the English regional assemblies would be a different matter. I doubt that the company in question, or companies in general, would be more inclined to locate in Hull because there was a regional assembly, just as I have grave doubts that any company would be more inclined to locate in Wales because there was a Welsh Assembly.

The Bill provides that future increases of the financial limit shall be made by secondary legislation, using the affirmative resolution procedure. The advantages are clear. It will reduce the burden on future legislative programmes while retaining proper accountability to the House and an opportunity to debate the issue.

The new limit should be sufficient for several years. The increase of the limit carries no implications for spending or policy decisions in future years. Such decisions will be made in the usual way, as part of public expenditure surveys. The revised financial limit will, however, provide the flexibility needed to ensure that the agency is properly resourced to undertake its existing programme of work and to take advantage of new opportunities that may arise.

Dr. Kim Howells (Pontypridd)

The Secretary of State must know that there can be very few people in Wales who have not congratulated the WDA on its magnificent work in bringing investment into the country, but he must also be aware that many people, especially in my constituency, are deeply worried that some of the WDA's roles, such as land reclamation and urban renewal, have been completely ignored to enable it to make those magnificent achievements and attract inward investment from abroad. What will he do about tip reclamation schemes in places where we need the land very badly for indigenous industry, such as at Coedely and Cilfynydd, or for urban development, such as in Pontypridd?

Mr. Hague

Those urban programmes are not ignored. They remain important programmes and important objectives of the agency. Inward investment has been the agency's highest priority in recent times because there has been an unusual degree of opportunity to attract inward investment—I make no apology for that—but those other programmes are not ignored, and I shall mention them later if the hon. Gentleman will allow me.

In November 1996, I announced a significant increase in the agency's base programme for the current financial year, from £120 million to £157 million. That included an increase of more than 60 per cent. in central Government provision to the agency to enable it to meet its commitments to the LG project and to fund other new inward investment projects throughout Wales.

The agency's budget for the coming year, which I announced in December, will similarly allow it to build on its existing successes and to increase its spending on strategic sites throughout Wales, to which I attach great importance. Central Government provision for the agency for next year will be £84.7 million and grant in aid is 8 per cent. above the equivalent figure for 10 years earlier in real terms. That will enable the agency to fund a base programme of £150 million in the forthcoming year.

The agency has a central role in the economic development of Wales. I should refer briefly to the functions and objectives of the agency as set out in the Welsh Development Agency Act 1975. The agency exists to further the economic development of Wales or any part of Wales; to promote industrial efficiency and international competitiveness and to further the improvement of the environment in Wales". There can be no disputing the excellent results that the WDA has achieved. It has played a significant part in transforming the Welsh economy in line with the Government's priorities. As a result, we have today a more diverse and well-balanced industrial structure. Our manufacturing base, at 28 per cent. of gross domestic product, is one of the most dynamic in the United Kingdom. We have attracted new high-technology industries. Manufacturing output in Wales in the past two years has grown by well over 10 per cent. Production businesses have multiplied by about 46 per cent. since 1979 and indigenous companies—of which I shall say more in a moment—are taking full advantage of the tremendous sourcing opportunity provided by inward investors.

Mr. Cynog Dafis (Ceredigion and Pembroke, North)

I am sure that the Secretary of State will say something later about spreading prosperity throughout Wales, but I remind him of figures released by Plaid Cymru last year which show that 80 per cent. of the jobs created by the agency have occurred and, indeed, are predicted to occur within about 10 per cent. of the Welsh land area, and that 60 per cent. of Welsh unemployed people live outside the region specified for anticipated success. Does not that require pretty fundamental reconsideration of the WDA's strategy and is such reconsideration now afoot?

Mr. Hague

I shall come to that point. Indeed, I intend to announce a policy change on that matter, which I believe the hon. Gentleman will be able to welcome.

I was describing the agency's achievements. My right hon. Friend the Member for Bridgwater, my hon. Friend the Member for St. Ives and the hon. Member for Truro will be pleased to note that since taking responsibility for inward investment in 1983, the agency has recorded an enormous number of inward investment projects—about 855—from overseas. Such projects have promised the creation or safeguarding of more than 100,000 jobs, and in the past calendar year alone, the agency has played its part in attracting £2.3 billion of investment and 15,000 jobs through 150 projects new to Wales—a record-breaking achievement. We have made an excellent start to 1997 and more good news is in the pipeline.

The consequence of those achievements is that unemployment has been reduced to 93,000. For the past six months, it has been falling by 18,000 a month. The news on long-term unemployment is also good. With the jobs come the wages that bolster local economies.

Securing the LG project is a tremendous achievement in terms of employment and investment, as has been acknowledged by hon. Members on both sides of the House. It is the most significant project that Wales has ever seen and the largest inward investment project in Europe. It will bring with it about 6,100 direct jobs and thousands of indirect jobs, and it can benefit the whole of Wales. I congratulate all involved on that magnificent achievement.

The benefits of LG should not be confined to south-east Wales, and we are all working to ensure that they are spread throughout Wales. Immediately after the announcement, we moved quickly to set up a group comprising the many parts of the Welsh Office with an interest, the WDA, the training and enterprise councils, the Employment Service and many local authorities, to ensure that Wales as a whole benefits from the LG investment.

Mr. Barry Jones (Alyn and Deeside)

How does the Secretary of State, alongside the Welsh Development Agency, intend to tackle large-scale youth unemployment and long-term unemployment in constituencies such as mine? Is there a joint plan to tackle those problems in the constituency of Alyn and Deeside?

Mr. Hague

Yes, the plan is to continue the success in reducing unemployment—including in the hon. Gentleman's constituency—that we have achieved in recent months. We started this year with the announcement that British Aerospace in his constituency is to create another 100 jobs. That was good news for his constituency, and I hope that it will receive more good news in the future. Long-term and youth unemployment is falling, as is unemployment as a whole.

On the LG project, wider issues are being considered, such as training skills, transport and component suppliers. Companies anywhere in Wales can do business with LG if they are able to meet the company's requirements. More and more companies are reinvesting in Wales, which shows their satisfaction with the Welsh work force and the confidence that they have in the strengths of the Welsh economy, and reinforces the successful image of Wales for prospective investors.

A number of very good announcements have recently been made: Sony is one and Bertrand Faure at Tredegar is another. However, it is essential that the role of indigenous companies is recognised in the same way as that of inward investors. Between January 1994 and December 1996, 141 foreign and 567 UK-owned companies received regional selective assistance payments towards projects in Wales. In the 10-year period to March 1996, almost 1,500 offers of regional selective assistance were accepted by UK-owned companies for projects in Wales, whereas fewer than 300 offers were accepted by foreign-owned businesses. During the same period, RSA totalling almost £215 million was paid to UK-owned companies, and nearly £213 million to foreign-owned concerns. It is clear that home-grown companies have received far more assistance than is commonly supposed.

Encouraging indigenous small firms to supply inward investors is part of the range of services that is now marketed under the Business Connect banner. In this financial year, Source Wales has helped 537 Welsh companies, and 112 deals have been won for those companies. The Source Wales database of 2,000 Welsh small and medium-sized enterprises assists in identifying supply opportunities to major manufacturing companies, not only in Wales but throughout the United Kingdom and Europe. The recent announcement about Halla's sourcing in north Wales—£1 million-worth of business—is a prime example of the benefits that the Source Wales programme brings to indigenous companies, and shows that major investments can benefit the whole of Wales rather than just the immediate vicinity.

Mr. Dais

Will the right hon. Gentleman give way?

Mr. Hague

I may give way again later in my speech, but in fairness to other hon. Members I should proceed.

Other agency initiatives to encourage indigenous firms include technology development and transfer. Under the regional technology action plan, the WDA is working with a large number of organisations to strengthen the Welsh innovation culture and to develop further the technological infrastructure in Wales, including Wales-wide telecoms cabling. Through the technology transfer initiative, more than 400 Welsh companies have been audited to establish the adequacy of their approach to innovation and technology. If the audits identify opportunities to improve competitiveness, European grants are available through the WDA to introduce technological solutions. In that way, companies throughout Wales have ready access to the best available expertise.

On finance for growth generally, the agency has moved from being a major investor in its own right to working in conjunction with the private sector to improve the availability of venture capital. In particular, it is now seeking to establish a network of "business angels", and has recently expanded its Eurolink scheme to operate worldwide, called Globalink, to establish for Welsh companies strong collaborative links with overseas business partners.

Thanks to those and other initiatives, and to the exceptionally favourable circumstances of the United Kingdom economy, business optimism remains positive in Wales, which shows that the Welsh economy is on a sound footing and that we can all have confidence in the future. Some recent surveys have shown Welsh business optimism to be the best in the United Kingdom.

Since 1979, the WDA has spent more than £820 million on property development, which has provided more that 20 million sq ft of floorspace. It has developed a network of new business parks across north and south and south-west Wales, taking full advantage of the A55 and M4 corridors, and has also pushed development into less accessible areas, a fine example of which is the Cleddau Bridge business park at Pembroke dock. A business park is also to be developed at Parc Pensarn, Carmarthen. The agency has placed ever-increasing emphasis on joint development projects with private sector partners.

After strong growth in auto-components jobs last year, the WDA has announced today that it will press ahead with a new business park in the Neath valley, which is designed specifically for automotive suppliers. It has awarded a £440,000 contract to install road and other services at the Neath Vale supplier park, which should be ready by May. Interest from potential tenants is high and the agency is talking to at least six companies, which together could bring 300 jobs to the area.

The agency's achievements do not end with job creation: that is the point made by the hon. Member for Pontypridd (Dr. Howells). It has also provided a better environment in which Welsh people can live and work. The agency's land reclamation programme has been huge. Since 1979, it has reclaimed 6,500 hectares of derelict land at more than 920 locations. Despite the pressures on spending and the priority rightly given to inward investment, the agency currently has almost 3,500 acres in the process of being reclaimed and, on current plans, some 1,850 acres will be completed in the next two years. That remains a massive programme by any standards, even though we must give higher priority to other areas.

In rural areas, under the agency's rural prosperity programme, £2.6 million has been invested in 248 projects selected by individual communities.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

Will the right hon. Gentleman give way?

Mr. Hague

I shall give way, but then I really must get on.

Mr. Rowlands

Does the acreage of land reclamation to which the right hon. Gentleman referred include the sites that are currently on hold as a result of the halt in budget development for the land reclamation programme?

Mr. Hague

The 3,500 acres include all projects, some of which are waiting for further attention, but the 1,850 acres to be completed in the next two years relate to projects that are either proceeding now or are certain to proceed in that period.

The rural programme to which I referred is part of the agency's wider development programme in rural areas which, in the period from 1991 to 1996, totalled some £34 million. Although £5.5 million of funding for small rural schemes will be transferred from the WDA to rural local authorities on 1 April this year, the agency will continue to play a significant role in rural areas. Indeed, £650,000 of rural funding will be retained by the agency to continue to fund LEADER and Interreg groups in the coming year, and a further £750,000 will be used to fulfil its commitment to the Welsh national botanical garden at Middleton. The agency is currently developing a strategy for rural economic development based on a package of services and capital projects, in conjunction with local authorities.

Despite those numerous successes, we know that there is more to do. We will continue to help to create jobs across a broad range of businesses. In addition to manufacturing, which remains a cornerstone of our economy, we want to see stronger services, with even more financial services and research and technology-based businesses in Wales—all of which, of course, offer above-average wages. In all those areas, the WDA will continue to play an active role.

Mr. Nick Ainger (Pembroke)

Will the right hon. Gentleman give way?

Mr. Hague

I must get on because I have given way a lot. If I have a little time in the next few minutes, I shall give way to the hon. Gentleman, but I must proceed with my speech.

We need to ensure that industry and commerce have the right supply of qualified, well-motivated people. That is why I have published the updates to two important Government programmes: "People and Prosperity: Building on Success", which I launched today and which concerns our agenda for action on training; and the initiative, "Bright Future: Beating our Previous Best", which I launched last week.

I have set the agency challenging targets to ensure that it directs its efforts towards what I believe to be the priorities for Wales. The agency has performed well against its targets—we have not yet reached the end of the current financial year, yet a number of them have been exceeded. For the current year, I set a target of £650 million of private sector investment to be levered in. So far, the agency has reached £1,986 million. My target of 12,500 jobs to be created or safeguarded has been exceeded, with 13,860 jobs to date.

Wales and the WDA can be justifiably proud of that record and I want the WDA to continue doing what it does best—helping to create new jobs for all parts of Wales. I want more investment and more jobs in those parts of Wales that are still affected by the highest unemployment: parts of the west, north-west and valleys.

We are already doing a great deal to spread the benefits of the investment that has already been made: the Source Wales programme; encouragement to suppliers across Wales to link up with inward investors; ensuring that inward investors look at sites across Wales before they invest; and setting targets for the numbers of jobs outside the eastern M4 and A55 corridors.

The WDA has so far this financial year exceeded its target of 20 per cent. outside those eastern corridors by creating more than 32 per cent. of its jobs outside those areas. I have decided that it is now time to take further steps to ensure that areas that have so far not been the principal beneficiaries of inward investment can share in the growing success of Wales.

First, I will set new and more demanding targets for inward investment outside the eastern M4 and A55 corridors. Although the precise level of those targets remains for discussion, they will be significantly more demanding than the current target.

Secondly, I am asking the WDA, within agreed UK and European limits, to recognise the extra costs of locating in some areas by giving more assistance to companies locating in those areas than to equivalent projects elsewhere. Ultimately, of course, the choice of a location is for the company but, we should make no mistake—it is no accident that companies are coming to Wales. I intend to ensure that companies keep coming and that they come to all parts of Wales. The two initiatives will form part of the policy guidance and direction that I intend to give the agency in the future.

Mr. Donald Anderson (Swansea, East)

rose—

Mr. Ainger

rose—

Mr. Hague

I am spoilt for choice; two hon. Members want to intervene.

Mr. Anderson

The initiatives are certainly welcome. The Secretary of State's guidance is for the future and critics will say that it is guidance in the very dying days of this Parliament. Even in December, the agency killed a £3 million project for a science and technology centre at Penllergaer, near Swansea. People will ask why. The guidance is welcome, but why is it so belated? The facts have been apparent for years.

Mr. Hague

There is no need to apologise for the way in which the agency has approached such matters in recent years. It has been extremely important to bring large investments into any part of Wales for which they can be secured. Of course, the company plays a large role in choosing the location.

Now that we have had spectacular success in some areas, it is right to say that we would be prepared to pay more for any given project to go to a new area than to go to an area where a large project had already been established. It would have been wrong to say that in the past, but now it is fair. We should concentrate resources to a somewhat greater extent on areas that have not been the principal beneficiaries of large-scale inward investment.

Mr. Ainger

Will the right hon. Gentleman give way?

Mr. Hague

This will have to be the last time that I give way.

Mr. Ainger

I am grateful to the Secretary of State. May I, with my hon. Friend the Member for Swansea, East (Mr. Anderson), say that the investment is belated but welcome? The Welsh Office has been advised by the WDA that in areas of high unemployment—especially those in my constituency, in south-west Wales and in north-west Wales, such as the Holyhead travel-to-work area—enterprise zones should be re-established as a key marketing ploy. Can the Secretary of State explain why that recommendation has been rejected by the Welsh Office?

Mr. Hague

We have been over that ground before. The hon. Gentleman knows that the Government's view is that enterprise zones are of assistance mainly where there has been a failure in the private sector property market. They can help in some cases, but not in others. We had little or no evidence that enterprise zones would be of direct help in those cases. As he knows, a great deal of other assistance is available to his constituency and to other parts of west Wales. Greater assistance may be available after what I have said this evening.

The priorities for the future of the agency are clear. I expect it to focus particularly on inward investment and indigenous business growth. Safeguarding and creating jobs in Wales is paramount, although the agency has other responsibilities as well. I shall continue to press on the WDA the points to which I referred this evening, when we meet later this month.

I know that Opposition Members have criticised the budget for the coming year, although at £150 million of gross expenditure and £85 million of Government grant, it is a very large programme. In recent weeks, Opposition Front Benchers have committed themselves to the existing spending ceilings of the Welsh Office for the next two years, while also increasing local government spending and setting up an assembly. Against such a background, they would have little hope of providing the level of resources that I am providing, let alone increasing it. If they can work out how they would provide such an increase, we would be interested to hear about it tonight.

We can all agree on the need to make the most of the agency's success. The chairman, David Rowe-Beddoe, and his team have worked hard to ensure that the agency adheres to the principles of compliance, openness and financial regularity that we expect from public bodies in Wales. They have worked hard at presenting the agency and a successful Wales to the world. The agency deserves the support of all of us in that. It is concentrating on what it excels at—winning jobs and investment for Wales.

I want the agency to build on those foundations and to achieve even greater success. With this Government, it has a secure future in further developing the increasing prosperity of Wales.

7.36 pm

Mr. Ron Davies (Caerphilly)

I begin on a note of agreement and join the Secretary of State in expressing my congratulations to the chairman, the board and all the staff of the Welsh Development Agency on having served the agency and the people of Wales well over the years. I especially congratulate the chairman, who had a difficult inheritance. Perhaps I shall return to that.

Although the Bill is specific, the debate has been wide ranging. The Secretary of State reviewed events over the past 20 years. I shall touch on some of those, as history can be interpreted in more than one way.

A number of initiatives were announced by the Secretary of State this evening. I broadly welcome them, as far as I understand them. I shall examine them in detail and apply the critical test by asking what resources will be available to ensure that those initiatives are carried through.

I was particularly interested in the Secretary of State's statement about ensuring that future developments take place outwith the hot area along the M4 corridor between Newport and Bridgend.

At present there is little evidence that the WDA or the Welsh Office has succeeded in getting investment out of that area, or that either of them understands the problems that are already developing, especially in the Newport area, as a result of the skills shortages stemming largely from the failure of the Welsh Office to offer a co-ordinated programme to provide skills or to provide adequate resources for the training and enterprise councils.

The Bill is a technical measure and is largely non-controversial. I put on record my broad support for it. We will assist its passage through the various parliamentary procedures.

There are two elements to the Bill: first, the increase in the statutory financial limit, which we would obviously support. The Government presumably regard it as particularly important in the light of the spending commitments that they have entered into in respect of the LG development at Newport.

Secondly, the Bill provides for future increases in the statutory financial limit to be made by means of secondary legislation—an interesting and novel proposition. It fits very well with our proposals for the introduction of a Welsh Assembly—secondary legislation could then be dealt with by that assembly. I know that there is an argument against using secondary legislation to introduce the increases—it is claimed that those increases should be subject to debate and scrutiny in Parliament. But the Welsh Assembly will provide the ideal opportunity for proper public debate.

Mr. Rod Richards (Clwyd, North-West)

Will the hon. Gentleman give way?

Mr. Davies

No, I shall not give way to the hon. Gentleman and I shall tell him why. He has been a Member of the House since 1992—almost five years— including a brief and relatively undistinguished career on the Government Front Bench. In that five years he has shown no understanding of the normal courtesies of Parliament. Until he does, I have no intention of giving way to him on this or any other occasion.

The debate about the provision of secondary legislation is interesting and it may well be pursued in Committee. It is an interesting comment on the legislative arrangements in the House that, when dealing with a Bill such as this—involving a minor technical matter on which there is broad agreement—the Government have to suspend the Standing Orders of the House, as they did last Friday, to take away from the majority of Welsh Members of Parliament their existing rights, under Standing Order No. 86, to sit on the Committee that will deal with the legislation.

Last year was the 20th birthday of the Welsh Development Agency and I took the opportunity over the weekend to read with interest the debate that took place on the Second Reading of the Welsh Development Agency Bill. The debate was initiated by my right hon. and learned Friend the Member for Aberavon (Mr. Morris), who has taken a great interest in the proceedings and developments of the agency ever since. During the Second Reading debate, the WDA was vigorously opposed by the then Conservative Front-Bench team. The then hon. Member for Pembroke, Mr. Edwards, addressing my right hon. and learned Friend, said: He seeks to interfere where he should leave alone. He seeks to dictate where he should give freedom … He persists with policies that will destroy confidence. He then asked the House to reject the Bill establishing the Welsh Development Agency.

It is interesting that the right hon. Member for Conwy (Sir W. Roberts) is in his place. At the time—and I believe subsequently—he was one of the strongest opponents of the WDA. He said: For the Government to become involved themselves in industry is an admission of failure. We may be sure that where private industry cannot succeed the Government will almost certainly fail."—[Official Report, 26 June 1975; Vol. 894, c. 712, 790] He and all other Conservative Members of Parliament voted against the creation of the WDA.

Since then, and especially since 1979, the Conservative party and successive Conservative Secretaries of State have been consistent about only two matters. I hope that the present Secretary of State, who has a few weeks left in the job, will pay attention to these important matters. I understand that he was a 16-year-old at the time, causing great embarrassment to himself and the Conservative party with a speech in which he called on the Conservatives to roll back the frontiers of the state. Perhaps these are the frontiers of the state that he wanted to roll back.

Successive Conservative Secretaries of State have been consistent about only two things. First, they have never reconciled themselves to the agency or to the concept of partnership. Secondly, they have been consistent in their determination to use the agency's successes for their own party political purposes.

Sir Wyn Roberts (Conwy)

The hon. Gentleman has forgotten to mention that when my right hon. and noble Friend Lord Crickhowell and I came into office, we decided to retain the agency and placed it on a new and reformed basis so that it has succeeded in avoiding many of the pitfalls that we envisaged for it at the time.

Mr. Davies

There has been no change in the agency's statutory basis. I know that the right hon. Gentleman has used that argument before, but there has been no change in the agency's statutory basis, and he and his colleagues opposed its creation. The right hon. Gentleman has loyally served several Secretaries of State who have done their very best since 1979 to undermine not only the integrity, but the existence of the WDA.

I remind the present Secretary of State and the Under-Secretary of State of the regime that existed under Dr. Gwyn Jones, the former disgraced chairman of the agency and a pal of Lord Walker. I shall remind the Secretary of State of what the Public Accounts Committee said of the regime under the then Secretary of State and Dr. Gwyn Jones. It said in paragraph 3.(xviii) of its 47th report on the WDA's accounts for 1991–92 that it was unacceptable that the Welsh Office took no action against anyone in the top echelons of the Agency who presided over a catalogue of serious and inexcusable breaches of expected standards of control and accountability. The Secretary of State's predecessor, the free market anti-Welsh Secretary of State, the right hon. Member for Wokingham (Mr. Redwood), cut the WDA's budget—its grant in aid—by two thirds. He enforced on the WDA a policy of property sales that wreaked havoc in 1995–96. The agency's ability to prepare on the basis of stability and sustainability has still not been restored. Peter Walker, now Lord Walker, attempted covert privatisation with Operation Wizard. The right hon. Member for Wokingham was less subtle; he preferred to emasculate the agency by imposing ferocious cuts in its budget.

I want to press three charges against the present Secretary of State. First, he has ruthlessly suppressed the findings enclosed in the WDA's corporate plan submitted to the Welsh Office in August. That plan for the forthcoming financial year reveals a number of interesting figures about the state of the Welsh economy.

First, the plan reveals that Welsh gross domestic product is 16 per cent. below the UK average. It reveals that Welsh household income is 77 per cent. of the UK average. It reveals that between 1990–95, real GDP in Wales rose by 3.3 per cent., whereas real GDP in the UK as a whole rose by 5.4 per cent. It reveals that real services GDP in Wales rose by 5.6 per cent., whereas in the UK as a whole it rose by 8.5 per cent. No amount of propaganda can disguise the true impact of those figures on our Welsh communities. We have now had 18 years of Conservative government and the relative position of the Welsh economy is no better than it was in 1979 when the Conservatives took office. Today we have 200,000 fewer people in work than when the present Prime Minister took office in 1990.

Secondly, the present Secretary of State has denied the WDA the funds required for long-term stability even though he claims that it is his protected and favoured expenditure programme. To do what little he has, he has—as he announced to me last Monday in a parliamentary answer—cut the budgets of the agriculture, training, roads, housing, environmental services and education programmes. Those cuts have been imposed to pay for the small increase in his economic development programme.

In the current financial year—in November 1996—to avert the crisis of his own making, the Secretary of State had to inject an emergency package of £25 million into the agency. Even with that experience of the damage caused by underfunding, the base programme for the next financial year, at £150 million, will be a lot less than required.

The agency itself—on page 17 of its corporate plan, which it submitted on 26 July 1996 to the Welsh Office—called for base expenditure of £178 million, plus European funding. I know that my hon. Friends the Members for Pontypridd (Dr. Howells) and for Merthyr Tydfil and Rhymney (Mr. Rowlands) are particularly concerned about cuts in the land reclamation programme. The information that I am about to provide will very clearly explain to them why those cuts are about to be implemented.

Mr. Hague

Would the hon. Gentleman increase the agency's programme for the coming year?

Mr. Davies

Let us deal with the current budget. As soon as the Secretary of State and the Government can pluck up the courage to face the electorate, we will have an election. As soon as we have a new Government, that Government will set about delivering their own programmes. I am now telling the Secretary of State of the consequences of the guidance that he gave to the Welsh Development Agency and of the—I believe dishonest—failure on his part to provide it with funds to perform those actions that he has publicly required it to do.

On page 17 of the corporate plan, which was submitted to the Secretary of State last July, the agency called for £178 million base expenditure, plus European funding. It stated: This would enable the Agency to achieve its objectives and the targets set out in the strategic guidance letter"— which is the public guidance that the Secretary of State provides to the agency for the forthcoming year. The agency told the Secretary of State that that amount would be required to meet his own, publicly stated guidance.

The report went on to state: Whilst funding at this level would not be sufficient for the agency to secure the very large inward investment projects, this would enable it to deliver a range of programmes consistent with its short, medium and long-term strategies for development and job creation in Wales. Activity would be centred on converting existing projects, providing the base for future investment, re-establishing the land reclamation programme towards previous millennium targets and maintaining the infrastructure projects at broadly current levels. Therefore, to stand still, next year the agency will require £180 million-plus, whereas its budget is £150 million, which is £30 million less than it told the Secretary of State it requires to meet his targets. Of that £150 million, some £25 million is already earmarked for the LG development at Newport. The reality is that there will be savage cuts in the agency's programme, and the effective end of any more major inward investment projects. Quite simply, the agency does not have the money to perform those tasks that, 10 or 15 minutes ago, the Secretary of State told the House that it intended to perform.

Mr. Donald Anderson

Does not that put in context the two new pledges made by the Secretary of State on increasing investment in west Wales? If the resources are not there, they will not happen.

Mr. Davies

That is exactly the case. It is also true that the Secretary of State said in this debate, in reply to an intervention, that, in the next two years, there would be a guaranteed land reclamation programme. To my knowledge, no such announcement has been made by the Welsh Development Agency, and no financial provision is being made to allow such land reclamation work to proceed. I look forward with great interest to hearing some clarification on those matters, perhaps in the Minister's reply to this debate. If he cannot clarify the matter today, perhaps the Secretary of State will write to me and tell me when those decisions were taken, when they will be made public, what financial provision is being made and when he intends to tell local authorities about the decisions that he has apparently made.

Dr. Howells

Does my hon. Friend agree that it was very unsatisfactory that the Secretary of State refused to name the big schemes included in those 3,000-odd acres, and that some reclamation schemes are a good deal less expensive to implement than others? If one has to detoxify land and cart away thousands of tonnes of toxic material from sites, it will bite into any agency's budget. To learn now that those projects are in doubt for the immediate future will do nothing for the confidence of the communities that will have to put up with that stuff for generations.

Mr. Davies

I know very well the site referred to by my hon. Friend, and the site at Treharris, in the constituency of my hon. Friend the Member for Merthyr Tydfil and Rhymney. From my own experience—if I may be a constituency Member of Parliament for a moment—I am also very familiar with the situation at Bargoed, which provides the clearest testament of the WDA's failure to possess a sustainable budget. Work finished two years ago at the Bargoed colliery tip. Half the tip was removed, but the other half is still in place, dominating the entire central part of the Rhymney valley. All my hon. Friends who represent former mining constituencies are well aware of the inadequacies of this budget and of the WDA's inability to sustain a land reclamation programme.

The third charge I make against the Secretary of State is that, whereas he has been more than anxious to try to take party political credit for the WDA's endeavours—especially for the LG investment—he has been singularly uninterested in developing an analysis of the various needs of Wales's economic regions, and especially of the hard-pressed west. I know that my hon. Friend the Member for Pembroke (Mr. Ainger) was very anxious to speak in this debate, but he has had to leave the Chamber because representatives from his constituency are visiting.

The Secretary of State has also not shown any interest in the case for developing our indigenous industries. Barry Hartop was a very successful chief executive, and he played a crucial role in attracting LG to Newport. He could have played an equally important role in ensuring maximum spin-off benefit from that investment. I would have been the first to congratulate him and to wish him well had he found other opportunities to use his skills. However, I think that the Secretary of State's connivance—a word which I use advisedly—in releasing Mr. Hartop on a "sale-or-return" basis to the Conservative party's pet project, the Greenwich millennium dome, was not only insulting to Wales but, by leaving the agency without a chief executive at this crucial time, likely to prejudice the chances of our getting maximum benefit from LG.

The coming general election will be important for the Welsh Development Agency, and I have been open about our intentions for the agency. I want it to operate within a new democratic framework, and to retain its operational independence. I believe that it can continue to play a crucial role, and I want to see its funding put on a more secure and sustainable basis. I also want it to develop a closer working relationship with the other development agencies, and specifically with providers of education and training.

The conflicting pressures within the Conservative party are now clear for all to see. We had a graphic demonstration of those pressures at the start of this debate. Conservative Members cannot agree on their own devolution policy, and they cannot agree on their policies for regional economic development. For us, the Welsh Development Agency is an essential instrument for economic development. For the Conservatives, it is increasingly becoming an unwanted, unacceptable and expensive mechanism which interferes in the operation of the free market. Many in the Cabinet—such as the current Chief Secretary to the Treasury—would be happy to see the end of the agency and the Welsh Office's ability to make independent bids for inward investment.

I should be happy for the Bill to secure a speedy passage through Parliament. I would be happier still, and I believe that the nation would also be happier, if the Government were to have a speedy passage from office. They show no real understanding of the problems of Wales; therefore, they have no long-term strategy to deal with them.

7.58 pm

Sir Wyn Roberts (Conwy)

I must begin by nailing the travesty of the truth perpetrated by the hon. Member for Caerphilly (Mr. Davies). As I remember his speech, he said that, over the past 18 years, the Government appear to have attempted to undermine the efforts of the Welsh Development Agency. That bit of rewriting history really does equate with some of the worst rewrites in the history of modern Europe.

We all know that the WDA is and has been one of the most important engines in the transformation of the Welsh economy that we have seen over the past 18 years. Its achievements have been astonishing, and astonishingly good for Wales; and we should not forget them. As the hon. Member for Caerphilly implied, they were summed up in the concise document published last year on the occasion of the WDA's 20th anniversary. The document was entitled "Twenty Reasons To Celebrate", and I am delighted that my right hon. Friend the Secretary of State has updated those achievements today.

The agency has helped to bring hundreds of new international companies and tens of thousands of new manufacturing jobs to Wales, and it is still doing so—one need look only at the enormous current investment in Newport by the Korean company LG, and the 6,100 jobs in the pipeline. I am sure that, even as I speak, the agency is in touch with other potential investors in Wales from all over the world. I am sure that we all hope that its efforts will continue, and will result in further successes.

Compared with the billions of pounds of investment secured for Wales—I believe that it had reached £6.7 billion last year; that is only since 1983, and my right hon. Friend has updated that figure by a couple of billion pounds yet again today—the WDA's total funding, even with the enhanced limit set out in the Bill, almost pales into insignificance.

Inward investment, however, is only one aspect of the WDA's activities. It has literally prepared the ground and provided well-infrastructured land and buildings, not only for inward investors but for developing local businesses, and it has sought to improve and assist them by a variety of means, including the Source Wales programme, Eurolink and now Globalink. The Source Wales programme has helped to secure international orders for some 500 Welsh businesses.

The agency's flexibility, entrepreneurial thrust and expertise has, on the whole, been a great asset in many areas, and has helped to loosen some long-standing logjams in development, sometimes not without risk to its own reputation.

The agency's work in land reclamation has already been mentioned. I regard it as a triumph of persistence, and the face of Wales looks much better as a consequence. Last year, when the agency celebrated its 20th anniversary, 15,000 acres—the equivalent of 4,000 rugby pitches—had been reclaimed, providing land for 180 industrial sites and factory premises employing 25,000 people, as well as land for homes, hospitals, schools and parks.

There is hardly a significant town in Wales that does not have a WDA presence. I regard urban regeneration as an extension of the land reclamation policy. Some 40 towns in Wales are earmarked for economic and environmental renewal, with some £120 million of agency money generating about £200 million of private investment.

I have only touched on some of the agency's considerable achievements of the past few years, but I think I have said enough to justify my belief that the agency has given extremely good value for money to Wales and the British taxpayer—long may it continue to do so.

I am sure it is only through the agency and the allied efforts that we are going to get good-quality jobs, raise average incomes in Wales and bring work to our westernmost areas and outside the M4 and A55 corridors, where the unemployment percentages are very high in some places, although the actual numbers involved are small compared with the industrialised areas of east Wales. I am glad that my right hon. Friend the Secretary of State has announced his new policy guidelines to be given to the agency, to extend its efforts in the most rural western areas.

The Government's financial strategy of requiring the agency to generate a substantial proportion of its base programme costs is, I agree, challenging, but it is surely right—we do not want the agency sitting back and playing landlord on an ever-increasing industrial property estate. That would be bad for the agency, and might skew, if not emasculate, its entrepreneurial thrust. Enabling investors to purchase gives them a bigger stake in their success on site, wherever they have settled, and spreads any risk to the taxpayer's investment.

The European connection is also looming large in importance. The WDA acted as a focus for Welsh representation in Brussels, and has extended its office there from the public to the private sector. Wales is one of the first regions to have received European Commission funding for a regional technology plan, designed to promote investment in innovation and technology. That is a very important step forward, full of promise for the development of the Welsh economy.

I pay tribute to the agency for its active support of the Welsh link with the four motor regions—the most advanced regions in Europe—which enabled many companies in Wales to develop links with those markets, something that they would not otherwise have been able to do.

Not unexpectedly, the agency's life has not been without its troubles. It is a measure of the stature of the present chairman, David Rowe-Beddoe, that he has been able not only to deal with the mistakes of the past but to keep the agency's eyes fixed on achieving its targets for the present and the future.

I was very glad to hear the hon. Member for Caerphilly pay tribute to the chairman and his team, as he does deserve our thanks for restoring the agency's good name and reputation. He certainly has my admiration, and I have no doubt that he is probably the best chairman the agency has ever had. Praise in the Chamber for anyone outside is such a rare delicacy that I should perhaps say immediately that I have no interest to declare, and that my paean is beyond suspicion.

What is to be the future of the agency which the right hon. and learned Member for Aberavon (Mr. Morris), whom I am glad to see in his place, had the foresight to establish, and which we had the wisdom to reform and retain on a new basis, in spite of our earlier critical opposition? Perhaps none of us at that time foresaw just how much we would need the agency and how much success it would achieve for Wales—140,000 jobs created or safeguarded since 1983 alone, which is certainly no mean achievement.

It has never been clear what future the Opposition have in mind for the agency, other than that it would be responsible to the proposed assembly. I hope that that does not lead to internal meddling and parochialism, but I have to say that I suspect the worst.

I read the article in The Western Mail this morning by the hon. Member for Caerphilly, and was more confused than enlightened by it. My impression was that other hands were involved in the writing of it, but I do not know whether I am right. The hon. Gentleman was happy to acknowledge Labour's parentage of the Welsh Development Agency, but he was also prepared to damn with faint praise its other offspring—the Development Board for Rural Wales and the Land Authority for Wales. He almost implied that they were surplus to requirements. He said: It is wasteful and bureaucratic to have the WDA, the Development Board for Rural Wales, the Welsh Office Industry Department, the Land Authority for Wales and Local Enterprise Agencies. I believe these bodies should be streamlined to achieve substantial cost savings".

Mr. Ron Davies

indicated assent.

Sir Wyn Roberts

The hon. Gentleman is nodding. We normally understand the word "streamlining" in that context as meaning being steamrollered. I suspect that that is what the hon. Gentleman has in mind. If the Development Board for Rural Wales is included in that threat of streamlining, I am sure that his ideas will go down like a lead balloon in mid-Wales. Putting the land authority under threat will fall like a ton of bricks on the construction industry.

It is becoming clear from the hon. Gentleman's article and his comments this evening about the agency's need for additional funds where he will get those funds. The streamlining of the agencies will provide funding not just for the WDA, but for the new Welsh Assembly. Eliminating those valuable bodies that have done worthwhile work for Wales may be one way of funding the assembly.

Mr. Davies

I did not say that

Sir Wyn Roberts

Even if the hon. Gentleman did not say it, he wrote it.

Mr. Davies

I did not.

Sir Wyn Roberts

The words are staring us in the face. We know what he means by "streamlining" the operations. Whatever happens, I hope, for the sake of the people of Wales, that the agency will not be diverted from its main tasks, which it has performed with great distinction.

8.12 pm

Mr. John Morris (Aberavon)

I welcome the opportunity to debate the Welsh Development Agency. More than 20 years ago, I had the privilege of introducing the Second Reading debate, as we have been reminded this evening.

My hon. Friend the Member for Caerphilly (Mr. Davies) looks to the future of the WDA. I read his article in The Western Mail, and I did not get the impression formed by the right hon. Member for Conwy (Sir W. Roberts). Streamlining is a bogeyman—a windmill that the right hon. Gentleman has erected to have it knocked down. Nobody else in his right senses—I do not mean to be unduly disparaging about the right hon. Gentleman, whom I have known for a long time and whom I regard with great friendship—would come to that conclusion.

My understanding of what my hon. Friend was saying is that, first, we need to examine the role of the WDA after 20 years. Surely that must be right. Secondly, we must examine how it fits in with the other economic agencies in Wales. Thirdly, we must reform where necessary. Is there anything wrong with that? I should have thought that Conservative Members would grasp the opportunity with both hands.

I had the privilege of setting up three bodies in Wales that have survived 18 years of Tory rule. They have survived because the Conservative party could not think of anything better. Over that time, the economic problems have increased.

I shall remind the House why the WDA, the Development Board for Rural Wales and the Land Authority for Wales were set up. Contrary to the expectations of my officials, we got two major economic Bills on the legislative programme, and a large part of a third. The WDA was parallel to the Scottish Development Agency. Through the good offices of Lord Callaghan, who took a great interest, we got the measure through because of that parallel.

The measure's primary purpose was to deal with the inevitable rundown of the steel, coal and slate industries. The Conservatives did their damnedest to oppose the measure. They tried to delay it, they voted against it on Second Reading—the right hon. Member for Conwy is the only Welsh Tory left in the House of the 158 Conservatives who voted against—and, in Committee, they opposed some of the powers of the agency that they have since clutched to their bosoms.

I made a personal pledge on the DBRW many years before I came to the House. The aim was to bring together and put on a statutory basis all the non-statutory bodies in mid-Wales, in fulfilment of Huw T. Edwards' council for Wales report. I believed that the fine touch of the paintbrush that the DBRW could bring would be able to deal with the small problems in many areas that the WDA could not manage because it would be immersed in the huge problems of the major industries.

The Land Authority for Wales is unique. It has done very well from the time of its first chairman, Baroness White of Rhymney. I commend it for bringing together parcels of land, including in my constituency. There is nothing like it in the rest of the United Kingdom. John Silkin introduced the Bill and I had the privilege of winding up on it. He told me that he wished that he could have done the same in England. Regrettably, there was no regional parallel, and perhaps the regions of England lacked the political will to set up such a body.

I praise the Government for having allowed the three bodies to survive. Each has done a great deal of work. My only wish is that they had had more resources.

I regret the short, unhappy period that the WDA has been through. The choice of people to run it—a political decision—and the lack of Welsh Office control reflect badly on the Welsh Office, particularly its administrators. Enough has been said and written, and I shall not repeat it.

My hon. Friend the Member for Caerphilly will shortly have control of the WDA. When I set the agency up, in accordance with the terms of the Act I had the privilege of choosing the first chief executive. Now that is a matter for the board. I do not think that we have yet been told who the new chief executive is to be—I am sorry that I missed the first few minutes of the Secretary of State's speech. When shall we be told?

That is an important issue, and we should know at the earliest opportunity. The job is too big to be left fallow, being carried out on an acting basis, however estimable the people concerned, who are trying their best. My hon. Friend the Member for Caerphilly may well have to keep an eye on that when he becomes Secretary of State.

I do not know what the current pattern is. The Secretary of State may have improved on what happened when I was involved. I had monthly meetings with the chairman and the chief executive. We considered what had happened during the past month and what was going to happen in the next month, perhaps looking further ahead. There were guidelines. Perhaps they are still there. Perhaps the machinery has been improved. I hope so, but the proof of the pudding is in the eating. The period when the WDA went out of control—the DBRW went a little out of control as well—showed how palsied the grasp of the Welsh Office was on these important agencies.

There is always a danger that such a body, like a nationalised industry, will create its own momentum and get out of the control of the Government Department, adopting its own self-defence mechanism and its own machinery of secrecy. I had to deal with that as a very young man, with the National Coal Board and, later, the railways. Indeed, I had to help to remove the chairman of the British Railways Board. That had never been done before. My hon. Friend the Member for Caerphilly was right to say that there must be clear lines of political responsibility and accountability—lines that were lacking during that difficult period.

Let me deal briefly with the power to spend. In today's The Western Mail, my hon. Friend said: Expenditure is set to be cut by £10m in real terms this year, and in the past few years the Welsh Office grant was first slashed to £25m and now restored to its previous level of £85m. Such arbitrary decisions are a handicap to long-term planning. My hon. Friend underplayed it. Whatever the amount at the WDA's disposal, what is needed is some assurance for the future, along with some consistency. The decisions to which my hon. Friend referred are not a "handicap", but the antithesis of long-term planning—if he was right in what he said.

I commend what has been done by successive Secretaries of State, and by the WDA, about inward investment; but it is bananas to suggest, as some industrial commentator suggested the other day, that it all began in 1983. It began long before my time, or my predecessor's. Members of the development corporation, including Douglas Badham and Meirion Lewis, all played their part.

Like the Secretary of State, no doubt, I have spent long, weary hours, day after day, talking to banks and other financial institutions in various countries—Japan, in particular—not knowing, because the people were so courteous, whether I was making any impact. When I arrived in the Welsh Office, Sony employed 200 people, and National Panasonic had not yet come to Wales. Ford has come in our time, and a host of other expansions has taken place.

It takes years for decisions about inward investment to be made. I commend what has been done with regard to LG, but I should like to know how long the campaign has taken. I know that it will continue long after the Secretary of State has gone to other pastures—it is a continuous process—but we should be glad of the results, wherever they come from, as long as the impetus is there and the good work goes on.

Along with a number of my colleagues representing West Glamorgan and counties further west, such as Pembrokeshire and Carmarthenshire, I went to see the Secretary of State, who is always extremely courteous and willing to see hon. Members. We drew attention to our difficulties.

As I have said, I welcome what has happened with LG—or will happen—but we were anxious about the fact that we had not received our share of the cake. The Secretary of State spelled out today what he indicated to us then. He has not much time to fulfil his pledge—this was a deathbed repentance—but I welcome it, none the less. He said that he would tilt the balance, in regard to financial and other incentives, in favour of areas that had not gained in the past. That is good news, although it has come late in the day.

On 28 January, the Secretary of State kindly answered a question that I had asked. I asked how many new industries had made inward investments in the past five years, and was told that there had been additions to some existing industries. I was pleased to hear about Sumitomo, and offer my congratulations. Nevertheless, against the background of the jobs—at least 10,000—that have been lost in my local steel industry, the Sumitomo investment will not mean many jobs. If there has been only one new overseas investor in five years, something must be wrong.

We have great expectations of the WDA and BP Chemicals Ltd., which have joined forces to plan an energy park. New industries may well come to that park: I hope so. I believe that the chairman of the WDA went to the area last May. It is high time that the promise made then was kept, and a start made on the infrastructure, roads and amenities to attract visiting industrialists. I hope that the work will start before too long.

Believe it or not, Wales is not lushly provided with large industrial areas likely to attract incoming industry, and we should therefore maximise those that we have. We should not split them up into penny packets, and when we have them we should market them as hard as we can. I wish the WDA well, and hope that my area sees some fruits from the endeavours of inward investors before long. I also wish my hon. Friend the Member for Caerphilly well in his task of piloting the WDA in the near future.

8.25 pm

Mr. Rod Richards (Clwyd, North-West)

Judging by his speech, the hon. Member for Caerphilly (Mr. Davies) learnt his economics at TUC conference fringe meetings. He turned down my attempt to intervene on him when he raised the issue of a Welsh Assembly; I shall say to him now what I wanted to say earlier. He has written a letter putting the case—as he sees it—for a Welsh Assembly, which has been circulated by local authorities. I should like to know who paid for them to circulate it. Public funds may have been used to promote party propaganda.

Hon. Members on both sides of the House have rightly congratulated the WDA on the successes that it has achieved over many years, but others have been involved in those successes. Attention should be drawn to the considerable role played by the Department in the achievements of which we continually read. Nor, so far, have we heard about the economic context in which the WDA and the Welsh Office have been operating. Ultimately, whether people invest from outside—or reinvest from inside—depends on their confidence in the country's economy: for any investor, the bottom line is the return that he expects to receive.

The macro-economic context in which the WDA has achieved its successes is unparalleled in western Europe, certainly nowadays. We live in a time of historically low inflation and interest rates, and a stable and strong currency. One of the most important factors, which certainly did not exist 20 years ago, is our flexible work force. Inward investors are always comparing the current flexibility with the position 15 or 20 years ago. At that time, Britain was known as the sick man of Europe because of its poor industrial relations, whereas today it is widely recognised as the enterprise centre of Europe.

Such confidence and stability as we now enjoy could be undermined by our European partners' policies, which they would have us implement, in particular the working time directive, which would damage jobs and prospects of inward investment, and a minimum wage. Again, for anyone selling the economy and the prospect of investing in this country, those policies would be to the detriment of future investment. Another reason—which people seldom recognise publicly—why people from abroad invest in Wales and Great Britain is that we are an English-speaking nation.

My right hon. Friend the Secretary of State mentioned changes in policy or in the modus operandi of the Welsh Development Agency. Many of us who represent seats in north Wales, mid-Wales or west Wales would welcome that greatly. He said that greater emphasis would now be placed on the parts of Wales with high unemployment, which, by and large, are perceived by many who live in those regions to have been disadvantaged, so his statement is timely.

Opposition Members will recognise that, these days, unemployment in their constituencies, which traditionally has been high, is very low compared with before. That reflects the success of the Government's macro-economic policy and of the WDA's policy.

I was interested to hear the hon. Member for Alyn and Deeside (Mr. Jones), a near neighbour of mine, mention unemployment in his constituency. Judging by the House of Commons Library publication on unemployment by constituency, unemployment in Alyn and Deeside stands at some 4.8 per cent., but the Welsh average is 7.4 per cent. I see many Opposition Members who I am sure are delighted at the much lower unemployment in their constituencies. For example, in Islwyn, the level is 5.4 per cent., in Delyn it is 5.6 per cent., in Pontypridd it is 5.6 per cent, in Bridgend it is 5.7 per cent. and in Wrexham it is 5.8 per cent. All those unemployment levels are much lower than they have been and reflect the Government's success.

At the top end of the scale of unemployment levels, which my right hon. Friend the Secretary of State addressed in his speech, we have Caernarfon at 11.1 per cent., Pembroke at 10.8 per cent.—

Madam Deputy Speaker (Dame Janet Fookes)

Order. Although this is a Second Reading debate and therefore, by definition, reasonably broad, the hon. Gentleman is stretching the case. May I ask him to return to the substance of the Bill?

Mr. Richards

I was welcoming my right hon. Friend's remarks that the Welsh Development Agency will be addressing the regions with much higher unemployment, which are to the north and west of Wales. The unemployment level in regions where it has been traditionally high is far more acceptable—if unemployment is ever acceptable—than it might otherwise have been.

I should like my hon. Friend the Under-Secretary, when he replies to the debate, to address one or two questions, although he may not have the opportunity to comment on them then; I hope, however, that he will find time to write to me about them. The first is on the distribution of the Welsh Development Agency budget. One of the concerns that we have in the north and rural parts of Wales involves forward commitments, within the properties budget, in different regions. It appears that the forward commitments, certainly in south Wales, are a high proportion of the budget allocated to that region, whereas the forward commitments elsewhere tend to be lower.

That creates a certain inflexibility in relation to future investment. What tends to happen is that, because of the high propensity towards forward commitments, moneys are moved from the regions that appear to have funds to spare and are transferred from one region to another. That means that in, for example, parts of north Wales, funds are not always available—this, I believe, is the position at present—to acquire land or to bring about the infrastructure changes that are necessary to attract investors, be they indigenous or from overseas. That critically affects forward planning in—in my case—north Wales, so the question to my hon. Friend the Minister is: what is the distribution of capital investment by geographic region and how does he expect that to be addressed?

The other point is the cost per job. Clearly, as I mentioned, investment is a matter of confidence in the economy, but confidence varies from region to region. I mentioned unemployment levels in parts of south Wales. Business and economic confidence in those parts would clearly be greater than, say, in Ynys Môn or in parts of Pembroke, where unemployment is high. Therefore, the case must be put—I believe that my right hon. Friend the Secretary of State addressed this in his speech—that the cost per job should be greater, or should be allowed to be greater, in regions where unemployment is very high.

We have all heard about the impact that 6,000 jobs from LG will have on Newport's economy, but the equivalent in a place such as Holyhead would be 50 jobs. There needs to be a greater allowance, to attract jobs to the parts of Wales that are perceived as economically unattractive. Therefore, it would greatly benefit us in north Wales to know precisely what the cost per job has been historically, and what my right hon. Friend the Secretary of State is prepared to allow the Welsh Development Agency to spend in future.

I take my hat off, as did the hon. Member for Caerphilly, not just to the chairman and board of the Welsh Development Agency, but obviously to all the staff who work there, as well as to officials in my right hon. Friend's Department who have contributed. In some cases, local authorities have also made a significant contribution towards attracting investment from many parts of the world.

8.38 pm

Mr. Alex Carlile (Montgomery)

I am sure that it will not have escaped your attention, Madam Deputy Speaker, that, as the debate was starting, there were two interventions from hon. Members representing constituencies in Cornwall—one of them my hon. Friend the Member for Truro (Mr. Taylor). Those interventions told their own story, that the Welsh Development Agency and indeed the Development Board for Rural Wales have been considerable successes, that they are envied in other parts of Britain and that Wales's attractions, which have no need of poaching but which are facilitated by Wales's economic development agencies, give us in Wales a significant advantage in trying to obtain the jobs that are capable of coming from elsewhere. The successes of the WDA and the DBRW tell us that others should perhaps be given the opportunity of setting up development agencies of their own where they do not exist, for they, too, could benefit from the disciplines that can be applied by those agencies.

I wish to pay tribute to the right hon. and learned Member for Aberavon (Mr. Morris). In the 14 years that I have represented Montgomeryshire, I have seen the fruit of the vision that he had when he created the Development Board for Rural Wales. When he created the DBRW, he had a clear and close understanding of rural, mid and west Wales. The board has worked extremely well. I am sure that he acknowledges that change is necessary as the years go by, and that the way in which the organisations function must change from time to time.

In my view, the linkage provided by Mr. Rowe-Beddoe during his chairmanship of both organisations has been valuable for two reasons. First, both the WDA and the DBRW went through short periods of which they cannot be proud, and there was good reason for ensuring that the management disciplines that were applied were extremely rigorous. Mr. Rowe-Beddoe applies rigorous management disciplines, and the performance of the senior executives in both organisations is evidence of that.

Secondly, the linkage has been useful because it has enabled the two organisations not merely to work closely together, but to learn more of each other's differing disciplines. However, it would be a disastrous mistake if any member of any political party or any Government were to take the view that there was now no need to distinguish between the way in which economic development should be managed in rural, mid and west Wales and the way in which it should be managed in the rest of Wales. The problems remain as different now as they were when the right hon. and learned Member for Aberavon set up the two organisations. They were set up quite deliberately, as he said in his speech, to represent separate requirements and needs.

The farming community upon which mid-Wales depends is different in every possible way from the former mining or steel communities of south and north Wales, not just in its job patterns, but in its structure. The continuing threat to what is still Wales's largest industry, agriculture, and the fortunately gradual, rather than sudden, decline in the number of jobs in that industry, require the continuing care of an organisation that is different from the WDA, an organisation that can take a more gradual approach.

If I wish to pay particular tribute to the work that has been done by the DBRW in the past two or three years, I can do so merely by pointing to the small new factories that are springing up, for example, just outside Welshpool, which has not had its full share of development. Also, more is happening west of the Newtown area which, at one time, had the concentration of development. I hope that the linkage between a better resourced WDA, as provided for by the Bill, and the DBRW will continue for a long time.

I wish to repeat a plea that I made recently in the Welsh Grand Committee, for a particular focus to be given in the future to the indigenous industries of Wales. It is wonderful for the Newport area to have the LG development, and any major incoming investment must be greeted with open arms. However, the DBRW has not always been the most popular organisation in mid-Wales, as it is said that sometimes, but not always, it gives the impression that it gives its all to outside investment coming in—particularly when a Japanese, German or Korean name is attached to it—but pays little attention to indigenous development.

That is not true, and it is not an accusation that I make. However, in my view, more can be done to develop indigenous industries within Wales. The Source Wales scheme is but an example of what can be done. But more can be achieved, particularly by focusing small-scale help on the development of new skills in Welsh factories—especially in the remoter parts of Wales.

In a recent Welsh Grand Committee debate, I made a particular plea for a part of the service industry in Newtown, in mid-Wales. The DBRW was, at the time, refusing to sell buildings to a successful business based in Newtown, called Charlie's Stores Ltd., which has grown from a street stall to a company with a turnover in excess of £10 million a year. The flexibility of Mr. Rowe-Beddoe was demonstrated to me today, when I received a letter from him informing me that an agreement had been reached to sell the premises to Charlie's Stores Ltd. Such a change in attitude towards indigenous industry will, I hope, be developed by the WDA and the DBRW.

It is often said—although I do not believe it to be the case—that the cleverest people in Wales become Members of this House, civil servants, schoolteachers, doctors and, dare I say, lawyers, but that they are bad at becoming entrepreneurs. I do not believe that to be the case at all, as there are examples of good Welsh entrepreneurs. They may not be directors of Tesco, but they are evident in other spheres.

I hope very much that the WDA—in spending whatever extra money is made available to it as a result of the Bill—will go out and look for Welsh winners for Welsh industry, to help the development of the industry of the future. We want to see a long perspective in the process. Above all, we should be looking for an evolution in Welsh industry that will lead not only to foreign companies coming into Wales, but to Welsh-grown companies—as Laura Ashley did in years gone by, and as Control Techniques from my constituency has done successfully—going to other countries and other continents to open Welsh companies. In doing so, they will show that Wales not just receives the crumbs from the rich man's table, but can be the rich man, too.

8.46 pm

Mr. Denzil Davies (Llanelli)

The Bill has been welcomed enthusiastically on both sides of the House, and I, too, pay tribute to my right hon. and learned Friend the Member for Aberavon (Mr. Morris), who piloted the original legislation through the House. We should also remember that the original Welsh Development Agency Act was passed in 1975 by a Government who believed that Governments should intervene in the economy; who believed that Governments should intervene positively to reduce disparities—in this case regional disparities—within the United Kingdom; and who believed that Governments can make a difference.

That is an old-fashioned view and, in some ways, this is an old-fashioned Bill. It is a kind of old Labour-ish Bill, as it increases borrowing and financial limits. The Welsh Development Agency is the only agency left in Britain which can intervene economically. Scotland does not have its development agency any more—it has gone, and is now called something else. It is with some pleasure that I notice that, despite all the fashion for global markets, the ideology of small government, the jargon about partnerships and the philosophy of communautarianism, we are all here this evening extolling the virtues of central Government using taxpayers' money to intervene in the economy. Perhaps there is still hope for that somewhat tarnished, old-fashioned view.

I read in the excellent briefing paper produced at the request of my hon. Friend the Member for Caerphilly (Mr. Davies) by the Secretary of State that there will be substantial increases in Government expenditure. There are problems, and the bottom line may not be as good as the figures I shall mention, but for 1996–97 the original figure was £40 million and the outturn—that lovely Treasury word—will be £65 million, an increase of 60 per cent. I must applaud a Government who increase public expenditure in a year by 60 per cent. The following year, the figure is up to £84.7 million, a further increase of 30 per cent. We can congratulate the Government on that at least. In a world of low taxation and balanced budgets, the increase is refreshing.

Despite its ups and downs, the WDA has made a difference. No institution is perfect, and every organisation has its problems occasionally. Sadly, despite the difference it has made, Wales is now the poorest region in Britain. Wales has the lowest gross domestic product per head of population. The other day, I was reading the budget put out by the Welsh Office. It is difficult to have regional budgets in a centralised economy and state such as Britain. It tells a horrendous story. It tells of a massive difference between the money that is raised in Wales through taxation and the money that Wales receives—properly—by way of public expenditure.

The difference can be illustrated by considering the financial deficit figure, or borrowing requirement. The budget is now two or three years old, but as of today the Welsh financial deficit in the United Kingdom economy is about 15 per cent. The budget mentions 20 per cent., but that is the figure from two years ago. Despite the difference made by the WDA, the Welsh economy still has a financial deficit of about 15 per cent. France and Germany are having trouble reducing their deficits from 4 per cent. to 3 per cent. to meet the Maastricht treaty conditions. The scale of a 15 per cent. deficit demonstrates the still sad state of the Welsh economy after 18 years of Conservative government.

My right hon. and hon. Friends have made the point that, in the quest for major inward investment in manufacturing industry, the WDA and the Welsh Office have, in the past 17 years, neglected an area that I describe as industrial west Wales. Industrial west Wales extends from the west of Bridgend to the western end of my constituency of Llanelli. I may be being slightly churlish because, as the Minister may point out if he has time when he winds up, Llanelli has received large sums from the WDA for land reclamation, environmental works and the regeneration of its town centre. I accept that and I welcome it. Those projects have improved the environment and generated some, but not much, economic activity. However, the money has not created the sort of wealth that is required. In industrial west Wales and in Llanelli, we still have a problem of high unemployment, especially among young people, low activity rates and low income per head.

About 30 per cent. of those who are employed in my constituency still work in production, mainly manufacturing and engineering. That figure is probably somewhat higher than the average for industrial west Wales. We have some excellent companies, as do other nearby constituencies. Many of the companies are car component firms. We have five or six that can, and do, compete with the best in the world; the same is true of some of the factories in my hon. Friends' constituencies in industrial west Wales. The area needs major inward investment in manufacturing engineering, as it is now described. Because of the car component plants, I believe that the area could now support a major car assembly plant.

I welcome the Secretary of State's statement that the emphasis may change, but I hope that the guidelines permeate down to the WDA in Swansea and the so-called Swansea bay partnership. A deliberate decision has been made in the past not to go for inward investment, but to support and nurture existing industry. That is fine, and I do not decry it, but we miss out on major inward investment.

Some time ago, the Mercedes car company announced that it was to build a small car, the Swatch, outside Germany. It is to be built just on the French side of the Franco-German border. At the time of the announcement, I tried to discover how a constituency such as Llanelli could attract that investment. I found it difficult to penetrate the bureaucracies, especially that of the WDA, to find out what was going on. I was told that Mercedes had employed a firm of management consultants in Boston and that nobody except Government agencies was allowed to talk to it.

Finally, I was able to obtain—unofficially—a list of Mercedes' seven requirements. My constituency fitted all of them, as did those of my hon. Friends in industrial west Wales. There was not one requirement that we could not have fulfilled. One of the main requirements was for clean air and for the site not to be too close to factories that pollute the air. That would be possible in Llanelli.

The problem was not one of resources. We are close enough to major highways, ports and an airport to satisfy all the requirements. I pointed that out to various people and was told that Mercedes was interested only in the north-east of England. I never got that in writing, and I do not know who made the decision. I was never told that by Mercedes. I suspect that the decision was made by the Department of Trade and Industry— I suspect that it was the Invest in Britain Bureau. My right hon. Friend the Member for Swansea, West (Mr. Williams) is not here, but he set that bureau up in 1974. It has become the "Invest in England" bureau. I do not decry that. England has to have that sort of investment arm, serviced by the Department of Trade and Industry, but I suspect that all this nonsense about Mercedes not being prepared to go anywhere in Britain but the north-east of England came from that bureau.

Mr. Roy Hughes (Newport, East)

My right hon. Friend must appreciate that this is merely a case of history repeating itself. Lord Walker's autobiography—as Peter Walker, he was Secretary of State for Wales—clearly states that the Toyota motor company was to build its manufacturing plant in Newport. As a result of the intervention of the Prime Minister of the day, Lady Thatcher, it was sent to more marginal political territory in Derby.

Mr. Davies

Unlike my hon. Friend, I have not had the pleasure of reading Lord Walker's autobiography. Perhaps one of these days I shall. I do not know, but I suspect that the Invest in Britain Bureau exists to attract industry to England, and we must be sure that we get our fair share.

There should be a change in policy for industrial west Wales. We are ready for a major car assembly plant. Such plants do not grow on trees. I understand the problems, but as my right hon. and learned Friend the Member for Aberavon said, preparatory work has to be done for many years. That work has to start now, and it is to be hoped that it will bear fruit in a few years.

8.59 pm

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

My right hon. Friend the Member for Llanelli (Mr. Davies) described this as an old-fashioned Bill. Indeed it is, and thank God for it.

Not only is this an old-fashioned Bill, but the agency ought to be fulfilling a couple of old-fashioned functions. It is worth reminding ourselves what its early functions, both of which it inherited, were. The first was industrial estate development; the second was the derelict land reclamation programme. The first function had previously been conducted by the estates corporations; the second by the Welsh Office, particularly after the Aberfan disaster.

The first function was nothing new. Indeed, in some ways the agency continues a great tradition. In the early days, the Government discovered that investment was necessary to deal with the problems of large-scale unemployment in particular areas. The first industrial estate in Wales was a result of the first U-turn by the then National Conservative Government of 1935. Mr. Baldwin and Mr. Chamberlain, who had raised to a fine art the principle of non-intervention—to the point that they tried to transfer large populations out of our communities—were driven by the threat of an election in 1935 to announce that they were willing to finance the Treforest industrial estate. It was the instrument by which the first major inward investors came into Wales. It is interesting that, of the 70-odd companies that came to Wales in the late 1930s, 49 were a result of Jewish immigration from central and eastern Europe. They were the first inward investors into the south Wales economy as we know it today.

I draw attention to the history of industrial development because, after the war, Government power and the investment of Government money brought small industrial developments into mining communities and mining villages, which created new manufacturing opportunities where only the coal and iron industries had offered employment. The development of those small industrial estates and groups of factories helped us to diversify, and created the post-war south Wales economy.

One of the worrying aspects of the drift in the Welsh Development Agency budget is the way in which smaller industrial estates are being sacrificed for large inward investments. I must plead with Ministers, and especially with my hon. Friend the Member for Caerphilly (Mr. Davies) when he assumes ministerial responsibility in the coming months, for the traditional role of the WDA in developing small industrial estates in communities that cannot attract or physically fit the large inward investment developments that we have seen in recent years. Those small developments should be just as much of a priority. They should be part of any WDA strategy or budget.

I was at the meeting of the heads of the valleys standing conference last Monday, when the Secretary of State was presented with a list of the smaller industrial estate developments that could take place, but which seem to have been put on stop because of the WDA's budgetary problems.

The second function that the Welsh Development Agency inherited was land reclamation. The agency assumed what had previously been the direct responsibility of the Welsh Office. Indeed, had it not been for the Welsh Office decision to clear the land at Pentrebach in 1975, there would not have been a site to attract the first Korean inward investment that was announced only a few months ago.

The Halla Engineering scheme was brought to a site that was cleared under a land reclamation programme as early as 1976–77. That programme has played an enormous and vital part in the regeneration of our mining communities. The Secretary of State told us that the amount of land reclaimed could have filled X thousand football pitches; ironically, in many cases—certainly in my community—it is football pitches that people want to develop in the reclamation programmes, to create a balanced recreational facility in a community in which tips and waste once lay.

There is great bitterness in communities such as Treharris, Trelewis and Bedlinog that have watched the vandalism of the accelerated pit closure programme. They were left with all the problems, and now we are told that the WDA does not have the money to, develop those sites and clear the waste land, offering new opportunities and a new environment to the villages. The Minister came and saw for himself, and he will have understood and appreciated the strength of feeling about the delays—indeed, the stop—to land reclamation programmes as a result of the WDA's current budgetary problems.

The Secretary of State kept on referring to the targets that he intends to set. Some are like Soviet grain targets; a figure that has been plucked out and which it is assumed will be reached. There was a specific target that we took seriously: that for land reclamation by 2000. That objective was set by Welsh Office Ministers and should be met, but on present budgetary plans, and certainly on present WDA performance, it will not be.

We are all, understandably, fighting over funds for millennium projects of one kind or another. That target was something to aim at for the millennium, but unless there is a significant change of heart and improvement in the WDA's land reclamation budget, it will not be met.

My strong plea is not necessarily made to my hon. Friends the incoming Ministers, because I hope that in the last few weeks of this Administration we can have an announcement of some unlocking of money to restart some of our land reclamation schemes. My hon. Friend the Member for Caerphilly knows all too well that there are constituency as well as national problems, and I hope that he, too, will regard restarting the programmes as a major priority, to remove the embittered feeling in many of our communities caused by the fact that lots of development is being carried out not too far away, while the much-needed and well-deserved changes that people expected in their immediate environment are not happening.

That brings me to a third function that the WDA, with its added financial capacity, should take up the challenge of assuming. In many of our small mining communities, alongside the bigger developments such as LG in Newport, Halla Engineering or the significant developments along the heads of the valleys road, there is a growing dereliction. Shops and houses that cannot be sold have been boarded up. The image of dereliction in many small mining villages is in sharp contrast to the glitzy sex appeal of international inward investment.

Mr. Allan Rogers (Rhondda)

And Cardiff bay.

Mr. Rowlands

As my hon. Friend says, that also applies to Cardiff bay. We spent many months making that case.

Along with chasing great international inward investments, and the excitement and adrenaline that doubtless runs in the veins of those who go in search of it, let us have some energy, innovation and imagination put in to support community enterprise and local regeneration. We need to ensure that the planning is right.

The closure of sub-post offices and chemists is the deadly sign of the loss of community in our mining villages. With it comes the boarding up of properties. Let us have local joint ventures of the sort that we have seen on the grander scale; let us have assisted development of the sort from which Merthyr Tydfil and Rhymney has benefited in recent years. Alongside the bigger, wider programme, let us have community enterprise development and an agency that can combine with local authorities and the Welsh Office to regenerate our communities at local level.

Mr. Roy Hughes

Does my hon. Friend appreciate that the LG investment in Newport is not negative from the point of view of the valleys? I come from the valleys, but I have found that people from there flock in their hundreds and thousands to work in Newport and Cardiff. That will happen again.

Mr. Rowlands

I hope that I have not suggested that I in any way oppose LG. The opposite is true. I am not so parochial that I do not realise the major role that LG will play in employment opportunities throughout the communities that surround the site near Newport, but let us also have some imagination and effort put into community development through joint venture schemes. The WDA has undertaken big, urban, commercial renewals, but it has not carried the same principles, efforts, energy and imagination down into our local communities. The partnerships and joint venture schemes that exist at one level should be delivered at another.

I have pleaded for more public money. I will be accused by the Government, and perhaps by my Front Bench, of breaking the Government-Brown diktats on public expenditure. We are talking about small sums of money. The Secretary of State was suddenly able to find £25 million to increase the WDA's budget. I did not notice taxes go up or public borrowing explode as a result. For the life of me, I cannot understand why, in the Welsh Office's £6.8 billion budget, we cannot find an additional £25 million. It should not be beyond the ingenuity of my hon. Friend the Member for Caerphilly to go through the budget after the general election and find such a sum.

A Welsh Office budget of £6.7 billion was forecast for 1995–96, yet the previous Secretary of State, the right hon. Member for Wokingham (Mr. Redwood), forecast a budget of £6.890 billion—£190 million more. Such changes between forecasts and outturn must be noted. The right hon. Member for Wokingham, whom I never took to be a great lover of public expenditure, forecast a budget for the Welsh Office for 1996–97 of £7 billion. That was his forecast.

Given the large sums of money involved, the planning, the outturns and estimates, all we are saying is that an extra £25 million should be found on top of the current planned expenditure to unlock the WDA's land reclamation budget and restore some of the financing that is necessary for it to carry out the core functions for which it has been responsible since its creation.

9.14 pm

Mr. Barry Jones (Alyn and Deeside)

This debate has latched on to the central issues as they affect our country, Wales. I thought that the Secretary of State made an emollient and typically courteous speech. I thought that my hon. Friend the shadow Secretary of State gave the speech of a man savouring the prospect of office within weeks.

Two essential points have been made in the debate. First, right hon. and hon. Members very much hope to see more investment from indigenous companies, notwithstanding their welcome for overseas investment. Secondly, we would like to emphasise our wish that the WDA should offer even-handed treatment across Wales. Right hon. and hon. Members have expressed some anxiety that that may not be happening. I do not wish to be controversial, but that is an important point to bear in mind in the years ahead.

Hon. Members have tried to emphasise the context in which the WDA is being debated. There is a historical context that can be understood by consideration of Ben Pimlott's biography of Hugh Dalton and the autobiography of the late Douglas Jay. Those books offer a history of the germ of regional policy. They reveal how those two great figures of the Labour movement, who worked as civil servants in the second world war, were responsible for the first conscious acts to prepare regional policy. From memory, I believe that Douglas Jay recounts how he encouraged, with the help of some Welshmen, the development of the first planned industrial estate, which was located in Bridgend. It was followed by others in central Scotland.

Mr. Roy Hughes

The first was Nylon Spinners.

Mr. Jones

Yes, my hon. Friend is right.

I see this debate as an anniversary of the debate on the creation of the WDA. I should like to emphasise the major role that my right hon. and learned Friend the Member for Aberavon (Mr. Morris) played in its creation. I remember the day when he opened the Second Reading of the Bill in which the agency was proposed to this honourable House. I had the honour of winding up for the Government. I recollect how the then Nicholas Edwards, who represented Her Majesty's Opposition, gave an unwelcoming, carping and grudging response to Labour Ministers' proposals in the middle of the 1970s. At the conclusion of the debate, the right hon. Member for Conwy (Sir W. Roberts) wound up for the Opposition and he, too, offered the same regretful, unwelcoming and carping response to my right hon. and learned Friend's creation of the WDA. That approach continued in the Standing Committee, in which I piloted the Bill alongside my late colleague, Alec Jones.

I also remember from that Second Reading that Peter Walker, now Lord Walker, made a grudging intervention in which he claimed the credit that he seemed to think he should be given for the idea of the WDA.

Nicholas Edwards, who later became Secretary of State and who is now in another place, would not have been able to survive as a Cabinet Minister without the instruments of economic power that my right hon. and learned Friend the Member for Aberavon had bequeathed him. There was a time, in the early 1980s, when unemployment in Wales according to the official figures exceeded 180,000—indeed, the number of unemployed people in Wales edged close to 200,000. Having said that, under successive Secretaries of State, the agency has been a great success. It had to be, because, in the early 1980s, there were major disasters in manufacturing industry in Wales, not least the colossal losses in man-made fibre jobs, brickmaking jobs and steelmaking jobs, as at Shotton steelworks in my constituency. In this debate, however, we must acknowledge the agency's successes throughout the 1980s and 1990s.

I have an agenda concerning my own constituency that I want to put to the Secretary of State. I shall first mention townships such as Connah's Quay, Shotton, Queensferry, and Buckley: to some extent, the agency has invested in Deeside and in those communities, but it is the wish of Flintshire county council and of my constituents that there be more investment. I give as an example the township of Queensferry where many of the shop fronts are now boarded up and are not operating in the interests of the citizens of that locality. To some extent, the same may be said of the township of Shotton. We have suffered considerably from man-made fibre plant closures, from steelmaking job losses and from cyclical redundancies in the aerospace industry, in addition to redundancies in the cement industry and in brickmaking. In all this, we have instanced the need for the agency to back us fully and to give us every possible help.

Mention has been made of Mr. Rowe-Beddoe and his chairmanship of the agency. Through my observation of the agency's leadership over many years, I know that he has been a success of a particular kind. His discipline over his executives and employees is severe—some of his detractors say that he is something of an Attila the Hun, but if he is and if he has made the agency more leak-proof and disciplined, so be it. In all my remarks, my hope has been to see the agency as being the means and the instrument by which my constituency might suffer less unemployment.

The agency has made the Deeside industrial park one of the finest in western Europe. Nevertheless, there are some requirements: we want the industrial park to be given a railway station of its own on the Wrexham-Birkenhead line and I would ask the Government to consider how that objective might be achieved. Likewise, there is a disused railway line from the industrial park to the city of Chester and it is our wish that the line might become a dedicated road, which would help to lessen traffic jams and the consequent pollution on Deeside. The agency may be of help to us in bringing that scheme to fruition. I very much hope that Ministers will respond positively on those two points.

Bearing in mind the pressures on time, and bearing in mind the fact that I had the chance to catch your eye last week, Madam Speaker, I resume my seat.

9.24 pm

Mr. Donald Anderson (Swansea, East)

We are having this debate on the Welsh Development Agency in the last few weeks of this Parliament. Opening the debate, the Secretary of State said that he at last recognised that various distortions had arisen in Wales that had not been corrected and that he proposed to tilt the agency's balance of policy more in the direction of west Wales and north-west Wales, which have not so far benefited. The difficulty is that it is the end of the Parliament so, when we urge the facts, which do need remedy, really we are preaching to my hon. Friend the Member for Caerphilly (Mr. Davies) and urging him to take up that challenge, because we will be unable to see the fruit of the apparent and intended change of policy.

There has been a marked degree of consensus about the value of the agency's role. My city, Swansea, has benefited substantially from joint ventures with the agency, especially in Swansea vale and Castle quays, but the record on inward investment is not good on the whole. For example, there has been no major investment in Swansea bay or in the area that includes Llanelli during the existence of the Welsh Development Agency.

There is an increasing perception in political and business circles in south-west Wales that the agency—and the Welsh Office, which presides over it—are countenancing a widening gap between the economic performance of south-east and south-west Wales. Yes, the division of the agency's responsibilities into three regions is important, but Bridgend is included in the south-west Wales region, and that masks the problems that have showed themselves further west, so a misleading impression is given of the performance west of Bridgend.

I hope that what the Secretary of State said will be taken up by my hon. Friend the Member for Caerphilly, but much damage has been done in the past, as my right hon. and learned Friend the Member for Aberavon (Mr. Morris) showed clearly, by what the Government may call working with the grain, which in effect negates the key aim of regional policy to reduce internal imbalances as well as imbalances between England and Wales.

There have been specific examples of diversion of investment projects from west Wales to Cardiff bay, such as one from Baglan, in the constituency of my right hon. and learned Friend the Member for Aberavon. Much damage was done by the right hon. Member for Wokingham (Mr. Redwood) in reducing the grant in aid for the agency to £25 million at a time when the Cardiff Bay development corporation was receiving slightly more than twice that amount in grant in aid. I understand the concept of making a flagship of the capital city, but it is now generally recognised in Wales that the Government have gone too far in that direction to the detriment of balanced development throughout Wales.

The West Wales chamber of commerce has sent a questionnaire to its members, the results of which are to be returned today, on precisely that theme. As the Secretary of State should know, there has been considerable disquiet in south-west Wales on that subject. Yes, we all rejoice that LG has gone to Newport, but there is now a major site, for which planning procedures are almost completed, at Velindre in the constituency of my hon. Friend the Member for Gower (Mr. Wardell). That would have a major impact on the economy of south-west Wales, and it is there that the present Secretary of State and my hon. Friend the Member for Caerphilly, his successor, should exert their energies to try to get a major investment at Velindre to match that at LG in Newport.

We need greater commitment and positive action to reduce the growing divide between east and west Wales. Given what the Secretary of State has said today, I concede that I may be pushing at a door that has opened, but that will never stop a politician pressing harder and harder. I hope that the lesson will be learnt. The facts of the current disparities are clear, and have been clear for a long time. At last, this Secretary of State seems to have recognised those disparities. I look forward to his successor, my hon. Friend the Member for Caerphilly, making a positive commitment to ending the disparities that have grown so alarmingly in the past years.

9.29 pm

Mr. Rhodri Morgan (Cardiff, West)

The debate has ranged far and wide, although it is about the financial limits of the Welsh Development Agency. Those limits are relevant to the WDA's activities and how quickly it exhausts the limits previously set. The key question that has emerged from this wide-ranging debate—this seemed to scandalise Welsh Office Ministers and former Ministers, such as the right hon. Member for Conwy (Sir W. Roberts)—is whether it is right for us to accuse the Conservative Government, who are now reaching their fag end, of having an ambivalent attitude towards the WDA, even since its inception in 1975. Although they have found the agency convenient from time to time, they have caused it to exist on a diet of feast and famine, so that it has never known quite where it stood with the Government.

The right hon. Member for Conwy accused my hon. Friend the Member for Caerphilly (Mr. Davies) of a travesty of the truth in making that accusation against the Government. This matter is at the heart of the debate. The Secretary of State—unintentionally, I am sure—misled the House when he said that the amount that the WDA will receive next year in accordance with the financial limit set by the Bill will be greater in real terms than the amount that it received 10 years ago. He is right if one uses that comparison, but one can always pick out a year here and a year there to substantiate any claim. We should use the average figures for central Government financing of the WDA.

For the first 10 years of the WDA—from 1976 to 1985, half of which was under Labour, and just over half under the Conservatives—the amount of grant in aid and the other relevant finance for the purposes of the Bill averaged £90 million a year. For each of the next 10 years—from 1986 to 1995, all of which were under the Conservatives—the amount was lower, but it was still fairly healthy at an average of £60 million a year. That is at today's prices.

Then along came the right hon. Member for Wokingham (Mr. Redwood), and all of a sudden, instead of £90 million a year on average for the first decade and £60 million a year on average for the second decade, the relevant figure—the amount of additional finance that the WDA received—suddenly dropped to £13 million, which was the second lowest figure in the history of the WDA in cash terms, let alone in real terms. That was the amount that the right hon. Member for Wokingham gave it in 1995–96, which was his first year as Secretary of State. Only in its first year, when it received £9 million—it was a new body and had not had time to set up its machinery—did the agency receive less grant in aid or have less borrowing power.

Then we had the first year of the present Secretary of State. Until the change in the budget last November, he was going to give the WDA only £17 million, which would have been the second lowest amount. That figure has shot up to £42 million, because of the extra £25 million that was supplied halfway through this financial year. The figure now looks respectable, but the Secretary of State's original intention was that it should be only £17 million. In those two successive years, the figures were £13 million, given by the right hon. Member for Wokingham, and £17 million, given by the present Secretary of State. That is a true measure.

The Secretary of State has now learnt his lesson, and has realised that being Secretary of State for Wales with the WDA at his disposal can bring him kudos. When he realised last summer that LG had signed on the dotted line, he thought, "I might become a bit higher profile as Secretary of State for Wales. I can become a slightly more important person and rise up the pecking order of the present Cabinet, and even more so of the future shadow Cabinet, if I am seen as the man who helped to bring LG to Wales."

All of a sudden, instead of the WDA being on a famine diet of only £17 million—the second lowest budget, barring its first year and the previous year under the right hon. Member for Wokingham—the Secretary of State decides to give it more money. Suddenly it is feast time again, at least to a moderate degree, and the amount of relevant finance is £42 million, which is still well below the average of the previous decade, but it is respectable. It looks as though the amount will go up to £65 million next year under the terms of the Bill, so the WDA will get a sum which is about the average of the past 10 years. That will be the time when the LG industrial development must be financed.

All that makes one wonder whether our charge that the Government are ambivalent about the WDA—making it exist on a diet of feast or famine—is not the bullseye. They have always had a problem with the WDA. That was apparent in the case of the Scottish Development Agency when it first started. The Government still do not know how they want to give the WDA the operational freedom to bring in large new inward investment and to use those big investments from outside to stimulate indigenous business in Wales to act as suppliers to the new industries.

Everyone now agrees about the farcical period of the right hon. Gentleman's predecessor, nominally the Secretary of State for Wales, but in practice the Secretary of State for Wokingham and the Tory right-wing think tanks. He was the one who crippled the WDA's operational abilities by causing it to privatise itself from the inside by selling all its major assets, which meant that it then did not have the monthly cash flow, and every time a large investor came in, the WDA had to go back to the Welsh Office for special finance. Luckily, in the case of LG, it did so successfully.

There was an American fifth cavalry charge coming over the top of the hill in November last year with an extra £25 million, to which my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) referred. We warmly welcomed that, but it should have been a lesson to the Secretary of State that he should not continue in the tradition of the right hon. Member for Wokingham, who disgraced himself so much in his period as Secretary of State for Wales, through his attitude to the WDA, single mothers and many other issues.

The structure of the Bill is noteworthy. It will be the last measure of its kind. Henceforth, any increase in borrowing powers will be made by secondary legislation—by order. It is an unprecedented measure in the extent of its delegation to secondary legislation. It is what is known as a Henry VIII power: there is no limit on the ability by secondary legislation—

Mr. Hague

indicated dissent.

Mr. Morgan

The Secretary of State seems to be shaking his head. Let me read from a note that I received from one of the Clerks of the House. He states: What is unusual about the WDA Bill, and, as far as we can discover, unprecedented, is not to impose any ceiling at all on the amount to which a limit may be raised by order. I say that cautiously because it is never easy to prove a negative.

Mr. Hague

I was shaking my head because the Bill requires affirmative resolution to raise the limit in future. That is by no means what anyone would understand as a Henry VIII power.

Mr. Morgan

The Secretary of State seems not to understand that a power has never been given by statutory instrument before, with no capping limit on it. That has never been done before. That is the view of a senior Clerk of the House. Perhaps the right hon. Gentleman has a different view. We know that he was something of a wunderkind 20 years ago, and had hardly sprung from the womb when he made his famous speech in the very year that the WDA was founded. We all remember that. Perhaps the Secretary of State still thinks that he is a wunderkind and knows more about such matters than the Clerks of the House. There will be others who do not agree with him about that, but we shall have to see who is right. There is no precedent for extending the secondary legislative power in this way—the Secretary of State may be proud of that and he may think that he is Henry VIII. I am not sure, but the Clerks of the House clearly believe that the procedure is unprecedented.

It is odd that the power, as it related to the Scottish Development Agency, was passed through secondary legislation in 1990, but the next measure extending the financial limits of that agency's successor body will have to go through primary legislation because it has exhausted its secondary legislative powers. That reveals the confusion at the heart of the Government's attitude towards the Scottish Development Agency and its successor bodies and the Welsh Development Agency.

Mr. Rowlands

From the gist of what my hon. Friend is saying, am I to understand that he will support our amendment to remove that provision?

Mr. Morgan

I have not seen any such amendment. Has an amendment been tabled? The issue will no doubt be raised in Committee and we can see whether the Government are right. Given our proposals for a Welsh Assembly, what the Government have done is highly convenient. It would allow the democratic control, which the Government now seem anxious to take away from the Floor of the House. If there were a Welsh Assembly, I would support the Government's move. It represents an important development if the Government are trying to give us favours in terms of our future proposals for a Welsh Assembly. The Secretary of State for Health was also helpful on that front today when he introduced more confusion.

Sir Wyn Roberts

Is the hon. Gentleman saying that if the power were to be transferred to the proposed Welsh Assembly, there would be no limit on the assembly's power to increase the amount, as specified in the Bill?

Mr. Morgan

It does not cause additional expenditure; it permits it—as the Secretary of State's briefing note rightly said. I am sure that the right hon. Member for Conwy, as a former Minister, would agree with that. It is a question of the loss of parliamentary control. We keep hearing about the West Lothian question, but the Government are happy to get their Members to vote for a loss of parliamentary control—I think that that was the point being made by my hon. Friend the Member for Merthyr Tydfil and Rhymney. There is not the same degree of parliamentary control simply because the measure cannot be amended. That is at the crux of the matter—that is why measures are being transferred to secondary legislation.

The Secretary of State is asking the House to approve the removal of the right to amend a measure by passing it over to secondary legislation, with no ultimate capping limit—that is unprecedented. The Secretary of State should have explained why he was doing that. His only explanation is that he did not realise that he was doing it. Obviously, he has not received the same briefing as I did from the Clerks of the House.

The issues involving the WDA concern all of us who represent Welsh constituencies. How do we get the balance right between east and west, between inward investors and indigenous firms? How do we ensure that when, for the first time in 20 years, the WDA hits a big inward investor such as LG, that does not absorb all its finances so that it is unable to capitalise on firms that could become suppliers? Those firms could be indigenous or they could have moved into the area. They may be on a smaller scale and it may be appropriate for them to set up in places that do not attract large numbers of commuters such as we have in south-east Wales and the Swansea area. Getting the balance right between east and west, between large and small, and between inward investors and indigenous investors is what lies at the heart of the topics raised by hon. Members today.

We have heard many comments from those who are concerned that, because the Government cannot give a sustainable commitment to fund the WDA for a two, three or four-year period and keep failing in their primary duty to provide a framework for the agency's financing, the agency does not know where it is. If the LG development proceeds in Wales, will it exhaust the agency's financial capabilities to sustain supplier industries that might be able to feed off LG, and thereby prevent building up a much stronger indigenous sector?

The final measure of whether the WDA is a success and of whether Welsh Office Ministers have looked after the WDA—although their predecessors opposed its creation—is the state of the Welsh economy. People have said that the Welsh economy is a brilliant success, because one or two big names have moved in. LG is the first mega-development for 20 years, but—for the purposes of those of us representing Welsh constituencies—the state of the Welsh economy is not explained by listing the big names and saying that LG is a great success or that JCB's expansion in north Wales is a great success. There are other great successes—such as Ocean Technical Glass moving to Cardiff, Newport Waferfad, and Halla moving into Merthyr—but the bottom line is the state of the Welsh economy.

While the gross domestic product per head in Wales remains 16 per cent. below that of the United Kingdom, it will remain true that Wales will continue to require an interventionist economic agency. The Government have never been able to make up their minds about the WDA; they remain ambivalent about it; and they would much prefer to close it down completely.

9.45 pm

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

It has been very good to have such a good-natured debate on the Bill—until the speech of the hon. Member for Cardiff, West (Mr. Morgan). However, I readily agree with his conjecture that one can always find a couple of figures to try to support the argument that one is inventing, because he proceeded to do precisely that in his 15 minutes. I offer him my sympathy because, judging by Opposition Members' interventions, I suspect that he will have trouble from Labour Back Benchers in Committee.

Mr. Morgan

What was I inventing? Will the Minister quote it, chapter and verse, or withdraw his comment?

Mr. Jones

I think that Hansard will demonstrate that very clearly tomorrow morning. I invite the hon. Gentleman to read it, to see whether he can repeat the statements a second time. However, he does not need to worry, because I have great confidence that he will not have to worry about the Welsh affairs portfolio for much longer.

This was a good-natured debate, and why not? It was about the success story of the way in which we have nurtured and developed the Welsh Development Agency.

It was good to hear speeches from the more senior Labour Members—if I may so call them—as they are those rare commodities on Opposition Benches: hon. Members with ministerial experience. It was good to hear from the right hon. Member for Llanelli (Mr. Davies) and from the hon. Members for Merthyr Tydfil and Rhymney (Mr. Rowlands) and for Alyn and Deeside (Mr. Jones).

It was especially good to hear from the two "originators"—those who took part in the original debate on setting up the WDA, my right hon. Friend the Member for Conwy (Sir W. Roberts) and the right hon. and learned Member for Aberavon (Mr. Morris). My right hon. Friend very effectively nailed the claims made by Opposition Members about the way in which he and successive Secretaries of State have maintained the WDA.

I am a little surprised at the right hon. and learned Member for Aberavon. Initially we knew what he wanted to say, but I always thought that he never made a more pertinent observation than, "You cannot ignore an elephant when you find it on your doorstep," which was a reference to the result of the 1979 referendum on a Welsh Assembly. He attempted to recreate the first fumbling footsteps of the child who has now been honed into the superb contributor to team Wales, which he so ably captains. I am sure that the right hon. and learned Gentleman has very knowing warnings about his party going back to the old, failed policies of the past. It is very likely that the phrase in his mind will be, "It will all end in tears"—which harks back to 1979.

This debate is about a success story—about how we have used the WDA as a key part of team Wales. We are determined to make the agency even more successful in the next Parliament. I feel that that objective is very much in line with the detailed analysis presented by my hon. Friend the Member for Clwyd, North-West (Mr. Richards). He was absolutely right to stress the necessity of confidence in the Welsh economy. I was glad to have his welcome and that of the hon. Members for Pembroke (Mr. Ainger) and for Swansea, East (Mr. Anderson) for my right hon. Friend the Secretary of State's announcement earlier tonight, on what we want the WDA to do, in being even more ambitious outside the eastern corridors of the A55 in north Wales and the M4 in the south.

I am glad that the hon. Member for Caerphilly (Mr. Davies) welcomed the same announcement, although he spoilt his welcome by claiming that nothing was being done and that we did not understand the necessity of doing something. He did not listen to what my right hon. Friend said. Immediately before making that point, he reminded the House that the WDA already had a target of creating 20 per cent. of its jobs outside those two corridors. Already this year, the agency has done better than that and reached a target of 32 per cent. If we do not have any understanding of the desirability of doing even more in that area, why are we setting targets to improve and extend the existing aims? Of course, the criticism comes from the hon. Gentleman who would give us lessons in civility.

The right hon. Member for Llanelli and the hon. Member for Swansea, East were understandably concerned about what the agency had already done to the west of the corridor in the south. I remind them that, since 1983, the agency has been involved in 111 inward investment projects in west Wales, which have created or safeguarded more than 12,000 jobs. It has entered into numerous joint venture agreements with local authorities and the private sector to achieve significant regeneration in the west.

Two fine examples of the agency working with local authorities and the private sector are Swansea vale, where the joint venture aims to attract 3,500 jobs and about £160 million of direct private sector investment, and Llanelli, where construction work has begun on the town centre shopping complex, which will provide 130,000 sq ft of much-needed new retail space. I am glad that the hon. Member for Swansea, East acknowledged that the agency has recently completed demolition and clearance work on the 200-acre former steelworks site at Felindre. That is a key strategic inward investment site, and the next stage will be the reclamation and infrastructure works.

The hon. Member for Caerphilly appeared to criticise the suspension of Standing Order No. 56. I want, through him, to—

Mr. Ron Davies

No. 86.

Mr. Jones

I thank the hon. Gentleman. It went through on the nod on Friday afternoon, and I thought that I needed, through him, to thank the Opposition for their ready agreement to proceed in that way. He peculiarly claimed that this form of legislation meant that a Welsh Assembly would be the perfect body to scrutinise it. Surely, it is a very backhanded compliment to Opposition Members to suggest that their ineffectiveness can be overcome only by a toothless talking shop filled by those who failed to enter this House. What does that say about Labour Back Benchers?

The hon. Member for Caerphilly could not answer when my right hon. Friend the Secretary of State understandably asked whether he would give the agency extra funds. The hon. Gentleman went on at length and identified what he called a £30 million shortfall, but could not follow through the logic of his own argument, a point not lost on his hon. Friends, most obviously the hon. Member for Merthyr Tydfil and Rhymney.

My right hon. Friend has already confirmed that the agency still has a significant land reclamation programme in its proposals for its next business plan. It has almost 3,500 acres in the process of being reclaimed and, on current plans, some 1,850 acres will be completed in the next two years. Some concern has been expressed about projects that have been delayed, but this year the agency has already responded to some of that concern. It has increased its budget by 25 per cent., to £17.5 million, which will allow the next phases of various projects to proceed. It has been necessary to review plans and commitments, but contractual commitments are being honoured.

Support for some projects is being deferred, but none will be lost. My right hon. Friend will shortly be discussing the agency's business plan with its board. He will be keen to ensure that its commitment to the 1,850 acres will be retained, although the individual projects that total it are wholly a matter for the agency.

I acknowledge what the hon. Member for Merthyr Tydfil and Rhymney said about Trelewis. I was grateful for the invitation to visit it with him in September. I understand the depth of local feeling even better as a result of that visit. As I have already assured him, I have placed the issue before the chairman of the Welsh Development Agency.

Mr. Rowlands

I am grateful to the Minister for allowing me a brief intervention. Does the target of clearing all derelict land by 2000 still stand?

Mr. Jones

I believe that the agency is confident of proceeding towards the target that it has set for land reclamation. The exact phasing and completion remain to be achieved, but I have confidence about the agency's progress.

Concern has also been expressed about progress at Coed Ely. I understand that the delay in that land reclamation scheme is not solely financial, but is primarily because of problems with the contractors and the complex nature of the project. The agency will do what it can to take the project forward as soon as possible.

In the strategic guidance for the current financial year, we have clearly set out our policies for the agency, for it to continue concentrating on the creation and safeguarding of jobs through inward investment and company development. We also attach priority to land reclamation. I fully support the emphasis that continues to be given to those programmes for the coming year, which are fundamental to the continuing success of the Welsh economy. We have also set the agency a number of key strategic targets. I am pleased that it met most of its targets in 1995–96 and even exceeded some of them. I look forward to another excellent set of results in 1996–97.

The agency's aim is to help create a successful and dynamic economy—promoting the best business climate in Europe by assisting the growth of quality jobs and competitive industry for the benefit of people throughout Wales. As my right hon. Friend the Secretary of State mentioned earlier, in line with that, the agency's programme over the next few years will focus on all parts of Wales, promoting indigenous business growth throughout Wales and creating the right climate for all the growing firms.

Like my right hon. Friend the Member for Conwy, I noticed the article in The Western Mail this morning. I felt that it was a travesty until I heard my right hon. Friend suggest that there might be another hand in its authorship—perhaps that of the hon. Member for Cardiff, West. Is an article entitled "Why the WDA needs to be reformed" what we should expect from someone who sincerely hopes to be representing Wales in the Cabinet by May? He refers to our failing economy, calling it stagnant at best and a disgrace at worst. He tries in every way to present Wales in the worst possible light, blithely ignoring the reality. Since the general election four years ago, unemployment in Wales has fallen by more than 30 per cent.—a drop of 40,700, to the current figure of 93,000. At the same time, employment is rising.

Going back a little further, we see that, over the past 10 years, manufacturing has increased by 7.1 per cent. In the rest of the United Kingdom, it has, I am afraid to say, fallen by 26 per cent. Over the same 10-year period, construction has increased by 10 per cent. in Wales—more than three times better than the figures for Britain as a whole.

Mr. Richards

Will my hon. Friend give way?

Mr. Jones

No. I am sorry, but I do not have the time to give way any more.

The hon. Member for Caerphilly ignores LG and the realities of its inward investment to the Cardiff and Newport area. In his blithe ignorance of what is going on, he does a cruel injustice to Wales. What of everybody who is working so hard in team Wales? They are faced with his alternative of wanting to centralise. He did not make it clear what he would do, but there were references again to the super-quango, bringing together the DBRW, the industry department, the Land Authority for Wales and the local enterprise agencies. The hon. Gentleman is an anti-devolutionist at heart. He would centralise and create a lumbering carthorse again, taking the WDA further back than it was when the right hon. and learned Member for Aberavon set it up.

There is another Welshman who had the right words to describe the Opposition Front Bench—the former right hon. Member for Islwyn, Mr. Kinnock. His comment is the comment of all of us: Wales deserves better than the Labour party.

Question put and agreed to.

Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 61 (Committal of Bills).