Welsh Development Agency

HC Deb 18 June 1997 vol 296 cc227-51

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Jon Owen Jones.]

9.34 am

Mr. Dafydd Wigley (Caernarfon)

I am grateful for this opportunity early in the new Parliament to put a focus on one of the key issues that arose from the general election—the failure of the Government, and the Government agencies, to overcome the job shortage in many parts of Wales.

I shall focus on the industrial location strategy of the Welsh Development Agency because the WDA is the main vehicle for delivering new job opportunities in Wales and because its strategy is laid down for it by the Welsh Office. Clearly, with a change of Government, there will now be fresh consideration given to a strategy that is appropriate in the light of the new Government's objectives. No doubt, discussion is currently going on between the Welsh Office and the WDA to that end. My objective in this debate is to spell out what we feel should be that strategy; I hope also to elicit from the Minister what is the Government's thinking on a matter that was central to Labour's general election manifesto.

I make it clear from the outset that I do not come to this debate carrying any baggage of hostility towards the WDA. I have long had an attachment to the agency; I can even claim paternity to it—or at least a share in the paternity. Back in 1970s, Professor Phil Williams and I published an economic plan for Wales in which a national development authority had a central role. I was on the Standing Committee in 1975 when the previous Labour Government brought forward the legislation that set up the agency.

I am the first to acknowledge that, in the 22 years since its creation, the WDA has played a significant role in the economic regeneration of Wales. It has given Wales a vehicle for fulfilling policies of which the regions of England have been understandably envious. It has also demonstrated how a national all-Wales body, working specifically for Wales, can have a direct, beneficial effect on the life and well-being of the people of Wales.

Having said that, I must acknowledge that—especially in recent years—there have been aspects of the WDA's policies with which I have disagreed, although such areas of disagreement have arisen primarily from the strategy laid down by the Welsh Office under the previous Government.

Let me first give some background to the economic context within which the WDA works and seeks to meet its strategic objectives. Wales has experienced a massive change in its employment structure over the past generation. Industries that used to be the backbone of the Welsh economy, such as coal mining and slate quarrying, have been virtually wiped out. Those industries often existed in communities that had almost no other source of employment. We have seen the rundown of agriculture as a source of full-time employment, and the farm labourer has become an almost extinct species. The sea fishing industry, once a major employer along the western seaboard of Wales, has dwindled to a shadow of its former self and in other areas the steel industry has been rationalised, resulting in its employment capacity being a fraction of what it was a generation ago.

We are, therefore, faced with serious endemic problems of long-term unemployment and a lack of job opportunities for those leaving school in both old industrial centres and rural areas. The loss of well-paid jobs in many of those industries has led to a severe decline in the level of personal incomes, so that gross domestic product per head in Wales has fallen from 92 per cent. to only 83 per cent. of the United Kingdom average. Part of that decline is due to the fact that where replacement jobs have been secured, they are often low skilled and sometimes part time—26 per cent. of the Welsh work force is employed in part-time work, which is the highest proportion in the European Union.

In the past decade, there has been a noticeable drop in average weekly earnings in Wales compared with those in the UK. Between 1985 and 1995, average weekly earnings of males dropped from 93.1 per cent. of the British average to 88.5 per cent; and earnings of females from 94 to 91.5 per cent. In the old county of Gwynedd, the drop was far worse: by 1995, Gwynedd males were earning only 83.8 per cent. of the British average and Gwynedd females only 86.1 per cent.

In 1995, men in Wales earned £43 a week less than the British average and women £22 less. To increase those earning levels must become a strategic objective of the WDA and that must be a factor in its industrial location decisions. Activity rates among men have fallen from 91.5 per cent. in 1971 to 81.2 per cent. by 1991. Those factors of low activity rates, high unemployment, low wages and a high level of part-time working have created pockets of acute poverty and deprivation.

That, of course, is not the entire picture for Wales. There are some areas where there has been considerable success in economic regeneration. Along the M4 corridor in southern Gwent and eastern Glamorgan, and along the A55 corridor in Deeside running through into the Wrecsam area, there has been a significant influx of new industry, not least by way of inward investment from overseas. About 50 companies from Japan have set up in Wales, along with many companies from the United States, and most recently we have heard of the immense LG project for Newport. We congratulate the WDA on its success in that area.

It is against that background that we must consider the appropriateness of the job strategy and location strategy of the WDA. That must be considered in geographic, sectoral and structural terms.

Until recently, the guidelines laid down by the Welsh Office for the activities of the Welsh Development Agency accepted that up to 80 per cent. of the new jobs created in or attracted to Wales should be in two target areas, representing less than 10 per cent. of the land area. of Wales. Those two areas were, first, around the M4 corridor in southern Gwent and eastern Glamorgan; and, secondly, around the A55 corridor in Fflintshire and Wrecsham. It is worth noting that three of the four new counties with the lowest unemployment in Wales are Monmouth, Wrecsam and Fflintshire, all with about 5 per cent. unemployment, and all are counties that coincide with those target areas.

Mr. David Hanson (Delyn)

Does the hon. Gentleman accept that, irrespective of that point, there is still a high inactivity rate among many people in Fflintshire, Wrecsam and the surrounding areas, and that many people are off the unemployment register and have become long-term inactive for a range of reasons, not least the closure of the pit in my constituency?

Mr. Wigley

I shall shortly discuss the need to get accurate local figures, which were, of course, distorted considerably during the previous Government's term of office.

The WDA strategy defined as acceptable a situation where as few as 20 per cent. of the new jobs should come to the rest of Wales—90 per cent. of the land area of Wales—despite the fact that two thirds of unemployed people in Wales live outside the two target areas.

Mr. Donald Anderson (Swansea, East)

Is it not an odd proposition that the greatest effort has been made where the need is least and where the locational advantages are the greatest in Wales, which adds to the imbalances within the Principality?

Mr. Wigley

That is the thrust of the argument that I am trying to develop; I accept the hon. Gentleman's point.

Between 1993 and 1996, a total of 134 manufacturing projects in Wales were offered regional selective assistance. Only five of those were in Gwynedd and only seven in Dyfed. That bears out the point that the hon. Member for Swansea, East (Mr. Anderson) made. That was a wholly unacceptable strategy, whereby Conservative Secretaries of State consigned countless thousands of unemployed people, and especially young unemployed people, to the economic scrap heap. As a result of the failure to establish a strategy and policy that would secure jobs within reasonable travelling distances of their homes—in north-west Wales, in south-west Wales and in the western industrial valleys of Glamorgan—those people have missed out severely.

The more cynical in our midst in Wales suggested that the Tory Government were deliberately using the Welsh Office industrial development budget to create a massive number of new job opportunities in Deeside in the north-east to try to meet the unemployment problems of Liverpool, and in Newport in the south-east to contribute to meeting the needs of Bristol. I readily accept that both those areas undoubtedly have their problems, but it is totally unacceptable that the budget of the Welsh Office should be used to solve their problems.

That deliberate policy of giving priority to securing new jobs in those parts of Wales which, because of geography and transport, were the easiest areas in which to secure employment, as the hon. Member for Swansea, East said, was a cynical betrayal of those areas of Wales where the challenge was that much greater and which required that much more effort to crack the problem. It has led to seething anger in those areas, because people feel that they have been abandoned by the Department of State that was supposed to safeguard their interests—the Welsh Office, which determined the strategy within which the WDA operates. If ever there was an example of why both the Welsh Office and the Welsh Development Agency should be made answerable to a directly elected Parliament of the people of Wales, this is it.

During the last few desultory months of the 18 years of Tory rule, as the last Secretary of State sat in his Welsh Office bunker, awaiting his party's richly deserved annihilation in Wales, there was a deathbed pang of conscience. On 19 March 1997, the Secretary of State adjusted the target figures, so that 50 per cent. of the new jobs might go to the two target areas and the other 50 per cent. should be secured for the other 90 per cent. of the land area of Wales, which includes most of the areas of high unemployment and deprivation. However, in adjusting the Welsh Office strategy for the WDA in that way, no indication was given of how those targets should be achieved.

There is, however, one intriguing sentence in the new guidelines which states that the WDA is expected to recognise, within the United Kingdom and European Union limits, the extra costs of locating in areas outside the eastern M4 and A55 corridors". What does that mean? Does it mean that the WDA can make grants to compensate for geographic disadvantage? If so, by what mechanism and from where is the additional cash to be found? I suggest that the cash found should be ring fenced in the same way as money was ring fenced for the LG project. Money should be ring fenced for the needs of south-west and north-west Wales and for the western industrial valleys.

One of the answers given by the Welsh Development Agency and the Welsh Office in justifying their former strategy has been that many of the footloose international companies, when considering coming to Wales, stipulate that they want to be in one or other of those two corners of Wales and that in trying to persuade them to come to a more westerly part, the WDA might risk losing investment in its entirety. That is, no doubt, because so many of the inward investment projects are manufacturing to sell their products in the main markets of continental Europe and, therefore, want to be strategically located to take advantage of road, rail and air links to continental Europe. It is worth pointing out to little Englanders on both sides of the Chamber that it would be disastrous for the economic regeneration of Wales if we were to withdraw from the European Union.

If attracting industrial projects to more westerly locations than Newport or Wrecsam is impossible for the UK Government, how is it that the Irish Government have succeeded in creating 10 times more new jobs in Ireland in the past five years than the UK Government have succeeded in creating in Wales? Ireland is divided by greater distances and a maritime crossing from the main markets of those companies, but, if the circumstances offered to companies are right, industries can be established and located in such locations.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

I am closely following the hon. Gentleman's argument.

Is it not a fact that most of these large investments are basically assembly plants? Does not the future lie in creating supplier networks out to the communities that he and I are interested in? Those are the role, function and targets that the WDA and Welsh Office are now aiming for. Supplier networks for those large assembly plants that lie along the M4 could be our job future.

Mr. Wigley

Yes, I saw the report in the Western Mail yesterday. It is hoped that about half the supplier companies to LG might be in Wales. That is good news and needs emphasising.

I suggest to the House, however, that the Welsh Office and the WDA have accepted far too easily the received wisdom that Newport and Wrecsam are ideally located to sell to Dusseldorf or Milan, whereas Holyhead, Caernarfon, Pwllheli, Ffestiniog, Ammanford or Aberdare are impossibly remote for such a purpose. That is nonsense and reflects much more on the mentality of those who drew up the strategy than it does on manufacturing industry. A small company located in Llanberis in my constituency manufactures medical diagnostic kits, 96 per cent. of which are exported. Llanberis is, in fact, closer in time to Manchester airport than Oxford is to Heathrow.

I would suggest that, with unemployment rates of 14 per cent. in Holyhead and south Pembroke, 12 per cent. in Aberdare and 10 per cent. in Caernarfon and Llanelli, the time has come for a fundamental change in the strategy laid down on the Welsh Development Agency.

It is time for 80 per cent. of the new jobs towards which the WDA or the Welsh Office provide public funding to be located outside the two target areas that have done so well in the past. There should be specific targets for securing new jobs in the western part of Wales, the old counties of Gwynedd and Dyfed, and in the western parts of the coalfield area.

Mr. Ieuan Wyn Jones (Ynys Môn)

My hon. Friend makes a very persuasive case about the need to attract jobs into west Wales. I am sure that he would agree that we should also underpin the indigenous industries in those parts of Wales. One of the great dangers that those industries face is that the strategy adopted by the previous Government was to force the Welsh Development Agency to sell its units, many of which are rented by local businesses. They may well be sold over their heads, and they may be charged rentals that they cannot afford if major companies move in. Does my hon. Friend agree that the Welsh Office should address that issue?

Mr. Wigley

Yes. I was just coming to that.

One aspect of the WDA's policy that I should like to highlight concerns the availability of industrial land and buildings. Virtually no strategic sites are available in Gwynedd for inward investment, although I understand that the WDA may be in discussion with the county council on one possibility near Bangor, in the constituency of the hon. Member for Conwy (Mrs. Williams). Why should those sites not already be earmarked? Furthermore, there are no WDA-owned industrial estates in Pwllheli and the Llyn peninsula. In view of that failing, I must ask how the WDA is meeting its obligation to unemployed people and the young jobseekers of Pwllheli and western Dwyfor.

The rents that have been charged in the Cibyn industrial estate in Caernarfon for units ranging between 1,000 sq ft and 3,000 sq ft range between £3.15 and £3.50 per sq ft. The rent being charged for similarly sized units in Amlwch, in the constituency of my hon. Friend the Member for Ynys Mon (Mr. Jones), is £2.50 per sq ft. Amlwch has the advantage of full development area status, which we in Caernarfon do not have. That underlines the need to review these rent levels.

If, in the past, Wales has been regarded as remote from the centres of population, trade and commerce, the advent of modern technology and telecommunications makes such a concept much less relevant. There is no reason why telemarketing call centres and computer-based work cannot take place in the most remote Welsh communities, with the essential product—information transmitted by land line—being sent at next to no cost to any urban centre in Europe or the world. Given the natural verbal skills of the Welsh people, this is perhaps a natural industry to grow in Wales.

I am conscious that the Welsh Development Agency has recognised the need to create a state of the art fibre-optic cabling of Wales as the basis for developing information industries throughout our country. A bid was made for millennium projects support for such an investment a short while ago. Given that the WDA saw that as a priority, and recognised that such an investment would be immensely expensive but also beneficial to the Welsh economy, the question for the Welsh Office now is: how does it intend to take that agenda forward? I doubt whether the Welsh Office budget is likely to have that much money—we are talking about hundreds of millions of pounds. In that case, the investment must be secured from elsewhere.

If we look around for the industrial concerns that may have that sort of money at their disposal, and an active interest in cabling up Wales, we find that there are relatively few contenders. Cable television companies might be interested, but the danger is that they will want only the rich pickings of the populous areas, leaving mid-Wales, north-west Wales and south-west Wales out in the cold. It would be outrageous if the WDA were party to an agreement that discriminated against those areas.

If no cable company were willing to take on such a broad responsibility, might it be possible to persuade British Telecom to undertake it, recognising, of course, that it would need something in return? Might that return emanate from a liberalising of the restrictions on what British Telecom can convey on a upgraded network of telephone lines, which, after all, go into every household? Optic cable links can carry myriad communication elements into every house, including multi-channel television links, interactive commercial links, the information highway and an embryonic element of a diffused and decentralised data processing structure. That, of itself, would enhance the potential of people to work from their own homes; and in an age when we must all be more environmentally conscious, it would minimise the unnecessary transportation of people and products.

The WDA has identified the development of this infrastructure; the challenge now is to take it forward because of its importance to the Welsh economy. Today, we want to know the attitude of the new Government to such developments. What guidelines are they giving the WDA? This is an urgent issue because key decisions are about to be taken and there are specific steps that the Welsh Office and other Government Departments must take to help the countless thousands who are unemployed in Wales.

Mrs. Betty Williams (Conwy)

Does the hon. Gentleman share my welcome for the Secretary of State's announcement two weeks ago of investment proposals for west and north Wales? Would he further agree that one reason why these areas have fallen into neglect has been the decline in employment in the slate quarries? I think in particular of Bethesda in the Dyffryn Ogwen area, where the trend has been one of gradual decline. Successive Governments have not given those problem areas the attention that they deserve, so the unemployment figures have steadily worsened.

Mr. Wigley

Yes, indeed. The hon. Lady represents an area similar to mine, so she is well aware of the problems. I accept her points.

We need to be clear about the size of the unemployment problem. The official figure for Wales is about 80,000, but I suspect that the true number is between two and three times as high—the labour force survey certainly suggests that.

We need a review of the workings of the Industry Act 1982, because many of the areas formerly designated for industrial development have now done very well indeed. We should not use crude unemployment figures for the purpose; we should factor in activity rate figures, the age structure of the work force, youth unemployment, outward migration to seek work and incomes per head. Consideration should also be given to how the UK industrial development map would best accord with the prospects of maximising help from the European Union. I stake a claim today that the Government should seek objective 1 status for the old counties of Gwynedd and Dyfed within the European Union; a review is currently under way.

There also needs to be a change in emphasis in the WDA between the support given to large companies to come and locate in Wales and the lack of support for small indigenous companies when they want to expand—the very point made by my hon. Friend the Member for Ynys Mon (Mr. Jones). Time after time, I have heard of small businesses in Wales asking the WDA for assistance but being given no practical help. There is often an initial indication of interest, but then it fizzles out and no cash materialises. It is immensely frustrating for small companies in Wales to hear of millions of pounds being provided through the Welsh Office or the WDA for inward investment projects—sometimes at a cost of £30,000 or £40,000 a job—when they cannot get a brass farthing towards creating a handful of much-needed jobs in some of our scattered communities.

Mr. Cynog Dafis (Ceredigion)

It is clear that a key element in any strategy for revitalising rural Wales is value addition to our food products. There is a food centre at Horeb in my constituency, established by the local county council, which has applied to the DTI for a grant to set up as a teaching business company. The sum requested is quite small—about £250,000—but the money has not been forthcoming.

Furthermore, the regulations governing the establishment of teaching business companies usually apply to large industrial systems only. Is not that a good example of how we need both the right policies in place and relatively small sums of money to set up enterprises that would be of key importance not just to Ceredigion but to the whole of Wales, as part of a Welsh food strategy?

Mr. Wigley

My hon. Friend touches on an important point. The Development Board for Rural Wales operates in rural and mid-Wales, but in areas such as Dwyfor, Preseli or Dinefwr, which fall within the WDA's remit, there needs to be a more integrated strategy serving the needs of rural Wales.

In developing its strategy, the WDA must, of necessity, be conscious of the resources that we have in Wales. One of those resources is the produce of our agricultural sector. In terms of meat and dairy products, we have a tremendous resource, but it is often too poorly marketed, and the added value in the food chain takes place outside Wales. We look with envy at how Ireland has succeeded in building on its agricultural and food production base. That must surely be an area in which the WDA more positively helps to facilitate development.

We also have the resource of our national University of Wales and of the research undertaken by its scientific and technological departments. Why on earth does such highly regarded research work not lead to more practical benefits, in terms of applied technology and jobs? The contrast between the direct spin-offs—jobs—created around Cambridge in England or Boston in the United States and the lack of such spin-offs in Wales is staggering. Key people in our university often take an academic delight in boasting that their work is not necessarily of relevance to Wales but is of relevance to mankind. That is all well and good, but they should remember that their budgets come from the Welsh expenditure block, and it is not unreasonable that the people of Wales should look to its university to bring back more direct benefits to the Welsh economy.

I mentioned earlier Ireland's success in attracting new jobs. We are, of course, aware that GDP per head in the Irish Republic is not just greater than that of Wales but has overtaken the UK's. We in Wales must learn the lesson from Ireland that it is important to create a skilled work force. The Irish have put substantial resources into education, to ensure that the industrial and commercial skills are there for potential employers. There has been a tragic failure to do that in Wales and throughout the UK. As a result—incredibly—there are high pockets of unemployment in Wales side by side with industrialists who cannot find adequately trained labour.

A strategic consideration, therefore, must be the improved skilling of the Welsh work force; the failure of the TECs in Wales in this context must be brought into the equation. There may be a case for integrating them with the WDA—and integrating part of their work with local authorities—so that the feedback from employers in Wales finds its way directly into the organisation of training and reskilling the work force. Clearly, there must also be a much closer liaison between education and training if this problem is to be solved.

On the need for reskilling our work force, the Government must surely be aware of the academic research that has been undertaken in Cardiff, based on primary research in Scotland, showing the benefit to the economy from investing in education, which virtually pays for itself. That is of direct relevance to the debate.

I was glad that the previous Government made some progress with regard to establishing training centres in Gwent and Bridgend, although I was sorry that no Welsh educational institution bid successfully for the Bridgend contract, and that we had to go to Swindon to find people who could take on the contract.

Do the Welsh Office and the Welsh Development Agency seriously believe that a training centre in Bridgend will serve the needs of unemployed people in Pembroke Dock or Aberystwyth, let alone Porthmadog, Bangor or Penygroeis? If it is their intention that such a centre should serve the whole of Wales, will travelling and residential costs be reimbursed? If, as I suspect, that is not the intention, can we have training centres nearer the people in Wales?

Another target sector that the WDA has identified, but which is being developed sporadically, is the television and film sector. We have a significant infrastructure in film production in Wales already, but I often wonder whether that base has been provided for the development of existing opportunities. One thinks particularly of the film development funds in Scotland, Northern Ireland and the Irish Republic. We need something similar if we are to take the maximum opportunity in Wales.

A further sector with a strong track record is marine biology in Bangor, yet we do not get the jobs arising from that.

Because of pressure of time and to allow other hon. Members to speak, I shall curtail my remarks. The work of the WDA must be seen in the context of the resources available to it. Its budget has been severely eroded over recent years. During the Redwood era, the WDA was specifically required to sell off the family silver in order to maintain its statutory responsibilities. That was an outrageous situation and must never be allowed to recur.

The way in which the WDA was starved of cash in terms of grant in aid during the Redwood era is staggering. In 1991–92, the grant in aid stood at £87.5 million. By 1994–95, it was down to £50 million and by 1995–96, it was down to £29.2 million. The WDA had to make up the shortfall by selling its capital assets, but, despite its doing that, the cuts had a direct material effect on the total expenditure of the WDA, which fell from £165 million in 1992–93 to £130 million in 1995–96.

It is true that additional resources have been put in recently, not least because of the need to ensure that money was available for the LG project. The net result is that the revised budget for 1997–98 stands at £152 million, which is below the level of the 1992–93 budget. When one takes into account the fact that some of that money is earmarked for the LG project, it becomes clear that the resources available for the rest of Wales have fallen significantly in real terms.

That is a direct consequence of the dogmatic approach of the previous Government. The incoming Labour Government must give a commitment to avoiding that and to providing adequate funding for the WDA to do its job properly.

We have recently heard about the appointment of the new chief executive, Mr. Brian Willott, and we wish him well in his responsibilities. It is a pleasant change to have a chief executive whose roots are in Wales and who is also prepared to live in Wales.

The WDA has a challenging time ahead. It will face changes in its democratic answerability and, quite possibly, in its structure and remit. All those will develop over the coming months. What is needed now is a clear-cut and decisive strategy geared to providing a fair range of jobs in required numbers within reasonable travelling distance of every community in Wales.

The WDA will need hands-on leadership, from within the Welsh Office and, in due course, from the Welsh Assembly and from its own senior executives. Its success or failure will be measured in terms of the increase in sustainable employment opportunities and in the standard of living and the quality of life in Wales. Its success or failure will be felt most of all by the people of Wales.

From the start, getting the strategy for the WDA right must be a priority for Welsh Office Ministers. We wish the Minister and his team well in their work, as we do the staff of the WDA. Labour was elected overwhelmingly in Wales on a programme of getting jobs for the people. It is now time for the Government to deliver. The WDA is the vehicle for facilitating that delivery. It is time to make it happen, and we hope that that is what the Welsh Office intends to do.

10.3 am

Ms Jackie Lawrence (Preseli Pembrokeshire)

I am grateful for the opportunity to make my maiden speech in this debate on the industrial location policy of the Welsh Development Agency.

The new seat of Preseli Pembrokeshire was created, in part, from a small section of the previous Ceredigion and Pembroke, North seat, which was ably represented in the House by Cynog Dafis, the first Green party Member of Parliament in the United Kingdom, who has played a prominent role in bringing environmental issues to the fore in debate both here and in west Wales.

The major part of Preseli was inherited from the former Pembroke seat previously represented by my Labour colleague, Nick Ainger, who has shifted slightly east and now represents West Carmarthen and South Pembrokeshire. My hon. Friend was the third Nick in a row to represent Pembrokeshire at Westminster. In 1992, he defeated the Conservative Nicholas Bennett, who had followed the former Secretary of State for Wales, Nicholas Edwards, on his retirement from the Commons in 1987.

During the five years since 1992, Nick Ainger has earned a reputation as an excellent and hard-working constituency Member of Parliament with a great interest in environmental issues. I have great pleasure in following tradition and paying tribute to his record as my predecessor in the House. His maiden speech referred to the importance of pollution control measures in the burning of fossil fuels, notably proposals to import and burn orimulsion at Pembroke power station—an issue which is on-going and affects his constituency, in which the power station is situated, but has also raised concerns throughout west Wales and further afield.

The environment, together with job creation throughout all sectors of our economy, are without doubt the two most important issues in Preseli Pembrokeshire. The two issues are not separate, but closely interlinked.

Pembrokeshire is a beautiful county, affectionately known by those who live there as Wales's premier county, and for good reason. We have probably the most beautiful coastline in the entire United Kingdom—a fact exemplified by the existence of the Pembrokeshire Coast national park, which was created to protect and conserve that coastline from increasing threats: threats from land use development, as well as the inevitable ecological and environmental pressures from the increasing number of tourists who come to share and enjoy our beautiful county.

Our offshore islands of Skomer, Skokholm and Grassholm are internationally recognised nature reserves. The seas around the island of Skomer are a marine nature reserve, one of only three in the whole of the UK. That designation was awarded in 1990 in recognition of that unique and sensitive marine environment. It is hoped that it will soon be matched by designation as a European special area of conservation.

That will mean that the highest environmental standards are required for any development around our coast, which is vital to protect the livelihood of the many local people who rely on the agriculture, tourism and fishing industries. Insistence on the highest possible standards for development is vital also to restore the balance between the needs of the petro-chemical industry based around Milford Haven waterway and the other sectors of our economy that I have mentioned.

Much as I should like to extol further the virtues of Pembrokeshire, I am conscious that this is an Adjournment debate and that the time available for Members to contribute is limited. I shall outline the problems faced by our local economy and the reason why an effective strategy for regional development is so important to us in Pembrokeshire.

As I said, anyone visiting Pembrokeshire almost always recognises that it is a beautiful place in which to live. However, that beauty masks some serious problems which are just as severe as and, in some cases, worse than those in many more obviously deprived parts of Wales or the UK as a whole.

The population of the administrative county of Pembrokeshire is about 110,000—a figure which census information shows has grown significantly in recent years. It is, however, an aging population. For example, there was a fall of 11.65 per cent. in the number of males in the age group 16 to 24 between 1981 and 1991, compared to a fall of 9 per cent. in Wales overall. Over the same 10-year period, the number of males aged over 65 increased by 27.6 per cent., compared with a Welsh figure of 15.1 per cent. Thus, we have a greater migration of our young people out of the county, but a substantially greater influx of people over retirement age.

From my 20 years living in Pembrokeshire, I know that young people who have grown up in the county would generally like to stay, and leave only because work opportunities are simply not available for them. They face the choice of moving elsewhere to find work, or remaining with no prospect of work, or prospects of wage rates as low as £2.20 an hour or even less. Those figures were outlined by Cardiff business school for west Wales in studies from 1996.

Unemployment figures have been consistently high since the late 1970s and are some of the worst in the United Kingdom. Long-term unemployment increased significantly between 1995 and 1996, despite numerous changes to the way in which the former Government calculated the "official" figures. A recent study commissioned by Pembrokeshire county council estimated that, in 1994, Pembrokeshire had a gross domestic product per head of population of just under £7,000—less than 72 per cent. of the United Kingdom average. That figure had dropped from 84 per cent. in 1984.

Fewer than 10 per cent. of those employed in Pembrokeshire are involved in manufacturing activities, compared with 20 per cent. for Wales as a whole. Between 1981 and 1991, manufacturing industries in Pembrokeshire declined by 12.7 per cent. compared with a 7.8 per cent. decline for Wales as a whole. Our mainstay industries of agriculture, tourism, defence establishments and oil have been hit badly. The former Government's closure of defence establishments at RAF Brawdy, Milford mine depot and Royal Naval armaments depot Trecwn led to the loss of hundreds of direct jobs and millions of pounds from our local economy.

The impact of bovine spongiform encephalopathy has been devastating for our local farmers; a 1996 study estimated an annual loss of £34 million from the south-west Wales economy as a direct result. In November last year, estimates showed that the Sea Empress oil spillage had cost the tourism and fishing industries about £32.7 million. The most recent blow to the people of west Wales is the news that Gulf oil refinery faces possible closure, with the loss of more than 200 direct jobs and a further 2:1 ratio of indirect jobs.

The whole operation of the Welsh Development Agency, including its industrial locations policy, is of immediate interest and concern to my constituents who are desperate for job opportunities and for investment. Earlier this year, before the general election, the former Secretary of State for Wales, the right hon. Member for Richmond, Yorks (Mr. Hague), is reported to have instructed the WDA to point any inward investment to areas of Wales outside the M4 and A55 corridors. Such an instruction should not have been necessary, as the Welsh Development Agency's responsibility is clearly to all of Wales, and not just the south and north-east corners. In fact, the opening paragraph of the chairman's statement in the 1995–96 annual report of the WDA assures us that the WDA has continued to pursue its mission to promote Wales as the best business climate in Europe by assisting in the growth of quality jobs and competitive industry for the benefit of all the people of Wales. Unfortunately, we have seen little evidence of that in Pembrokeshire.

Wales requires an economic powerhouse that considers the needs of all areas of Wales—east, west, north, south, urban or rural—without any lines of demarcation. That body would combine the best elements of the WDA with the best elements of the Development Board for Rural Wales in order to cater for the needs of both urban and rural areas of Wales. It should be able to apply the strategy that is most appropriate for the area in which it is working, instead of one strategy or the other in the selective style of the previous Administration.

I am sure that the Under-Secretary of State for Wales, my hon. Friend the Member for Neath (Mr. Hain), who represents a Welsh constituency, will be acutely aware of the frustrations of the people of Wales not just with the industrial locations policy of the WDA, but with the lack of accountability of that organisation. For that reason, I welcome the referendum planned for later this year when the people of Wales will be given an opportunity to say yes to the restoration of democracy within Wales. The expertise of 60 local people in an assembly will ensure that instructions such as that given by the former Secretary of State to the WDA to "go west" are no longer necessary.

Local people know what local people need. The implementation of an element of proportional representation in elections to the Assembly will ensure that people from all localities in Wales have an input—whether the issue is economic development and regeneration, health or education and skills training. The Assembly will not detract from the work of hon. Members in this place or of local government in Wales. It will enhance and complement both and, unlike unaccountable quangos, it will restore the democratic deficit that has increased over the past 18 years—by all accounts, at a cost that is considerably less than that of quangos. It will deliver reduced costs, with democracy for the people of Wales as a bonus.

For the sake of the economic future of my constituency and in order to meet the needs of other areas such as Pembrokeshire that demonstrate problems of both urban and rural deprivation, I am sure that my hon. Friend the Under-Secretary will consider ways of responding effectively to our needs.

10.14 am

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)

I congratulate the hon. Member for Preseli Pembrokeshire (Ms Lawrence) honestly and sincerely on her maiden speech, which was thoughtful and thought provoking. I am confident that she will prove an excellent Member of Parliament and that the people of Preseli Pembrokeshire will be represented very well.

I also congratulate my hon. Friend the Member for Caernarfon (Mr. Wigley) on securing time for this debate on a matter that is important for the whole of Wales. In the time available, I shall concentrate on the rural parts of Wales. My hon. Friend has assiduously tackled deficiencies in the Welsh Development Agency over the years. He has offered constructive criticism, rather than simply banging away without offering any helpful suggestions. I am sure that the recent change in direction by the agency and the Welsh Office is due in no small measure to my hon. Friend's efforts.

The Welsh Development Agency's success in attracting high-profile new investment, such as LG in Newport, is most welcome. However, the problems of rural areas present a far more difficult scenario. In effect, a single huge job creator in a populous area will sweep away an enormous percentage of the unemployment figures at a stroke. However, the economy in the other 80 per cent. of Wales will remain utterly reliant on the small and medium-sized sector businesses, without which the economy would collapse. It follows, therefore, that it is far more difficult to attract the medium-sized sector to the pockets of unemployment that are prevalent in many parts of rural Wales.

The situation has been exacerbated of late by the scaledown of labour in the agricultural industry. A particularly worrying aspect is the rate of long-term youth unemployed, which is as high as 33 per cent. in some parts of rural Wales. Addressing that problem must be a priority if we are to build a healthy and viable society in Wales.

It is correct to say that the Welsh economy generally is depressed, with gross domestic product per head at about 83 per cent. of the United Kingdom average, as the hon. Member for Preseli Pembrokeshire said. Low wages are a feature in many industries. Tourism, which is one of the main employers in Wales, remains largely seasonal despite the efforts of many in the industry to encourage expansion into the so-called "shoulder areas" of the year. Wales must also deal with an inferior transport network—indeed, it is hardly a network at all.

Rural Wales is characterised by a population comprising a high proportion of elderly people with a lower proportion of under-45s. Population growth in rural Wales is due largely to the in-migration of mainly elderly people and, as a consequence, service delivery is more costly per head. In addition, the settlement pattern of rural Wales is under threat. Characteristically, Wales has always had a network of small market towns which frequently serve a catchment area of many miles. In the past five years, we have seen a huge growth in the number of large stores—such as supermarkets and hypermarkets—in those towns. They are seeing off the smaller retailers, one by one.

I was among those who called consistently for policy planning guidance notes 6 and 13 to be introduced in Wales without delay. The Welsh Office, under the tenureship of the former Secretary of State, the right hon. Member for Wokingham (Mr. Redwood), sat on the documents for 12 months after they were introduced in England by the Department of the Environment. During that time, large retail outlets sprang up like mushrooms over huge swathes of rural Wales. We must now come to terms with the consequences of those events.

In seeking to address the particular problems associated with the economic and socio-economic planning for Wales, the Welsh Office should develop a rural strategy, which was so eloquently propounded by my hon. Friend and by the hon. Member for Preseli Pembrokeshire. I consider that we have lessons to learn from the English model, a rural affairs commission similar to that model might be part of the answer. The fact is that the problems of rural Wales are broad based. They never present one single answer, but beg several. A body that brings together all the problem areas and addresses them would be most welcome.

What I have just said will inevitably be taken as a criticism of the Development Board for Rural Wales, but, in truth, the board has performed fairly well within what many of us consider to be a far too limited remit. I recognise that the board has considerable expertise in encouraging growth in the rural economy, but its powers and obligations should be extended. There is no justification for cutting its budget, even if that means thousands of new jobs for the Newport area. I call on the Government to reinstate the board's budget and to extend its remit so that it is better able to fulfil its statutory purpose and obligation to assist in improving the economic and social welfare of the people in mid Wales. The recent market town initiative is most welcome, but I ask the Minister to look again at what the board can offer existing businesses to help them expand. That must be the key to any strategy. I believe that that offers far more potential even than attracting further inward investment. A thorough appraisal of ways in which to invigorate rural Wales and redress its further decline is long overdue.

We need improved public transport, and initiatives such as post buses are most welcome. Our rural post offices and shops are a vital resource. Although some recent rate relief was introduced, further initiatives must be sought. Capital grants must be introduced to assist businesses in rural areas. Support for all rural businesses, be they general stores, garages, public houses or whatever, should be considered, because they are key resources. Any business failure in those sectors inevitably has a serious knock-on effect throughout rural areas.

My hon. Friend the Member for Caernarfon referred to information technology and the need to cable up Wales. That is of paramount importance if Wales is to have a truly prosperous future. I believe that time is of the essence, as Wales has great potential for attracting telematic-based firms in rural areas.

One of the particular problems in rural Wales is the need to link up indigenous businesses. Due to the far sightedness of several individuals in my constituency there is a contract shop for connecting businesses. In the past, businesses typically had to import raw materials from the west midlands, but they now find that those same materials are available at a competitive rate within the constituency. Such an initiative is extremely important. I also echo what my hon. Friend said about the transport of goods and people.

We need to think carefully about encouraging real diversification in agriculture. If that means a relaxation of planning procedure, so be it. The national park within which I live must be a living, breathing and expanding area where the communities can live and prosper. We need to redouble our efforts to assist our market towns. Environmental improvements such as those undertaken by the WDA at Llanrwst and currently at Dolgellau are fine as far as they go, but we need to make it more attractive to people to start up in business. We need to remind people that rural Wales has some world market leaders within it. If they can succeed, a new business will also succeed. A far more radical and all-embracing policy is required so that all the key players in rural regeneration are singing from the same hymn sheet.

We have a wonderful quality of life in rural Wales. People must recognise our determination to ensure that businesses prosper. At the moment, I fear that that message is not getting through. I also fear that a drastic rethink is necessary to make Wales, in particular its rural areas, a haven for business start-ups and expansion.

I trust that when the Welsh Assembly is set up it will concentrate on the dire need to refocus and simplify the various efforts to achieve rural regeneration. I believe that the Assembly would be an excellent forum for that and a catalyst for true forward thinking about what is good for Wales.

10.24 am

Mr. Donald Anderson (Swansea, East)

What a happily consensual debate this has been. It is one in which people who represent different parts of Wales have sought to consider constructively its problems and propose solutions.

I congratulate the hon. Member for Caernarfon (Mr. Wigley) on his timely choice for debate because, at the start of a new Parliament, I believe that we are pushing at an open door. I know that when the Under-Secretary of State for Wales, my hon. Friend the Member for Neath (Mr. Hain), replies, he will fully understand the problems and will seek to address them constructively.

I also want to commend warmly the maiden speech of my hon. Friend the Member for Preseli Pembrokeshire (Ms Lawrence), which was a model of its kind. During the election campaign, I had the privilege of being twinned with Preseli, and my wife and I spent a happy two weeks there at the start of the campaign. I can certainly underscore what my hon. Friend said about the deprivation in her constituency. At one stage, I thought that there was a new candidate standing for election because of the number of boards displaying the name Halifax. That is some indication of the pressures that that constituency has faced due to a combination of factors associated with the oil industry, defence cuts, BSE and other problems that my hon. Friend described so graphically. I know that she will be a worthy successor not only to the hon. Member for Ceredigion (Mr. Dafis), who used to represent the northern part of her constituency, and my hon. Friend the Member for West Carmarthen and South Pembrokeshire (Mr. Ainger), who used to represent the major part of it.

The broad theme of all the contributions has been the same—yes, the Welsh Development Agency has had some successes, but there have also been some major failures. That cannot be laid at its door, because as its name implies, it is an agent and there is a principal behind it—the Welsh Office. By its policies, the Welsh Office has allowed the divide between the more prosperous and less prosperous areas of Wales to increase. In part, that is due to its failure to use the instruments that are available to it, but, worse than that, it has increased the locational advantages of south-east and north-east Wales. Effectively, its policy has been one of failure by omission to use certain instruments to attract developments to those areas that need it. Worse than that, by its policies it has increased the disadvantages of certain areas—disadvantages that have already been described.

I do not intend to ask the Under-Secretary to visit the areas in question because he knows them well. We were delighted by his appointment because he will be a powerful advocate within the Welsh Office for the type of policies that we have mentioned. My hon. Friend need only look at the relevant statistics gathered by the Welsh Office concerning population movement and other demographic factors such as the aging population, the number of young people who leave Wales and the decline in the population in certain areas. They speak for themselves.

The statistics on poverty show how earnings have declined. In my part of south-west Wales, for example, earnings used to be well above the Welsh average because of highly paid steel jobs at Port Talbot, but we are now well below it. That has been a feature of the economic development in south-west and north-west Wales. Other statistics, which relate to economic activity and the comparative financial advantages of certain areas, also speak for themselves. Under the Redwood era, as the hon. Member for Caernarfon has said, the figures were astonishing. Over three years, I think, the Cardiff Bay development corporation was given by way of grant in aid more than twice the budget that the Welsh Development Agency had for the rest of Wales.

Recently, for example, my city of Swansea was trying to attract a well-known consumer business to the city. Swansea was told, "Yes, we may be interested in coming, but you—the city and council—must match the subsidised price of, and other incentives at, Cardiff bay." The city does not have the resources to do that. Playing on the locational advantages of south-east Wales is causing enormous problems.

There is always a temptation in these debates to be parochial and to get a quick headline in the local newspaper. We must recognise, however, that Cardiff is the flagship. It is the capital of Wales and should be treated accordingly. We must recognise the locational advantages—

Mr. Martin Caton (Gower)

Does my hon. Friend agree that partnership between the Welsh Development Agency and other agencies, such as central Government, is essential if we are effectively to create the jobs that we need, especially in the Swansea area? Does my hon. Friend agree also that the WDA let us down extremely badly recently when, having promised us money for the Technium project, the science park at Penllergaer, which is just outside my hon. Friend's constituency, the money was pulled away, along with European money that was already guaranteed? That money went back to south-east Wales. Does my hon. Friend agree that that was regional policy in reverse?

Mr. Anderson

Yes, precisely that. My hon. Friend has produced an extremely good case study. As he says, it is regional policy in reverse. Money was pledged for the science park at Penllergaer. The project involved using the expertise of the local university in a way that the hon. Member for Caernarfon was suggesting. At the 11 th hour, however, the money was taken away by the WDA and assigned to the Cardiff area. It was an astonishing decision, and I hope that my hon. Friend will use it as a case study.

I am sure that my hon. Friend the Minister is aware of other examples in the Neath area of regional policy in reverse. Money goes to areas that are already relatively prosperous, its having been taken from areas that are not prosperous. That must be examined.

I adopt all that has been said about proportions. I understand very much what has been said about the deathbed repentance of the right hon. Member for Richmond, Yorks (Mr. Hague) a few months before the general election. The right hon. Gentleman saw the writing clearly on the wall. He said, "I have sinned. My policy has been wrong. Oh Lord, what I would like to do is as follows." That policy has been set down and I re-pose the question asked by the hon. Member for Caernarfon: will the Welsh Office pick up the challenge?

I am talking not of the theoretic undertakings of the previous Secretary of State but of a firm commitment that the investment targets for the WDA will be entirely recast with emphasis being given to the more deprived areas, such as areas west of the golden corridors of the A55 and M4. I want to see that broad commitment accepted in principle. Will my hon. Friend the Minister, in whom we have enormous confidence and think of as the advocate of the areas outside the more prosperous areas of Wales, give us an indication of the ways in which the Welsh Office intends to act? What instruments does it propose to use? I hope that my hon. Friend will underline that we have a new and reforming Government who are prepared to use all the available instruments for Wales as a whole.

10.34 am

Mr. Richard Livsey (Brecon and Radnorshire)

I congratulate the hon. Member for Preseli Pembrokeshire (Ms Lawrence) on making an excellent maiden speech. I have a considerable Pembroke ancestry in my blood and I appreciated what she said.

I am delighted that the hon. Member for Caernarfon (Mr. Wigley) has initiated the debate. I congratulate the Minister, the hon. Member for Neath (Mr. Hain), on his appointment as Parliamentary Under-Secretary of State. In constituency terms, he is my next-door neighbour.

I shall endeaivour to make a succinct speech in drawing attention to a number of areas of strategy that are important for the Welsh Development Agency and the Development Board for Rural Wales.

Various Secretaries of State have used the WDA as the engine of economic development in Wales. That is especially true of the tenure of Peter Walker, one of the better Conservative Secretaries of State, in the mid-1980s. The problem is that locational development has been unequal, with the result that there is a divide. There are many who say that there is little economic development in south Wales west of Bridgend, and there is some truth in that. There is a similar divide in north Wales along the A55.

We have a problem in the western valleys and we have enormous problems in south-west and north-west Wales. There are problems in rural areas. We are in danger, however, of forgetting mid-Wales, which is a huge chunk of the country. There is a great deal of discussion about what goes on in north Wales and south Wales, but the problems of mid-Wales are substantial. Those problems are undoubtedly the result of poor infrastructure. It is unpopular these days to talk about road developments and I would not advocate motorways running throughout Wales, but some improvements to the A470 and A483, especially in the Brecon and Radnor constituency, and in Powys in general, would improve north-south communications and assist economic development without wrecking the environment.

The difficulties facing the rural economy, with up to 25 per cent. of those involved depending on employment that is connected with agriculture, should not be underestimated. The problems of BSE and cuts in the green pound are taking farm incomes down to even lower levels.

We in mid-Wales are especially concerned about the Development Board for Rural Wales and the interface between the DBRW and the WDA in the location of investment. It is vital that the DBRW continues. There is a feeling in mid-Wales that perhaps its days are numbered. I ask the Minister to ensure that it continues. Indeed, it should be developed and given more powers. The problems facing agriculture should be addressed more clearly by the board. Legislation should be introduced to ensure that that happens.

The boundaries of the DBRW should be coterminous with the objective 5b area of the European Union in Wales. There may be a case for extending the board's boundaries.

Many upland farms in Wales produce incomes of £10,000 a year or less. With the green pound devaluation and the halving of ewe premiums, incomes could fall to £5,000 per family. There is a great need to provide employment in rural areas to ensure that members of farming families have alternative employment and an alternative income. That means that economic development must be pushed through to many of the more remote rural areas to ensure that employment opportunities exist.

With the advent of a Welsh Assembly, which we all hope and trust will be set up, there is a great need to make up the democratic deficit. We certainly need a rural strategy that includes not only the WDA but the DBRW, the farming unions and the rural counties of Wales—and not only a policy, but a Welsh Office Minister, devoted entirely to the needs of rural areas. Then there could be a coherent strategy for employment and location.

The needs of rural Wales are great and I should like the Minister to assure us that the DBRW will continue to develop, that its budget will not be cut, as has happened over the past 12 months, and that it will be given a fair deal.

10.39 am

The Parliamentary Under-Secretary of State for Wales (Mr. Peter Hain)

This has been what my hon. Friend the Member for Swansea, East (Mr. Anderson) appropriately described as a happily consensual debate. It is not hard to discover why, when we look at all the empty green Opposition Back Benches where Conservative Members would normally be sitting.

Mr. Nick Aingeir (West Carmarthen and South Pembrokeshire)

Where are they?

Mr. Hain

There are none left, because they were wiped out in Wales. That is why we can now, at last, tackle the real issues there, such as those raised by the hon. Member for Caernarfon (Mr. Wigley), whom I congratulate on securing the debate.

The hon. Gentleman raised several important issues that are right at the top of the Government's agenda for Wales. He also made some apt and sharp observations about the call centres and the need to ensure that a broad-band telecommunications network extends right across into north-west Wales. I shall write to him about that, and perhaps we can have a dialogue later.

I also congratulate my hon. Friend the Member for Preseli Pembrokeshire (Ms Lawrence) on an excellent maiden speech. In fact, I am somewhat jealous because I, as well as my hon. Friend the Member for Swansea, East, was her twin at the election—not that she needed our help, because she secured a bumper majority.

My hon. Friend spoke eloquently about her constituency, which is indeed beautiful. I have good reason to know that, having visited Skomer island with her on Sunday. However, as she eloquently explained, that beauty masks much unemployment and serious economic and structural problems, which the Government will seek to address, but which the Tory Government so shamefully neglected.

To be successful, the Welsh Development Agency needs a clear framework of strategic guidance from the Government, incorporating specific targets on job creation—the levering in of private sector investment, the reclamation of derelict land and the generation of new business for Welsh firms.

The WDA's industrial location policy is based on the economic case for promoting inward investment in Wales—and it has been most successful. The new Labour Government are determined to build on that success.

However, it has been easier to attract inward investors to the south-east and the north-east of Wales. I agree with the hon. Member for Caernarfon about that, and we now need to redress the balance between east and west Wales, and between the south and the north. We are also determined, as the hon. Gentleman said, to locate investment up the valleys. I agree with him there, too.

We must be clear that getting investors into Wales, rather than specifying exactly where in Wales they should go, is the absolute priority. There is stiff competition from other regions of Britain and we simply must offer the best package possible. I do not think that there will be any disagreement about that. If that means having 6,000 LG jobs in Newport, or not having them at all, I am sure that we would all agree that the answer is self-evident. So, while I am second to nobody in my desire to spread prosperity westwards off the M4 and A55 corridors, I also ask for hard-headed realism from everybody in that respect.

Mr. Caton

While my hon. Friend is talking about moving investment westwards, will he join me in recognising the excellent work done by the WDA as the lead partner in developing the Felindre old steelworks site in my constituency, close to the boundary with his own? That must now be one of the premier inward investment sites in Britain, and probably in the whole of Europe.

Mr. Hain

I agree with my hon. Friend, and I assure him that the Government are doing all that we can to ensure that we get major investment in what he rightly calls a premier site.

Foreign direct investment has been, and continues to be, a vital source of new employment opportunities. For this year, the agency has the target of creating or safeguarding 12,500 jobs, almost two thirds of which—8,000 jobs—will come from inward investment. Half those new jobs will be outside the eastern M4 and A55 corridors.

The benefits are not limited to jobs. Overseas companies have brought new skills, new technologies and new products that have been of wider benefit to the Welsh economy. For example, home-grown firms have entered the supply chains of the overseas companies, thus creating and safeguarding further jobs. The new arrivals have also been able to learn from our businesses, so the benefits have flowed both ways.

We must look forward as well as back. The Welsh economy today faces challenges very different from those of 20 years ago.

Mr. Wigley

Before the Minister moves on to the general forward-looking bit of his speech, may I underline what I said earlier about the guidelines issued by the Welsh Office on 19 March, which said: The targets set out below"— that is, with regard to how many of the jobs should be outside the two pockets— reflect this and the Agency is expected to recognise, within the UK and EC limits, the extra costs of locating in areas outside of the eastern M4 and A55 corridors. That is deliberately specified, to try to attract companies that would otherwise want to go to those pockets—although, of course, as the Minister said, we would not want to lose them altogether. Presumably, that means giving some inducements to meet the extra costs. Can the Minister tell the House what the mechanism for doing that will be?

Mr. Hain

We have a delicate balance to strike here, and we intend to use all the levers available both to the WDA and to the new Government to ensure that we get extra investment in north-west Wales. If the hon. Gentleman does not mind, I would rather leave it at that at the moment.

It is also vital—

Mr. Martiyn Jones (Clwyd, South)

I am sorry to spoil my hon. Friend's flow, but I have here some figures from the Library, obtained by my hon. Friend the Member for Vale of Clwyd (Mr. Ruane), which suggest that employment and inward investment in north-west Wales are not quite as bad as they were portrayed earlier. There were 1,500 jobs in Anglesey and Gwynedd, and 4,700 in Wrexham and Flintshire.

The real problem area seems to lie in between, in Denbighshire and Conwy, where only 400 jobs were created last year. That is probably something to do with whether the local authorities are submitting projects to the WDA. Will my hon. Friend say something about those problems?

Mr. Hain

My hon. Friend makes a valid point. The duty Government Whip, my hon. Friend the Member for Cardiff, Central (Mr. Jones), muttered to me earlier from a sedentary position that there was high unemployment in Cardiff, too. Indeed, there is, but we do not want to get into a competitive auction. We must seek to do the best for all parts of Wales, and I think that there will be unity on that subject among Members here today.

The issue, however, is the imbalance of inward investment. The hon. Member for Caernarfon made a valid case.

Dr. John Marek (Wrexham)

Can my hon. Friend consider the problems caused in north-east Wales. too? A Western Mail article by Darren Waters quotes the Secretary of State as commenting on the appointment of the new WDA chief executive, Mr. Willott, as follows: I want to see more jobs created in the Valleys and in the western and north-western parts of Wales. I want a new focus on the growth of existing businesses". Of course, that leaves out Cardiff, which is central to the concerns of the Government Whip, my hon. Friend the Member for Cardiff, Central, and leaves out north-east Wales, too.

The Secretary of State also left out the area described by my hon. Friend the Member for Clwyd, South (Mr. Jones), the Vale of Clwyd and the areas in between.

The Minister would do a service for all of us in Wales if he gave a categorical—

Mr. Deputy Speaker (Mr. Michael J. Martin)

Order. The hon. Gentleman should know better. He is making a speech, rather than an intervention.

Dr. Marek

May I finish my sentence, Mr. Deputy Speaker?

Mr. Deputy Speaker

The hon. Gentleman may go no further.

Mr. Hain

My hon. Friend the Member for Wrexham (Dr. Marek) speaks eloquently for his constituency. It is a matter not of taking jobs away from north-east Wales, but of ensuring that the imbalance is corrected and that we have an investment strategy that supports all parts of Wales. More jobs will be created in north-east Wales.

I am pleased to make an announcement that will be of particular interest to my hon. Friend the Member for Alyn and Deeside (Mr. Jones). Comtek Electronics and Lasar Cutting Services are bringing new jobs to north-east Wales. Their projects will create almost 100 new jobs, involve the investment of more than £2.5 million extra finance, and will be welcome additions to the communities in north-east Wales.

Mr. Barry Jones (Alyn and Deeside)

I welcome my hon. Friend to the Front Bench and congratulate him on that announcement and on the hard-headed, realistic way in which those jobs have been steered towards my constituency. They are much needed, because we have considerable long-term unemployment. We also have Deeside industrial park, which we need because we are still coping with the consequences of losing 8,000 steel jobs. I thank the Minister most sincerely.

Mr. Hain

I thank my hon. Friend. One of the reasons why such investment has come to north-east Wales is his diligence on behalf of his constituents.

It is vital that Welsh goods and services are competitive at home and abroad. With Wales exporting twice as much as it imports, it is truly part of the global economy, and we must pay particular attention to our key markets in Europe. Indeed, many United States, Japanese, European and now Korean companies chose to set up in Wales to service the European market. The Government's positive approach to Europe was triumphantly shown in the early hours of this morning by the outcome of the Amsterdam summit. That will provide existing and potential investors with further confidence that Wales is the right place from which to do business in Europe.

Inward investment is, therefore, an important component of the globalisation of the Welsh economy. However, we are pressing for a fairer distribution of inward investment throughout Wales, particularly in west and north-west Wales, but also in the south Wales valleys.

I underlined the importance that I attach to inward investment when I met Mr. Joseph Jun, the European President of LG, together with his colleagues, Mr. C. B. Kim and Mr. S. H. Kim, two days ago. I was impressed with their dynamism and they expressed confidence in the partnership approach that the new Labour Government and their agencies are providing. We agreed that we would like as many LG suppliers as possible to locate in Wales, up the valleys and northward and westward. That could bring a further 15,000 quality jobs. Of the 48 companies so far identified as suitable suppliers to LG, 19 are in south Wales, six are in west Wales and two in north Wales. There is potential for the whole of Wales, and we shall work hard to ensure that the Welsh Development Agency and the Welsh Office have the right strategy.

The Welsh Development Agency's strategic target for the number of jobs created or safeguarded outside the eastern M4 and A55 corridors was increased for 1997–98 from 20 to 50 per cent. of its overall target of 12,500 jobs. I strongly endorse that target.

The hon. Members for Meirionnydd Nant Conwy (Mr. Llwyd) and for Brecon and Radnorshire (Mr. Livsey) made powerful points about the state of the rural economy in Wales. The Government are conscious of that problem and I am sure that my right hon. Friend the Secretary of State would welcome discussions with hon. Members who represent rural areas in Wales to agree on a concerted approach. I agree with the hon. Member for Meirionnydd Nant Conwy about post offices, which play a vital role in rural communities.

Mr. Livsey

Will the Minister assure us that the Government's policy is the same as that stated by the present Secretary of State on 10 February? He said that he had no plans to abolish the Development Board for Rural Wales. Is that still the Government's policy?

Mr. Hain

We recognise that the Development Board for Rural Wales performs an important job, and we want to ensure that there remains a strong rural focus in economic and investment activity. We are reviewing all the quangos in Wales, as I am sure the hon. Gentleman would expect us to, given the loss of public confidence in quangos. The DBRW is obviously one of those that we are reviewing.

I expect the Development Board for Rural Wales to give priority to the west of its area. At least 55 per cent. of its programme expenditure will be concentrated in that area by 1999–2000 and we expect that at least 40 per cent. of the jobs to be created this year will be outside Powys, increasing to 40 per cent. by the millennium.

Mr. Dafis

I am sure that the Minister recognises, as we all do, that higher education—both teaching and research—has a key role to play in revitalising the Welsh economy. He will also be aware that there is deep concern and some bitterness in higher education circles in Wales about the way in which its funding has been cut, which has put it at a serious disadvantage compared with higher education in England. Some of those cuts have been made because of the need to provide significant sums, especially for the LG project. Is that not an example of the imbalance in industrial development strategy?

Mr. Deputy Speaker

Order. Interventions in this debate are very long.

Mr. Hain

The hon. Member for Ceredigion (Mr. Dafis) makes important points, which will be taken into account.

Both the WDA and the DBRW fully recognise the importance of this push to the west and north-west, and both agencies are represented on the North Wales economic forum, which has an important role in co-ordinating these efforts in the region. I look forward to the launch of the new South-West Wales economic forum, which will play a similar role. I think that that will deal with many of the points raised by my hon. Friends the Members for Preseli Pembrokeshire, for Swansea, East and for Gower (Mr. Caton). The Secretary of State and I will shortly be meeting the North Wales economic forum, with which we want to work closely in regenerating north Wales.

All partners should work closely together to ensure that each region and area of Wales is able to maximise its potential for attracting investment. I will be working to ensure that Wales gets the best deal from any review of the assisted areas map. It is essential that we proceed on that.

However, the most important component of all is the right people with the right skills, as LG's senior managers stressed to me on Monday. The people of Wales are our biggest asset. They are the reason why Wales has been so successful, and that drives the WDA's efforts to bring jobs and projects to Wales. We are keen to upgrade the skills level in the Welsh work force still further. But we need not only a highly skilled work force: it also has to be the most flexible.

There are formidable challenges ahead if Wales is to preserve its position as one of the leading locations for investment in Europe. Our partners in the European Union are now more alive to the benefits of inward investment than they were five or certainly 10 years ago. The economic reforms in eastern Europe make those countries formidable competitors for global investment. Recently in my own constituency, Lucas shifted 500 assembly line jobs from Neath to Poland where wage costs were 60 per cent. cheaper. The only way Wales can rise to this challenge is by being the best—not necessarily the cheapest, but the best. To be the best, we must have the most skilled and flexible work force and be at the leading edge of technological advance.

Our strategy must include rationalising or abolishing quangos and making them more democratically accountable to a new Welsh Assembly. That will strengthen existing partnerships, especially with local government. We want more power and decision making to be devolved to the regions of Wales. That will help to spread inward investment more evenly across the whole of Wales.

We want closer ties between the companies that choose to invest in Wales and the communities that will serve them, so as to boost the prospects of the rural and more remote parts of Wales, which are a priority for the Government.

If inward investment is crucial, so, too, is in-Wales investment. The development of home-grown firms is more important than ever before. Most of the jobs growth in modern economies is in small and medium-sized businesses. I shall meet the North Wales Federation of Small Businesses tomorrow to discuss how the Government can support its activity.

I have also asked the WDA and Welsh Office officials, and the other institutional agencies, to discuss how we can advance the proposals for a new economic powerhouse that will be contained in our White Paper on devolution next month. Businesses and their workers in Wales need a Welsh Assembly to give them a real voice in winning new jobs and investment opportunities; otherwise, Wales will fall behind.

This has been an important debate. The consensus demonstrated in it should now be built on, and a new Welsh Assembly should be formed to secure the extra investment, economic activity and jobs to ensure that Wales becomes a world-beating economy.