HC Deb 04 March 1997 vol 291 cc794-806

Not amended (in the Standing Committee), considered.

Order for Third Reading read.

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

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

The House will be aware of the provisions of the Bill, the purpose of which is to amend section 18 of the Welsh Development Agency Act 1975 to raise the financial limit of the agency from its present level of £950 million to £1,350 million. The Bill is a routine, technical measure to permit on-going public expenditure to finance the agency's activities without prejudice to future spending decisions.

I was asked in Committee how long the proposed increase of £400 million would last. The annual amounts that contribute to the limit are derived from a series of activities that have to be based on the best assumptions at the time, including the total that can be afforded for the agency's programmes, the estimate for total capital and current receipts, the likely level of repayments and the permitted level of the budget for running costs. On top of that would be any supplementary provision that could be made in-year. It is really not possible to state with any certainty how long increases in the agency's financial limit are likely to last, and I would not wish to pre-empt future public expenditure decisions either generally or specifically.

In Committee, the hon. Member for Cardiff, West (Mr. Morgan) asked me to provide the total figure for 1997–98 and 1998–99 that will count against the agency's financial limit. I have written to him and a copy of the letter has been placed in the Library. Approximately £62 million is planned to count against the agency's financial limit in 1997–98 and about £101 million in 1998–99. Those figures should be taken as only indicative figures for the purpose of debate, and they are liable to change.

I was pleased to be able to respond to the wishes of members of the Committee in another respect—for the sums counting against the agency's financial limit at the end of each financial year to be reported more widely. Members of the Committee will already be aware that the agency's annual report, a copy of which is laid before Parliament, carries a statement of the agency's expenditure to date counting against its financial limit. I have, however, agreed that the Welsh Office's departmental report should also include figures showing the agency's progress against its financial limit, starting with the 1997 departmental report.

9 pm

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

In some ways, I regret that it looks as if this Bill will be the last of the Welsh Development Agency Bills because of its provision that such matters will in future be dealt with by statutory instrument and in a debate of an hour and a half. I regret that because, even during the passage of this Bill, we have probed and discovered aspects of the agency's expenditure, budgets and future targets, which are of interest and concern to us all.

The most important fact is that there is a Bill at all and that, after 18 years, a Welsh Development Agency has survived. Those of us who recall the heyday of early Thatcherism—in which any form of government intervention was denied entirely and it was thought that everything should be left to the market and the money supply—will be fascinated by the agency's experience over the past 18 years. There was supposed to be no fine-tuning of the economy, but the Chancellor and the Governor of the Bank of England now fine-tune on a monthly basis.

The most extraordinary and interesting development of the agency, which has been spending very large sums of public money—I support that expenditure—has been in ensuring the location of major inward investment. By any standards, it represents regional, development area policy of the kind that goes back to post-war Britain. It is strange that, considering everything else that has been said ideologically over the past 18 years, the agency has been fulfilling a rather traditional, long-standing function. Indeed, it has gone beyond that.

I found the Secretary of State's speech on Second Reading fascinating for the way in which it seemed to counter the concept of non-intervention. We have not only intervention, but clear, specific prescriptive targets for the agency to achieve. We have got down not only to the number of jobs that we expect the agency either to create or secure but to sub-regional targets, which I very much welcome.

I should like to remind the House that, on Thursday, the Secretary of State said: I shall require that at least 50 per cent. of the jobs safeguarded or created by the agency to be outside the eastern M4 and A55 corridors."—[Official Report, 27 February 1997; Vol. 291, c. 461.] So far, it has been argued that development has favoured the south-east and the north-east. Such planning is prescriptive. We are saying to the agency, "Thou shalt put 50 per cent. of all jobs and the expenditure that goes with them in certain specific areas in the Principality." Although I support that—the Secretary of State's announcement was widely welcomed—I think that it produces an interesting concept of detailed prescriptive targets which I thought were inconsistent with high Thatcherism.

As we have targets and the Secretary of State made the case for them on Second Reading, we should be enlightened on the definition of the sub-region about which we are talking. What is the eastern M4? At which junction does it become the western M4?

Mr. Jon Owen Jones (Cardiff, Central)

Bridgend. Mr. Rowlands: Perhaps the Minister can confirm that.

We should also have a definition of the M4 corridor. How wide is it? I am fascinated by the prescriptive targeting that has emerged from the Secretary of State's thinking, but we need closer definitions.

Now that the discussion of detailed, prescriptive targets has started, I would like to propose some more targets. I shall direct my remarks to my hon. Friends on the Opposition Front Bench, because I hope that they will soon establish with the Welsh Development Agency targets for the next few years. However, my remarks may be valid during the Secretary of State's few remaining weeks of tenure. If targeting is now in fashion, we should ask the agency to reach other targets.

First, I would like one target to be restored. We used to have a specific target for the reclamation of derelict land by 2000. That clearly defined target has been pushed aside, but I hope that my hon. Friends on the Opposition Front Bench will consider restoring it. In the debate last Thursday and in our debates on the Bill, concerns emerged that, whatever success the agency has achieved, with LG and Halla Engineering, the Welsh still have the lowest disposable personal income in the United Kingdom and the lowest gross domestic product per capita. Therefore, I see no reason why a future Secretary of State should not seek to establish targets to improve those figures by a certain date.

Mr. Denzil Davies (Llanelli)

That is Stalinism.

Mr. Rowlands

I am merely describing targets like those that the Secretary of State has suggested. If we can have geographical targets, we can ask the agency to achieve economic targets.

The Welsh economy differs from those of most other regions and nations in the United Kingdom in another respect. Everybody says that future development in the world economy will come from small and medium companies, not larger ones. All the figures that I have seen show that Wales has a low proportion of small and medium companies, especially in manufacturing. The UK figure for companies with under 200 employees is 45 per cent., but the Welsh figure is 32 per cent. Small and medium companies therefore play a smaller role in the Welsh manufacturing economy. A significant target would be the promotion and development of small and medium manufacturing companies as a future base for the Welsh economy. That might also be an important Welsh Development Agency target.

I was fascinated by the new concept of prescriptive targeting by a Tory Secretary of State. I can imagine the howls of protest that would have come from Opposition Members if a Labour Secretary of State had talked about such targets—they would have called it old socialist planning—yet a Tory Secretary of State is targeting and planning, even in a sub-regional fashion, as much as any previous Government.

I welcome the Government's conversion to those concepts, because I still support those concepts. 1 believe in the role and function of Governments. I represent a community that is living proof that government matters, because when Governments did nothing we suffered; I believe passionately in targets and in government, and therefore in the role that the agency can play.

I have identified one or two of the targets that a future Labour Government could adopt. In describing them, I may also have revealed the daunting legacy that we shall face when we come to power within the next couple of months.

9.10 pm
Mr. Dafydd Wigley (Caernarfon)

I am glad to take part in the debate, albeit late in the passage of the Bill. I have had an interest in Welsh Development Agency legislation from its earliest days. My only regret is that the Secretary of State is not with us on Third Reading, to accept our felicitations on today's news that, even though he may not be able to find a seat or be elected in Wales, he has found a future wife there. I am sure that we all congratulate him on that.

The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) went back to the days in 1975 when the original Bill was debated. There was total opposition from Conservative Members to the creation of the agency: they were against it, lock, stock and barrel, because it would be interventionist and might affect the workings of the free market economy.

One of the Conservative party's wiser acts after coming to office was to realise that one does not throw the baby out with the bath water, and that the WDA had the potential to do a great deal of good for Wales. The Welsh Development Agency may not have had the resources that the Bill will give it, and may not always have had the guidelines that we would consider necessary for it to make an impact on the Welsh economy; none the less, it has been an extremely important body and has a future role that may be even more significant.

The hon. Member for Merthyr Tydfil and Rhymney spoke about targeting. I, too, was interested in the fact that the previous target allowed up to 80 per cent. of the new jobs that were coming to Wales to be concentrated in two small corners, the south-east and the north-east, which represent 10 per cent. of the land area of Wales and include about 30 per cent. of the unemployed.

Now the position is that 50 per cent. of the jobs will exist within 90 per cent. of the land area, and 50 per cent. will be in an area with 70 per cent. of the unemployed. That is a move in the right direction, but it does not solve the problem. Furthermore, the hon. Member for Merthyr Tydfil and Rhymney was right to ask about the definition of the two areas. Is it to remain the same, and on what basis has it been reached? It is not a statutory basis, and this has not been defined formally at all.

We gather that the boundary runs along the M4, from the border with England as far as Bridgend, and that, in the north, Alyn and Deeside and Wrexham are included, but not Prestatyn. If those are the limits, presumably areas that are crying out for new jobs, such as the Cynon valley, Merthyr Tydfil and Rhondda in the south, or Point of Ayr and Prestatyn, which are in the north-east but need the jobs, will miss out on the 50 per cent. that are available.

How will the Government ensure that jobs come beyond the defined area, to places that need them, such as Dyfed in the west—in the south-west, in Pembrokeshire, there have been areas of high unemployment for many years—Ammanford and the Amman valley further east, and Holyhead and parts of the old Gwynedd in the north-west?

Mr. Gwilym Jones

I intervene to try to assist the hon. Gentleman and, I hope, the House. For the purpose of the WDA's strategic guidance and targets, the eastern M4 is defined as the coastal strip from Chepstow in the east to Pyle in the west. The northern boundary is coincident with the southern boundary of the programme for the valleys area, extended east to include the southern half of Monmouthshire. In north Wales, the eastern A55 corridor is defined as the non-rural part of the Wrexham county borough council area, the whole of Flintshire and the northern part of Denbighshire, including the towns of St. Asaph, Rhyl and Prestatyn. I have had a map of the eastern M4 and A55 corridors placed in the Library.

Mr. Wigley

I am grateful for that helpful intervention. There has been a small change from the map used by the WDA previously, and that underlines the need for these matters to be defined so we know exactly where we stand.

Assuming that we have clearly defined areas, the other question that arises—which is even more relevant to the Bill—is, "How will the resources to be made available by the legislation be used to achieve the Government's objective?" The objective, as described by the Secretary of State for Wales the other day, was that there would be a mechanism to enable those areas further to the west—perhaps the old coalfield areas in the industrial south of Wales or the western side of Dyfed or Gwynedd—to receive resources to make up for their difficulties in attracting industry.

I should be glad if the Minister will tell us how the money to be provided by the Bill will be used. What will be the mechanism? What will be the constraints? Will it be possible to use those resources as the Secretary of State suggested? It is not good enough to give generalities. The areas with full development area status, intermediate status and no benefit at all are defined in legislation, and the resources have been fairly tightly defined. If, by virtue of the Secretary of State's statement, it will be possible to have more resources per job in the areas of the west without development area status to make up for the loss that they would otherwise experience and to enable them to compete on an even footing with areas with full development area status, that is significant. Presumably, that statement has been cleared with the European Union, because questions of competition clearly arise.

I hope that the Minister can give a categorical assurance that the mechanisms have been cleared and defined and will be available to make sure that every location trying to get reasonable development—Dyfed, Gwynned, the western parts of Glamorgan, the old coalfields, Neath and the Rhondda and Cynon valley areas, all of which have had high unemployment in the past—will have adequate incentives to attract industry which would otherwise take the easy option and locate in the south-east or north-east corridor of the M4. If the Government cannot give a statement along those lines, it will be a question for an incoming Government after the general election. We know that those areas need to be targeted, but that is not happening.

I turn briefly to another matter raised by the hon. Member for Merthyr Tydfil and Rhymney—the balance of priorities in using resources. There is a balance between money going to inward investment into Wales and the need for investment in companies that are already located in Wales. Small and medium companies often need the same helping hand, but they undoubtedly feel that they miss out. In my part of Wales, small companies say that one has to be a big Japanese or Korean company to get help from the WDA.

The WDA is not interested in small companies. That may not be a fair reflection on the WDA, and I understand the importance of the 6,000 jobs that come with projects such as LG; I do not disparage that. However, if they grow, our small acorns can be valuable contributors to the economy. They have the advantage of being scattered around Wales so that they benefit several areas and, as they are rooted in Wales, they are unlikely to decide to pack up at the first ill wind of economic depression. We must ensure that there is an equal balance in using the resources that the Bill provides to help small indigenous companies in a way to which perhaps not enough attention has been given in the past.

My final question concerns the Opposition spokesmen rather than the Government. How will oversight of the WDA's use of its funds, the balance between investment in large companies from outside and small companies, and the geographical distribution of the resources available, be handled under the elected assembly that Labour is committed to introducing? Will it be done by absorbing the WDA, and the resources that go with it under the Bill, in the apparatus of government under the assembly? Will there be an arm's-length relationship or will it be done by the present quango state? I suppose, hope and suspect that there will be a change, but it would be helpful to know. In using resources, which I assume will be available to the Welsh Assembly in due course, it is important that we have accountability and the fine tuning of policy necessary to meet the requirements of unemployed people in every part of Wales.

The hon. Member for Merthyr Tydfil and Rhymney was right. Wales is at the bottom of the league table of gross domestic product per head of all the countries and regions of Britain, not including Northern Ireland. That respects a decline from 92 per cent. of GDP per head a generation ago to only 83 per cent. now. That does not reflect well on the success of Government policies in recent years. I hope that we will get not only the resources given by the Bill but a dynamic commitment to rejecting unemployment as a factor in the economy and ensuring full employment in every part of Wales, and a determination by virtue of that to raise the income per head of the people of Wales to an acceptable level. That is the background against which we should see the Bill. If it plays such a part, it will be helpful; if it does not, the same areas will suffer for decades to come.

9.22 pm
Mr. Nick Ainger (Pembroke)

I shall be brief because I want to touch on matters already mentioned by my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) and the hon. Member for Caernarfon (Mr. Wigley). On Second Reading, the Secretary of State discussed setting targets to increase the performance of the WDA in areas outside the narrow confines of the M4 corridor and the eastern end of the A55 corridor. He gave a commitment to increase the target for creating and securing jobs outside those areas from the present 20 per cent. not merely to the 32 per cent. that he claimed that the WDA was already achieving, but to 50 per cent. I welcome that.

My constituency has the second highest unemployment level of any travel-to-work area, not only in mainland Britain but in Northern Ireland. Only Cumnock and Sanquhar has higher unemployment than south Pembrokeshire. It is interesting that the third worst area is also in the western periphery of Wales: the Holyhead travel-to-work area. I welcome anything that targets resources to achieve a significant increase in the number of jobs secured or created in those areas.

As the hon. Member for Caernarfon said, as well as setting targets, the Secretary of State gave a commitment on how the resources would be used to achieve those targets. He said Secondly, I am asking the WDA, within agreed UK and European limits, to recognise the extra costs of locating in some areas by providing more assistance to companies locating in those areas than to equivalent projects elsewhere."—[Official Report, 10 February 1997: Vol. 290, c. 80.] I ask the Under-Secretary to confirm tonight how that aim would be achieved.

Would a company that located in the constituency of my right hon. and learned Friend the Member for Aberavon (Mr. Morris)—which, given the boundaries that the Minister announced a few moments ago, would be eligible for additional resources—receive the same per capita funding as a company that located in the constituency of my right hon. Friend the Member for Llanelli (Mr. Davies)? Would it receive the same grant as a company locating in my constituency, which is some 70 miles further west? Would there be a gradation of assistance as the companies located further afield? The same question applies on the north Wales coast, towards Ynys Môn.

The Under-Secretary owes us an explanation. We agree with and welcome the targets, but how will they be achieved? The Secretary of State said that different grants would be offered. Is he saying that, the more peripheral one gets, the more grant one receives? I should welcome that idea, as I have the most peripheral constituency. The Under-Secretary must make it perfectly clear how the targets will be achieved.

If the grants are not graduated in that way, constituencies with the worst unemployment problems and the worst structural long-term unemployment—such as my constituency and Ynys Môn, and particularly the two travel-to-work areas of Holyhead and south Pembrokeshire—will think that the Government's rhetoric is meaningless. We need specific, additional help. If there is no true gradation, and a job in Port Talbot, Aberavon or Holyhead receives the same grant aid as one in Pembroke Dock or Wrexham, there will be no great incentive for any new investment in the far west. Labour Front Benchers will also have to decide how to tackle the structural problems of the peripheral areas in the far west. I welcome the Minister's comments on that matter.

After the statement on 10 February, my local newspaper carried a front-page story saying that help was on the way. I told the reporter to be careful: I warned that Christmas had not arrived early and that we needed to see the details. I fear that, despite the WDA's best intentions in trying to push significant inward investment further west and the fact that investment may improve along the M4 or the A55 corridors, unless it has the resources to achieve that aim, the areas with the highest unemployment will not see the major investment that is required to address their structural problems.

9.29 pm
Mr. Rhodri Morgan (Cardiff, West)

Like the hon. Member for Caernarfon (Mr. Wigley), I offer my felicitations to the Secretary of State on his engagement. I am sorry that he is not here to receive those felicitations, but perhaps it is because he was a bit shy of receiving them that he decided to absent himself.

I understand that the Western Mail was in two minds as to whether to run the headline this morning, "Offa's Tyke Joins Welsh Establishment", but decided against it for good reasons. We shall watch carefully to see whether the Welsh Development Agency decides to invest in some Welsh gold mines now, if the Secretary of State orders an especially large engagement ring for his new fianée.

I shall now discuss the Bill, and especially the issues that have arisen tonight, on how one resolves the differences between what has emerged of the Secretary of State's promises, as to how he will distribute WDA resources differently geographically. That subject was highlighted by my hon. Friend the Member for Swansea, East (Mr. Anderson) in the annual Welsh affairs debate—the St. David's day debate, as we sometimes call it—last week, on 27 February 1997 at column 462. He drew attention to the attempt to push investment and new job creation preferentially westward, and to some extent northward, by creating what one might loosely call a Mason-Dixon line. South-east Wales would have a lower priority than south-west Wales, the former having received the benefits of LG and certain other recent investments—Ocean Technical Glass, Newport Wafer-Fab and so on—and now that, perhaps more modestly, north-east Wales has received the benefits of the expansion of JCB, Hoya Lens and so on, investment would be pushed further west along the A55.

The problem is that, to do that, one must know whether sufficient resources are available to make it possible. Although the Bill extends the WDA's parliamentary financial limit by £400 million, if, as is likely, the Bill is passed—we shall not oppose it—the issue will remain of how much of those resources is left uncommitted, with which to execute the new policy of pushing investment further north and west. What is the point of issuing a ringing declaration about directing new WDA investment preferentially to areas that have not benefited very much in the past couple of years, if there are no resources to do so?

My right hon. Friend the Member for Swansea, West (Mr. Williams) has asked the Minister to tell us how much of the WDA's budget is uncommitted as things stand: uncommitted in this case meaning, I believe, on a commonsense basis—uncommitted to the known projects, in other words, to LG, Newport Wafer-Fab, JCB, Halla Fork-Lift Trucks, the expansion of Sony in Bridgend or any other investments that have been announced.

The Secretary of State is making a grand pronouncement about his intention to bias the agency's operations so as to push job creation further west: further into the valleys, further west into north Wales and west Wales, and into Pembrokeshire because of its unique difficulties following the problems of bovine spongiform encephalopathy, the Sea Empress disaster, defence cuts and the oil refinery closure, but how can that be done if all the resources have been fully committed? We have not yet received an answer to the question that was posed by my hon. Friend the Member for Swansea, East in column 462 in last week's annual debate on Welsh affairs. That question has arisen repeatedly during tonight's Third Reading debate.

What resources are available to the Welsh Development Agency, via the Bill, the public expenditure survey process and so on, with which to carry out the commitment given by the Secretary of State to execute the grand new policy to try to develop the whole of Wales, not merely the south-east and north-east corner?

The WDA has the problem, not only of existing commitments, but of how the Welsh Office wants to define its relationship with the agency. In other words, does the Welsh Office see the WDA as an organisationally autonomous body, within the constraints of Treasury approval, approval from the Secretary of State and parliamentary debate once every five years, such as this debate? Does the Welsh Office envisage that within the normal constraints of parliamentary approval, the WDA should have a reasonable degree of operational autonomy, or should it work on the basis that every time it lands a big fish such as LG, it should go back to the Department for approval to spend the money? The Department would then give it a special handout, as happened last autumn in the winter supplementary estimate, and would say to the WDA, "Obviously, you have landed a big fish. You cannot handle that within your cash flow. Here is another £25 million, and a further £20 million for the next financial year."

That was never the original intention for the relationship between the Welsh Office and the WDA. In the past few years, the amount of finance given by the Welsh Office to the WDA has gone up and down like a yo-yo. The agency was virtually crippled by the previous Secretary of State and the forced asset sales policy, which took away the cash flow, its operational autonomy and its ability to handle all but the largest projects within its annual budget. Once the agency lost the cash flow from its rental income on buildings and land, it did not have operational autonomy.

We need to know from the Minister tonight whether it is now Government policy in the few remaining weeks of this Government to try to make the WDA totally dependent on the Welsh Office, so that every time it has a need for expenditure approved by the Welsh Office, it will ask the Welsh Office to give it some money from the general pool, as happened with the extra £25 million. I am sure that the Minister recalls that in Committee my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) asked him where the extra £25 million that was awarded to the WDA last November came from. The Minister replied, "Within the usual flexibilities."

Is that the sort of relationship that the Welsh Office wants to have with the WDA? Does it want the WDA to ask the Department every time it wants to spend some money, rather than being operationally autonomous during the financial year, except in emergencies? "Within the usual flexibilities" is not sufficient to define the relationship between the Welsh Office and the WDA in the future.

Many speakers have referred to the problem of getting the balance right in Wales in terms of new job creation. Has south-east Wales, in particular, done almost too well for its own good, and is it straining the labour supply and the supply of specialist skills, such as those of engineers?

I saw a letter in the Western Mail that referred to the possible emergence of an almost continuous urban strip of a possibly undesirable kind, running roughly from Cardiff Wales airport, to the west of Barry, right through Cardiff, through Newport and on to the end of the steelworks at Llanwern. That was described as a newly emerging city called Bacardiport—made up of Barry, Cardiff and Newport—giving the right yuppie image of people sipping sundowners while looking at their boat from their luxury pad, and so on.

That illustrates the danger of areas of Wales having prosperity levels that we usually associate with the south-east of England, while the rest of Wales would be left to fend for itself as dormitory areas or areas that remained dependent on welfare, and so on. We need to know more from the Government about how they intend to achieve the right east-west, north-south, valleys-coast balance in the work of the WDA.

Finally, I shall deal with the sums that the Government will make available via the Bill and its financial provisions. In Committee, at columns 12, 16 and 19, I guessed that under the terms of the Bill, using the Bill's definition of finance for the WDA, the WDA would require about £100 million in the year 1998–99.

The Minister did not want to answer in Committee, which is fair enough. We then received a letter stating that my figure was wrong, and that the sum was £102 million. I received a letter on 25 February stating that the figure would be £202 million, but that letter was withdrawn.

Given the excitement generated in the ministerial private office by all the talk of engagement and marriage, it may be natural and forgivable to make a few mistakes, but it looks as if the figure of £100 million was about right—within £1 million or £2 million of the correct figure. That means that, having given an additional £400 million to the WDA in terms of the financial limit, or having permitted that expenditure, we would be doing the same job again in about four years' time.

The Government have said that they will attempt to give us the indicative limits. We are not talking about fixed commitments, but the amount will be about £100 million in 1998–99, which means, obviously, that £400 million will be used up in four years. If, as the Minister said, the limit is only indicative, I do not see why he could not go a step further and say—as it was not a commitment—that the Government expected the £400 million to last for so many years.

It would be useful for everyone in Wales to know the Government's policy on the WDA. Its financing, and its dependence on the Welsh Office, should not be allowed to go up and down like a yo-yo. We have lived through that over the past few years: we have lived through a very serious situation. The previous Secretary of State for Wales, the right hon. Member for Wokingham (Mr. Redwood), tried to wreck the WDA by forcing it to dispose of all its major saleable assets. He lowered the amount of finance required in the terms of the Bill to only £13 million in 1994–95. The present Secretary of State started off in the same mould, keeping finance to less than £20 million, until he found an extra £25 million last November. He is now rebuilding the agency, but he is doing so with post-dated cheques. It is important for us to be given a much clearer picture.

As for the WDA's financing of the Eurofreight terminal project between Cardiff and Newport, no money appears to be going in. The WDA has been asked to look after the terminal on behalf of the Secretary of State, but what is it actually doing? Consultants commissioned to act on behalf of the Secretary of State, but under the WDA's aegis, have reopened the whole issue of whether the terminal ought to be between Cardiff and Newport or between Newport and the Severn bridge, or on Cardiff docks, or on the site of the existing freightliner terminal at Pengam moors.

That question was closed off by the Secretary of State, but the consultants for the WDA have said that they are reopening the issue, and that they are considering four sites rather than one. Is that because the Secretary of State has told the WDA to put off the decision? Has he said, "We have no money to fund the grant for the Eurofreight terminal anyway, so please delay this until after the election"? The Government are undoubtedly living in a post-dated cheque culture.

We want to know how the Mason-Dixon line is defined. We also want to know when the Secretary of State and his ministerial team expect Wales to move up from the bottom of the prosperity league table. We have plans to remove not only the democratic deficit but the prosperity deficit from Wales, by putting the WDA and its resources directly at the behest of the Welsh people, through the Welsh Assembly.

9.43 pm
Mr. Gwilym Jones

With the leave of the House, Mr. Deputy Speaker. I want to respond to as many of the questions that have been raised as I can in the short time that is left. First, let me thank the hon. Members for Cardiff, West (Mr. Morgan) and for Caernarfon (Mr. Wigley) for their kind congratulations on the engagement of my right hon. Friend the Secretary of State. I hope that the House will accept that it is understandable that, for once, he has not been in the Chamber for the entire debate.

The hon. Member for Cardiff, West was concerned about the flexibility that—not unusually—we used to find more money for the Welsh Development Agency in-year. That was a result of end-year flexibility entitlements carried forward from previous years, a switch of resources from class XIV, vote 1, claims proving lower than expected for agri-environmental and farm conservation schemes, and cases of funds within vote 2. I am grateful to him for his forbearance on the difference between £101 million and £202 million. He gave one explanation. Perhaps it was merely nothing more than wishful thinking.

The hon. Gentleman asked about time limits. Since the debate in Committee, I have checked that, and I note that the current limit will probably last for about six years, whereas the previous limit lasted for three years. We feel that the limit proposed in the Bill is more than appropriate.

I am glad thatthe hon. Members for Caernarfon and for Merthyr Tydfil and Rhymney (Mr. Rowlands) have given me an opportunity to respond to their concern—it is one we hear elsewhere in Wales—about indigenous companies.

As the hon. Member for Caernarfon said, one complaint we hear is, "You have to be a big Japanese or Korean company to receive help from the Welsh Development Agency". He will know, as will every hon. Member, that that is certainly not the case. It is Government policy, and it is the WDA's intention, to ensure that help is available to every company that can appropriately be provided for, be it an indigenous company or an inward investor coming into Wales.

A new target will be to focus attention for support for indigenous companies to go hand in hand with support for inward investors. The agency is required to secure additional business worth £24 million through its business development activities. Within the target of 12,500 jobs in total, 8,000 should come from inward investment, of which some 3,000 should be new jobs from overseas. Linked with the inward investment jobs target is the requirement to secure some £400 million in associated planned investment. The target for investment from all the agency's programmes is £600 million.

The hon. Member for Merthyr Tydfil and Rhymney also expressed concern about the opportunities for the debate in future, and suggested that only one and a half hours would be allowed. I have checked this, and one and a half hours should probably be regarded as the minimum for debate. It would be possible to have longer debates—subject, of course, to the Speaker.

The hon. Gentleman also referred to land reclamation. The aim of removing all major or significant dereliction in Wales by the end of the century was promoted by the agency some time ago. However, circumstances change, priorities are reviewed, and new projects come forward. Other factors can affect progress. For example, the full complexity of some schemes becomes apparent only after work has commenced. The target of removing all major dereliction by the end of the century was the agency's target, and not one reached by my right hon. Friend the Secretary of State.

The hon. Member for Pembroke (Mr. Ainger) made a fascinating proposal about a gradation westward through Wales, from which he would very much have been the greatest beneficiary. I wonder whether he would invite even more trouble from his more easterly colleagues in trying to pursue that objective. We have told the WDA that it will have to act within agreed United Kingdom and European limits, but that we want it to recognise the extra costs to companies of locating in some areas by giving them more assistance than it gives equivalent projects elsewhere.

That matter is best taken forward by the WDA determining what it would recognise in the circumstances. I wish to encourage the hon. Gentleman not to be as overly negative on behalf of his constituency as he implies.

Mr. Ainger

What the Minister just said confirms again that it is far more difficult to locate businesses the further west one goes. There are higher costs and so on. He is again implying that there may well be a gradation in grant aid. Is it possible under the present restrictions to offer different levels of grant aid, using whatever criteria, between an area such as Pembroke and areas such as Llanelli or Aberavon?

Mr. Jones

That is a matter for the agency to consider. We have said that we want it to consider the extra costs involved—no more, no less. That is the best thing for it to take forward.

Mr. Rowlands

Will the Minister give way?

Mr. Wigley


Mr. Jones

I give way to the hon. Member for Merthyr Tydfil and Rhymney.

Mr. Rowlands

The most important and significant assistance is selective financial assistance. Will that reflect the geographical problems as well?

Mr. Jones

I want the agency to use all the weapons at its disposal, so that it can be effective. We now place great emphasis on the western corridors in north and south Wales.

Mr. Wigley

I want to develop that point. Will the agency make grant aid available? By and large, it has given loan aid. Many of the companies that are not in the regions with full development area status cannot obtain grants. Will there be a change either in the maps under the Industry Acts or in the definition of the WDA's powers to give grants as well as loans?

Mr. Jones

I am not going to invent legislation on the hoof, because we have stated our intention. We want the agency to recognise the extra costs involved in locating in north-west and west Wales. I am confident that the agency will achieve its targets, because it already has an excellent record on job creation in western and north-western parts of Wales.

Mr. Morgan

Will the hon. Gentleman give way?

Mr. Jones

I wanted to refer to the hon. Gentleman's point about LG and the dependence of the Welsh Development Agency.

Mr. Morgan

I just want to ask the Minister to respond to my point about what my hon. Friend the Member for Swansea, East (Mr. Anderson) said last Thursday. On the question of how much uncommitted budget the WDA will have to execute under the new policy of pushing investment further west and north, the Secretary of State said: The WDA has many commitments, but that does not mean that its entire budget is committed."—[Official Report, 27 February 1997; Vol. 291, c. 462.] If its entire budget is not committed, how large is the uncommitted section?

Mr. Jones

I do not have that answer at my fingertips, but I shall be pleased to write to the hon. Gentleman to give him more information.

The hon. Gentleman expressed concern about whether the Welsh Development Agency would be totally dependent on the Welsh Office should something similar to the LG project be developed in the future. No, that is not my expectation. I expect the agency to continue to be a totally integrated part of the successful "team Wales" approach that we have taken, and which we will continue to take after the general election with even more success, without the extra bureaucratic costs and hurdles with which the hon. Gentleman would saddle Wales.

Question put and agreed to.

Bill accordingly read the Third time, and passed.