EXTENSION OF FUNCTIONS

HC Deb 25 February 1998 vol 307 cc378-443 3.58 pm

Mr. Denzil Davies (Llanelli)

I beg to move amendment No. 374, in page 56, leave out lines 9 to 13.

The Chairman of Ways and Means (Sir Alan Haselhurst)

With this, it will be convenient to discuss the following amendments: No. 493, in page 56, leave out lines 10 and 11.

No. 523, in page 56, line 11, at end insert— '(aa) in paragraph (a), for "or any" substitute "and every", and'.

No. 519, in page 56, line 13, at end insert— '(d) after paragraph (d) insert— (f) to promote social equity in Wales.".'.

No. 540, in page 56, line 26, at end insert— '(e) after paragraph (i) insert— (j) to encourage the development of exports from Wales.'.

Mr. Davies

The amendment focuses on two aspects. First, there is the insertion into section 1(2)(a) of the Welsh Development Agency Act 1975 of "and social" after the word "economic". For the future, if the clause is accepted as it is drafted, one of the purposes of the Welsh Development Agency—it has to operate through its purposes—will be not merely the furtherance of economic development throughout Wales but the furtherance of economic and social development. That being so, the WDA will take upon itself the purpose of social development as well as and in addition to its present purpose of economic development.

The second focus of the amendment is on the replacement—if the clause becomes law—of the word "industrial" with "business" and "businesses" in relation to the purposes of the WDA. When it comes to the agency's functions, "industrial" is replaced by "business". I wish to consider the definition of "business", which is contained in paragraph 2 of schedule 10 to the Bill. The definition of "business" is important in relation to the replacement of "industrial" with "business".

I shall deal first with the importance of the words "social" and "social development", as I have explained, after "economic development". We are faced with a major change in the function and the purpose of the WDA. It may seem to be a small matter, but it presents a major change.

My right hon. Friend the Secretary of State, in one of his memorable soundbites during the referendum campaign, referred to an "economic powerhouse". Perhaps that was the most memorable phrase of all. The WDA was to be, rightly, after devolution, an economic powerhouse. It was a ringing phrase that sounded well. However, when we read the clause, we see that the WDA will not be an economic powerhouse. Instead, it will be a "economic and social powerhouse". To my ear, that is not such a ringing phrase as "economic powerhouse". I am not even sure whether a body can be a social powerhouse, but perhaps that is possible. It is clear that something has happened on the journey from the devolution and referendum campaign to this awful drafting of proposed legislation, which always concentrates the mind.

We now have an economic and social powerhouse—in other words, a change or addition to the functions of the WDA. The insertion of those few words—this may seem pedantic—changes the nature of the WDA. I always thought—some of us were in the House of Commons and in government when the WDA was established—that under old Labour, which was very old-fashioned about these things, it was brought into being as a wealth-producing agency or an agency to promote wealth production.

Mr. Richard Livsey (Brecon and Radnorshire)

Does the right hon. Gentleman agree that it was a previous Labour Government who introduced the Development Board for Rural Wales, which has social functions? In fact, those social functions stood rural Wales in good stead, and we would have been sore put if we did not have them.

Mr. Davies

I shall refer at length to the debates that took place in the Welsh Grand Committee. These were not on the words "social function" but on the exact words that are to be inserted into the proposed legislation. Again, it was old Labour intervening in the economy.

The Welsh Development Agency was supposed to promote wealth creation. If the changes are carried out, the WDA will have a mixed role. To an extent it will have a contradictory role, not only in wealth creation but in social function or social facilities. There could be problems along that path.

The hon. Member for Brecon and Radnorshire (Mr. Livsey) is right. I take him back to the Development of Rural Wales Act 1976, which applies, until it is done away with, to a small but important part of Wales, Powys, Meirionnydd and Cardiganshire—or Ceredigion—and has been extended, perhaps, to parts of Carmarthenshire. I am not sure. The words "social development" are plain for all to see in that Act. They were taken originally from the Highlands and Islands development board legislation. I do not keep up with Scottish affairs, so do not know what happened to that board. It has probably gone, but whether it exists is immaterial.

There is no definition of "social development" in the Bill, and there is none in the 1976 Act. I do not complain about that; it is not an easy phrase to define. I do not know about the Highlands and Islands development board, as I have not checked. The hon. Gentleman will be interested to know that there was interesting discussion in Standing Committee K on the meaning of "social development". I refer to the Standing Committee debate in 1976, when these matters were debated, and to what was said by my hon. Friend the then Under-Secretary—who represented Flint, East at the time but who now represents Alyn and Deeside (Mr. Jones). At the time, amendments were tabled to change the wording from "social development" to "social needs". My hon. Friend resisted, saying: I must resist the amendments and I will explain why. The amended wording could be construed as restricting in some way the activities that the board might support". These are the important words: The board should be able to provide facilities"— social development facilities— in the form of additional physical amenities such as halls"— I take it that he meant village halls— and playing fields, and that explains why the Government are right and the Opposition are wrong. The board should be able to support the activities undertaken in those halls by voluntary bodies"— indeed, voluntary associations appeared throughout the debate— if they contribute to the growth and development of the area and enrich its culture. My hon. Friend continued: There is no reason why the wording of the Bill should be restricted in a way which would throw doubt on whether the board could assist social activity. We are approaching some kind of definition, or at least a description. Social development means, quite properly—I have nothing against it—helping village halls and voluntary associations, and assisting in what is called social activity. My hon. Friend said that the definition of the words was taken from the legislation governing the Highlands and Islands development board.

My hon. Friend continued: A check on any possible and reasonable exercise by the board of the powers"— there was an argument that the words were too wide and that there should be some kind of check— to support social development is not to be found in the legal definition of the powers"— there was no legal definition— but rather in the need for the consent which the board"— the Development Board for Rural Wales— must obtain from the Secretary of State"— that is, my right hon. Friend until the Bill becomes law and the orders are made— and the Treasury for any assistance offered".—[Official Report, Standing Committee K, 22 July 1976; c. 82–83.] Will my hon. Friend the present Under-Secretary of State deal with that specific point? Where will the checks apply in future? My hon. Friend the then Under-Secretary of State properly referred to such checks. He said that there was no check in the legal definition—the courts might check that, and I shall return to that in a moment—but that rather there was a check in the need for the consent of the Secretary of State and the Treasury.

What will be the position when the Bill becomes law and we have an assembly? Will the check, if there is to be one, be transferred from the Secretary of State to the assembly, and will Treasury consent still be required? Will there be no check at all, or will the assembly be some kind of check? That is a subsidiary question, as to how any check will operate on moneys paid for social development, which would include social activity, village halls and voluntary bodies and associations.

On 28 July 1976, my hon. Friend the then Under-Secretary mentioned assistance to rural councils and voluntary service councils—I am not sure what that means. He referred to assistance to the Council of Social Service for Wales. I am not sure whether that still exists. Again quite properly, he referred to assistance to the Welsh Committee—I am not sure what that refers to either—and then to young farmers' clubs. They do a wonderful job in rural Wales. I do not decry any of that at all. But my hon. Friend, who was describing what was meant by "social development", was saying that assistance to young farmers' clubs fell within that phrase, although he seemed to imply that the requirement of the consent of the Secretary of State and the Treasury would be a check.

My hon. Friend then referred to the splendid Association of Welsh Weavers. I am not sure whether that still exists. Perhaps the hon. Member for Brecon and Radnorshire has a Welsh weavers association in his constituency. I hope that he does. I hope that it still exists. If it does, it is surely a worthy body. I am trying to explain what Ministers in the previous Labour Government who introduced the phrase "social development", which is now being taken out of the Development of Rural Wales Act and put into this Bill, understood by that phrase.

My hon. Friend continued: 'social development' is the wider term"— wider than social needs— and includes what is suggested as community development."—[Official Report, Standing Committee K, 28 July 1976; c. 196.] There had been speeches by the then hon. Member for Merioneth about the importance, perhaps rightly, of community development. According to my hon. Friend the Under-Secretary, community development was encompassed by the phrase "social development".

Mr. Livsey

The right hon. Gentleman will agree that the social development work carried out by the Development Board for Rural Wales has been extremely beneficial, and if it is incorporated in the Bill, it will benefit other parts of rural Wales. For example, the development of the Brecon jazz festival and the Hay festival of literature would not have occurred without the DBRW's social development powers. It has created a lot of employment and interest in the locality.

4.15 pm

Mr. Davies

The hon. Gentleman is right. The only comment with which I take issue is that incorporation in the Bill would enable those benefits to continue to go to rural Wales. Of course, they would, but the point that I am making is that it would enable the benefits to go everywhere in Wales: to Rhymney or Llanelli—if the hon. Gentleman can have a jazz festival in Brecon, I presume that we shall get the same benefits as his constituents now get.

It would have been perfectly possible for the draftsman to incorporate the phrase in the Bill and confine it to the areas covered by the DBRW. It could have been said that social development should apply to a part of Wales, which could be defined as Powys, Ceredigion and Meirionnydd—the same areas covered by the development board. The hon. Gentleman made a good point. Indeed, he made the point for me. We are extending a measure that was properly conceived for a small but important area of rural Wales to the whole of Wales: Cardiff, Newport—

Mr. Dafydd Wigley (Caernarfon)

Will the right hon. Gentleman give way?

Mr. Davies

I appreciate that Caernarfon was not included and that now it will be. I am sure that the right hon. Gentleman is delighted about that.

Mr. Wigley

Does the right hon. Gentleman accept that, during the DBRW's 20 years' existence, several areas of Wales, particularly Dinefwr, Preseli, Glyndwr and Dwyfor, which are just as rural as areas in mid-Wales, argued strongly that they needed the powers that were available to the DBRW, but were not available under the WDA? This change at least meets that agenda.

Mr. Davies

Indeed. Many areas would have liked to be encompassed within the 1976 legislation, and now they will be. Urban areas are now encompassed within the measure, including the middle of some of our towns. Tredegar, Ebbw Vale, Merthyr and Port Talbot will all now be able to ask the Welsh Development Agency for assistance for their village halls, jazz festivals or drama festivals, because those are all functions that fall within the phrase "social development".

Mr. Gareth Thomas (Clwyd, West)

I have been listening closely to my right hon. Friend's argument. I hope that he will forgive me for characterising certain parts of it as overly legalistic. Will he accept two points: first, that those concerned with the regeneration of communities appreciate that there is an artificial distinction to be drawn between economic and social development; and, secondly, that the main focus of the enhanced WDA will be economic development? It will be important for the new agency to be enabled to carry out incidental and ancillary functions, including social development in all areas, and remain intra vires, to use a legal term.

Mr. Davies

I am sorry if I am being legalistic, but there is nothing incidental about the phrase "social development". I suppose that it could have been made incidental when the Bill was drafted. Although my hon. Friend might not like to read those legal words, if he bends his mind to it, he might see that "social" is put on the same plain as "economic". It is not incidental in any way. Indeed, interventions by Liberal Democrat and Plaid Cymru Members—is the party still called Plaid Cymru?—show how much they value payments to young farmers' clubs, jazz festivals and village halls, which will now become available, if the funds exist, to anyone in Wales. My hon. Friend may think that a good thing, but this is a major change in the function and purpose of the WDA. When it was established under poor old Labour, it was concerned solely with wealth creation. Now it is moving into the social field.

Mr. Nigel Evans (Ribble Valley)

Does not the right hon. Gentleman agree that changes could have been made to the WDA in the past, had it been thought necessary to include social development in its remit? There is social deprivation in Swansea, Neath, Port Talbot and parts of Cardiff. If the changes are made, they will get in line along with the rural areas and argue for their fair share of the cake.

Mr. Davies

That is the point. I would not blame them for doing so. I take exception to my hon. Friend the Member for Clwyd, West (Mr. Thomas) chiding me for being legalistic. I am not being legalistic: dozens of voluntary associations will queue up with their tin cans outside the WDA and outside the assembly, because the proposal is a charter for voluntary associations. I do not know how many there are in Wales, but there are many. I tabled a question to my right hon. Friend the Secretary of State for Wales, asking him to list them. He did not know how many there were, but said that he would put a list in the Library. It has not arrived yet—I do not criticise him for that—but the list will be very long.

The Welsh are good at voluntary associations, and we have never had problems with social development—we are marvellous at it. Our problem has been with wealth creation. It is no good my hon. Friend chiding me for being legalistic. The Welsh economy is not the strongest in the United Kingdom. It may suffer considerable problems over the next year or two as a result of factors outside its control.

Mr. Bernard Jenkin (North Essex)

Monetary union.

Mr. Davies

I do not even include that. Other, global factors could cause problems.

The Welsh economy needs wealth creation. Conservative Members may argue that the WDA was interventionist and old Labour, which believed that Governments should help with wealth creation. Such views are unfashionable these days, but that was the agency's purpose. We all agree with social development, but it is dangerous to mix it with wealth creation. That is my first point about the change to providing for social development.

I do not know where the money will come from. My hon. Friend the Minister might tell me that the WDA budget will be expanded, but if its purposes and functions increase and the sum of money provided stays the same, something will have to be cut, I do not know what. There will be considerable pressures on the WDA, from voluntary associations, for example. The WDA will be responsible to a democratic assembly, not to the Secretary of State, who will not have the economic powers that he holds at the moment.

Mr. Oliver Letwin (West Dorset)

Does the right hon. Gentleman agree that the Welsh Development Agency will still depend on the Secretary of State in one respect, that is, the extent of its borrowing powers?

Mr. Davies

That may or may not be the case, but the budget will be determined by the assembly. We shall have an Athenian-type assembly that will want to obtain as much money as it can. If it can tell the WDA that its functions include building village halls, it will do so. There will be considerable pressure to cut back on economic development, as we shall all be pressing the WDA for money for social development.

It may be said that that is only incidental, and that there will be judicial reviews. I am sorry to talk about lawyers again. Sadly, local authorities are becoming fairly accustomed to people saying—understandably—"You have powers to help dyslexic children, or to provide speech therapy. You are not exercising those powers properly." They take local authorities to court on those grounds, but the courts usually say that, if there is no money, authorities cannot provide such facilities. That might well be the case with the WDA, but there will be pressure through the courts and the political system. I urge my hon. Friend the Minister to think again. It is perfectly possible to confine social development to the areas to which it is currently confined.

The other aspect that concerns me—in fact, the two aspects must be considered together—is the replacement of the word "industrial" with the word "business". I shall not be "old Labour" on this occasion, and say that we must keep the word "industrial". There is no great magic in a definition of the word, which has been used for centuries in Britain and France to cover all sorts of activity. I do not object to the change from "industrial" to "business"; indeed, I can see that it makes sense in the world we live in. What worries me is the extraordinary definition of "business" in schedule 10.

Paragraph 10(2) gives that definition. I welcome the fact that there is a definition, for a change, and I suppose that "business" is not an easy word to define. The draftsman starts perfectly sensibly, saying that "business" includes any industrial, commercial or professional activities". I do not object to that. Solicitors and accountants in Cardiff who will receive large fees from the WDA will now be able to obtain other forms of assistance from it. I do not object to "professional activities" in the modern world: wealth can be created through them.

The definition continues, however, with the words—in brackets— whether or not with a view to profit". The draftsman clearly felt that a business is normally carried out with a view to profit, whether or not it achieves that profit—but not, it seems, in the new WDA. Profit does not really matter. It seems that someone engaging in a professional activity without a view to profit can now obtain money from the WDA. That is a strange and unnecessary extension of the functions and purposes of the agency.

I have asked myself what sort of organisation would conduct a business without a view to profit. I hate to mention it, but I suppose that the Welsh Rugby Union could be said to be conducting a business nowadays. It has sponsorship and money; it is engaged in business activities, but certainly not with a view to profit, on or off the rugby field. Some organisations could describe themselves as businesses, but without a view to profit.

Why on earth do we need that provision, given the purposes and effect of the WDA? The WDA is there to foster wealth creation. I am sorry if this is another "old Labour" view of the world, but what the Welsh economy needs is profit, and lots of it. Let us tax it by all means, but let us have it. We have very little of it; that is the problem.

Mr. Wigley

My constituency contains a village co-operative called Antur Waunfawr, which is not geared to making profits. It employs people with learning difficulties who would not otherwise obtain work, and it supplies commercial goods. Surely that body could legitimately be aided by the WDA.

Mr. Davies

That is a legitimate body, but my question is whether it should be mixed in with a body such as the WDA, whose ostensible purpose is to create wealth from a profit base in the Welsh economy. I understand that that is an old-fashioned view, but perhaps the legislation is a kind of third way—capitalism with a human face. The Welsh economy needs commerce, industry and professionals, all of them producing profit. There is always a place for the sort of community activity that the right hon. Gentleman mentions, and it is good to see it, but as I say, I question the sense of mixing it in with an economic powerhouse, which is what the WDA was supposed to be, although it will not be any more.

4.30 pm

Not only does the schedule mention activities that are carried on without a view to profit, but it refers to the activities of any government department or any local or other public authority". The whole range of government, including quangos, public authorities, non-governmental bodies, voluntary bodies and those that do not make profits are included. Everything is to be thrown at the WDA. Local authorities will be able to ask the WDA for money. Even Departments will be able to do that. The idea is bizarre. Will the Treasury ask for some of its money back? All those bodies will be like bees at the honeypot of the Welsh Development Agency, poor thing. Apparently it will be entirely different from what it was before.

Perhaps the WDA's budget will be doubled, and that is fine, but I question the effect of what is proposed. Despite the criticisms of some of my hon. Friends, the WDA has been a successful interventionist body and has helped to create real wealth in Wales. We need more of that, but perfectly enlightened social activities are to be mixed in, and that is dangerous. I hope that the Minister will deal with those issues, which I hope will not be a by-product of the DBRW and WDA merger. That is not necessary, and the matter could have been ring-fenced in the legislation. I hope that the Minister will explain that matter, which is important for our constituents.

Mr. Evans

I should like to speak to our amendment No. 493 in this group, and I welcome the opportunity to focus on the extension of the Welsh Development Agency's functions, the possible impact on Wales and the potential for the greater devolution of the social role. I enjoyed the speech by the right hon. Member for Llanelli (Mr. Davies). He said that he thought that the WDA would be an economic and social powerhouse. For a second, I thought he said that it would be an economic and socialist powerhouse. However, I understand that we are all new Labour now, so that could not possibly be the case.

The WDA, which was set up in 1976 by a previous Labour Government, is one of the great success stories of Wales. In a recent debate, the Attorney-General said that he had had the privilege of setting up three bodies in Wales that had survived 18 years of Tory rule. He said that they had survived because the Conservative party could not think of anything better. That was a tribute to the Attorney-General, although it came from himself. It seems that the new Labour Government can think of something better.

The WDA has been built on by successive Secretaries of State for Wales, but there is a fear that the proposed changes may endanger its success. Its remit has been prescribed and the Development Board for Rural Wales has taken over a similar, but more targeted role for areas such as Ceredigion, Meirionnydd, parts of Powys and swathes of rural Wales. That will end with the fusion of the Land Authority for Wales into one super-quango.

We should not underestimate the real success story of the Welsh Development Agency. I think that the right hon. Member for Llanelli fears that the proposed changes will jeopardise the wealth creation focus of the WDA, which, in the 1980s, played such an important role in helping to restructure the traditional industries of coal, slate and steel in parts of Wales, especially steel in Llanwern and Port Talbot.

The Welsh Development Agency also met the task of land reclamation with gusto. I am sure that it would have tackled the task with even more gusto if it had had a larger budget. The WDA also worked on town developments, which were praised by the right hon. Member for Llanelli.

The Welsh Development Agency has helped to transform Wales, which has loosened its grip on its industrial past to become the enterprise centre of Europe. We fear that that role may be jeopardised by changes that will occur under the assembly.

I congratulate the chairman and the entire team of the Welsh Development Agency on its success. We can tell how good the agency has been by the fact that it is being copied not only in other parts of Europe, but across England. The new challenge will be posed by regional development agencies in England—which will receive the help and advice of secondees from the WDA, which is another enormous compliment to their skill.

Another fear is that the Welsh assembly and its 60 politicians may become overly intrusive in the agency's daily affairs. I seek assurances from the Secretary of State—

The Secretary of State for Wales (Mr. Ron Davies)

indicated dissent.

Mr. Evans

I see him shaking his head. I am partly reassured by that, but perhaps, later in the debate, we shall receive a bit more—verbal—reassurance that that will not be the case. I am sure that he has taken heed of the fears expressed by the Confederation of British Industry about the lack of a clear demarcation between the assembly's strategic role and the performance of the WDA's daily functions.

This group of amendments seems to propose assigning many extra tasks to the Welsh Development Agency. Some hon. Members have been critical of the agency, saying that it did not pay due regard to areas outside the M4 and A55 corridors, which have acted as investment magnets. However, if we get the changes to the agency wrong and those areas no longer attract the same investment levels—for example, 20 per cent. of all inward investment into Britain has been in Wales—and if those changes divert the agency from its core responsibility, damage will be done not only to the areas along the M4 and the A55, but to other areas that had planned on gaining some of the extra social development funding. Those areas will be badly let down, particularly if new investment does not materialise.

If we get the changes wrong, the social deprivation that will be caused in parts of Wales—north, south, east and west—will be absolutely enormous, and the tin can that the right hon. Member for Llanelli mentioned in his speech will most certainly find its way to the agency, to the Welsh assembly and to local authorities. We must fully consider the exact consequences of what we are asking of the WDA.

The steer that was given to the WDA—asking it to concentrate on areas away from the M4 and the A55—was absolutely right. The 1996–97 figures show that of £2.2 billion of indigenous and inward investment and 18,400 new and safeguarded jobs, 6,200 of those jobs were safeguarded or created outside the eastern M4 and the A55 corridors. That is absolutely right, and it is exactly what we wanted. The same is true of the Development Board for Rural Wales. We wanted to ensure that more of its money and job creation activities went to a wider area within rural Wales, and that was starting to happen.

New regional development agencies are being created. Despite the concordats that we have heard so much about, we are still unsure about what will happen to Wales's success story when Wales has to compete with those RDAs and with Scotland. Who will be the umpire?

Other problems that will confront not only Wales, but other parts of the United Kingdom are the minimum wage, Europe and farming. Farming is a particular problem for rural Wales, and the WDA will have to pick up the pieces of the crisis that has hit Welsh farming. However, it is not only farmers who are being hit, but the small rural businesses such as tractor suppliers, builders and many others which have grown up around farming. They will now have to look to the WDA. Many small towns and villages will also have to ask the WDA for extra assistance. The greatest social development assistance that can be given to any community is to ensure that there is proper, sustainable work. Without that, there will be severe problems.

Businesses have been hit by five interest rate rises since 1 May. They are probably already working on tight margins and have now seen their borrowings increase and their charges go up. Those which were already marginal may have gone bankrupt.

We have to re-examine the whole subject of Europe if there is to be any re-evaluation, as we understand there is, of the way in which regional aid will be doled out strictly according to the unemployment figures. In many parts of Wales, the unemployment figures are looking good, but we are still told that the gross domestic product of communities in Wales is low compared to many other areas, especially areas in Europe.

We could find ourselves in the absurd situation of seeing areas such as Catalonia attract regional aid that would be taken from areas such as Wales. That would mean a £1 billion hole which the WDA would be asked to fill. We seek some assurances from the Secretary of State in that regard, although I expect that he is battling hard to ensure that any changes in Europe will not disadvantage the parts of Wales that have benefited greatly from regional aid.

I am sure that there is a reason for the way in which social development assistance was targeted on certain rural areas, and a reason why the work was not given to the WDA. If the three bodies to which I have referred are to be merged, we must ensure that social development assistance continues to be given to the parts of rural Wales that need it. The right hon. Member for Llanelli suggested that one way in which to do that would be to include in the Bill more specific references to social development areas. Another way might be to involve local authorities.

As the Minister knows, I was a county councillor in West Glamorgan for six years, and one of my joys during that time was to sit on one of the grant committees. The right hon. Member for Llanelli wondered how many voluntary bodies there are in Wales—I can tell him that there are a great many. They used to ask our committee for support month after month, and we used to dole out money for various bodies. Mention was made of the young farmers, but we gave money to the cubs, boys bands and others. All organisations have a voluntary body to assist them, especially those involving young, disadvantaged and disabled people. We used to go through our budget, which was small in relation to our other budgets, doling out what money we had to assist those good causes.

In the spirit of devolution—and in anticipation of the development of the partnership council—more power could be devolved from the new super-quango WDA to local authorities, particularly if resources are to be limited. Money could then be allocated to the areas that currently enjoy social development status.

I hope that the Minister will closely examine the role of the 22 local authorities, which know their own areas well. If the Government do not carefully reconsider their proposals, they will throw out the baby with the bath water. The WDA's capacity to create wealth could be jeopardised; it will have to fill up the holes created by the other problems that will arise. Social development money will be given to Swansea, Port Talbot and Neath, for example, where there are areas of deprivation that will require money. The WDA will spend so much of its time looking after them that it may ignore rural areas of deprivation.

4.45 pm

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

All of us who were at the birth of the Welsh Development Agency will naturally wish to scrutinise any recasting or revamping of its role such as is proposed in the clause. That is partly because we feel a sense of parenthood, but mostly because we believe that the agency has a fundamental role to play in the regeneration of the community. Having read the clause and discussed the amendments, I ask a simple question: will the changes create an enhanced WDA that is capable of doing more and better for communities such as the one I serve?

The clause recasts the agency by amalgamating it with other organisations. It also goes further, however, and I hope that the Minister will say whether the redefining of the agency's role and objectives is consequential on the amalgamation, or whether the agency is expected to play a different, wider and more significant role in the context of a Welsh assembly.

I hope that this does not sound like counter-bidding or, indeed, immodesty, but I think that even the Attorney-General, my right hon. and learned Friend the Member for Aberavon (Mr. Morris), would concede that I was the inventor of the Land Authority for Wales. As a Minister, I devised the idea and took it through Cabinet Committees. I was able to put the Community Land Act 1975 on to the statute book only after a mammoth session in Standing Committee—the record has only recently been broken—in which we sat from 10.30 am until lunchtime the next day to push the Welsh clauses through. By that time, I was already a Minister in the Foreign Office, so I found myself in a curious position.

As a result, I have always had a fond feeling for the Land Authority for Wales, especially as it was also an early example of the Welsh Office striking out on its own in legislative terms. I do not know how many hon. Members recall the Community Land Act, but in England, the powers were vested in local authorities, so we had contentious debates with Welsh local authorities about the establishment of the Land Authority for Wales.

We managed to establish the authority, and I think that it has served a practical and useful purpose. It is one of the great survivors. The rest of the Community Land Act has all but disappeared, but the land authority has survived. Therefore, I feel some sort of fondness for the organisation.

I make no complaint about the fact that the authority is now to be incorporated into the revised and revamped Welsh Development Agency—except to say that we should not oversell the change. The land authority was doing a perfectly good and effective job on its own terms, and it was one of the rare quangos that did not cost the state anything. It was a wealth-creating, profit-making quango in that one respect.

The land authority is to be incorporated into the Welsh Development Agency, but it could usefully have continued to serve its purpose outside the agency—although I have no reason to believe that it will not do so within the agency.

Mr. Denzil Davies

I hate to carry on reminiscing, but while we are talking about the profitability of the Land Authority for Wales, may I ask my hon. Friend whether he was the Welsh Office Minister who came to me, when I was a Treasury Minister, asking for additional legislation to exempt the authority from taxation on its profits?

Mr. Rowlands

I was not, but I certainly would have been party to the attempt. I think that it was Baroness White.

Mr. Davies

The answer was no.

Mr. Rowlands

The Land Authority for Wales represents a modest practical success story, and I am sure that that should be able to continue under the aegis of the new Welsh Development Agency in the context of the assembly. All I ask of my right hon. and hon. Friends on the Front Bench is that they do not exaggerate the significance of the change. The authority is already carrying out its function, and will simply continue to do so in its revised form.

We have, however, heard many exaggerated claims for the new, revamped Welsh Development Agency. I read one recently, and in the context of the clause and the amendments tabled to it, I ask my right hon. and hon. Friends to what extent it is correct. I refer to the belief that the combination of a new assembly and an economic powerhouse will somehow create a new political momentum for a Welsh energy policy. I have heard that proposition debated in the context both of the assembly and of the proposed changes to the WDA.

When the provisions were recast, was it intended that in all the changes in the functions of the new, or rather revised, WDA, there would be any new kind of power or responsibility for devising, encouraging or developing a Welsh energy policy? Is that consequential upon the changes? I cannot see that it is.

I am sorry to say that the context in which I most recently read the claim that the changes would lead to a new momentum for a Welsh energy policy came from those who want massively to extend opencast coaling throughout south Wales. I have my doubts, therefore, about whether such a development is really consequential on the changes that we are making.

The key to that side of the policy is what will happen with consents for power stations. Will the power to give consents be vested in the assembly, or will it remain with the Department of Trade and Industry? Will the changes in the clause and the rest of the Bill, including the existence of the assembly, make any difference to who consents to power stations? If there is one instrument that could enable one to, or prevent one from, devising an energy policy, it is the power to give power station consents.

What I am about to say will be in a sort of shorthand form, because I do not really mean it in a pejorative sense. My right hon. Friend the Member for Llanelli (Mr. Davies) was right to ask seriously whether the changes proposed in the clause would dilute or deepen the role of the Welsh Development Agency. As my right hon. Friend asked, will we be setting up even more competitive pressures on its budget, both inside and outside the agency? Those pressures are already there in powerful and significant form, even on the traditional functions that we all agree are central to the agency, but which have become Cinderellas in the context of its changing role, even in its existing form.

I am thinking especially of the agency's derelict land function. My right hon. Friend will know how, when we were in opposition, we had to apply continuous pressure to ensure that the WDA's budget for the derelict land programme was safeguarded and maintained in the face of all the other pressures. Will not the new, enhanced economic powerhouse WDA lead to even greater competitive pressures? Both my right hon. Friend and I have felt that the derelict land programme has become something of a Cinderella programme as the WDA's policy, programmes and budgets have evolved. Will it not continue to be a Cinderella and have to compete with other Cinderellas?

That question is serious. I have a vivid illustration: the Deep Navigation site is tied into millennium money, and we have been begging the WDA to come up with its share of the money. We have often thought that we had got the money, but then question marks have been placed against whether the WDA will budget for it. Even at this late hour, the question mark persists and I hope that it will be erased soon. That is an example of the set of pressures that already exist within the agency, but will not those pressures multiply within the new, revised agency, with the result that the agency's role in the regeneration of communities such as the one I represent will be diluted and not enhanced? That is a serious question, which requires an answer.

In some ways, I suspect that the redefining of the functions and role of the agency contained in the clause reflects the changes in society and in the Welsh economy—

The Chairman

Order. I have been listening carefully to the hon. Gentleman's speech and he appears to be in danger of making a clause stand part speech. The amendments to the clause are very particularly grouped, and the hon. Gentleman appears to be ranging over them in a way that takes him outside the group that we are discussing.

Mr. Rowlands

I am sorry, Sir Alan. I had not intended to do that. I think that one will find that most of my remarks refer to the alteration in the wording, whereby the word "social" is added and the word "industrial" is changed to "business". I intended to illustrate that in the point that I was about to make when you, understandably, intervened to ensure that I stayed on the straight and narrow.

My point is this: does not redefining the word "business" and excluding the word "industrial", as my right hon. Friend the Member for Llanelli suggests, extend the WDA's role into an area in which the WDA has thus far steadfastly refused to become involved? I do not know whether other colleagues have received representations on this subject, but companies that repair motor vehicles or garages have thought that they could benefit from the WDA. Does the redefining of the role from industrial to business mean that the WDA will now incorporate activities in the service sector, in which it had previously refused to become involved? That is relevant to the amendments, Sir Alan, and relevant to the points that I have put to Ministers.

Mr. Gareth Thomas

Will my hon. Friend accept that there is a real need in Wales to invest in the service sector and the research and development sector? In that respect, why does he not welcome the broader scope of functions of the new enhanced agency in that it encompasses not only industry in the old-fashioned sense, but business in the wider sense?

Mr. Rowlands

My hon. Friend anticipates my final observations on the amendments, because I intend to address the argument concerning the industrial sector versus the service sector, as well as the indigenous versus inward investment argument, which has raged through some of the discussion that the clause has engendered outside the House of Commons.

I said earlier that the wording of the clause reflected changes in society that have already taken place. When preparing for the mighty efforts that we are going to make in respect of the new deal, I found that a portrait of the Merthyr Tydfil county borough now shows that the proportion of total employment supplied by the industrial manufacturing sector has fallen to 26 per cent.—that statistic coming from the heart of a great industrial manufacturing base. The service sector has been growing as a proportion of the total. My hon. Friend is right to draw attention to the changes, and to the fact that we must accommodate them.

We should not rest the regeneration of local economies primarily on the shifting sands of the service sector. The thing that makes our communities distinctive from service sector communities is our manufacturing role, tradition and skills. I challenge the assumption that one has not only to accept that the WDA should change its role, but to want it to change its role. I do not want it to change its role in one fundamental respect. I would like the WDA to continue to see itself fundamentally as an agency to regenerate the manufacturing sector. The agency can do that in two ways. It can support indigenous local industry—where that exists—and it can encourage major inward investment. I was interested to see the figures for new jobs created in Blaenau Gwent recently, where Tesco and Festival Shopping Ebbw Vale created 300 jobs each. That reflects the incredible changes that are taking place.

5 pm

In my area, Halla—despite its problems—is trying to regenerate and rebuild the manufacturing sector by inward investment, as are US CAN, Candy and the St. Merryn Meat company. These inward investments were achieved by a powerful partnership: the Secretary of State for Wales with a regional selective assistance budget and executive functions working with the WDA. While I do not oppose the fundamental role that the new economic powerhouse will have—especially in the development of indigenous industry—I am queasy about breaking up that powerful partnership.

My real worry about the WDA is not that it will not fulfil the tasks it has been given, but that the role it has played in inward investment—which has played a fundamental part in the regeneration of economies such as mine—will be damaged. I hope that my right hon. and hon. Friends can give me the reassurance I seek.

Mr. Wigley

The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) referred to the fact that he was in at the birth of the WDA. I almost claim the right to have been in at the conception because, in 1970, Professor Phil Williams and I were trying to draft a plan to create such an agency. I am aware that there were many before that who also had ideas.

The WDA was opposed by the then Conservative Opposition when it was created. The Conservatives have seen the light since then, and they understand that bodies such as the WDA can play, and have played, a significant part in development. The creation of the WDA was fought tooth and nail by the Conservatives, who opposed it on Second and Third Reading. The Conservatives learned from experience—as, no doubt, they will learn from a similar experience regarding the National Assembly for Wales in due course. It may take a little longer, given the present generation, but time will tell.

Mr. Robert Syms (Poole)

Does the right hon. Gentleman agree that when there is strong debate in this place on issues such as the WDA, perhaps because there is opposition and people focus on the clauses, it produces good legislation which stands the test of time?

Mr. Wigley

In that case, the Conservatives should not have voted against Third Reading. However, I take the point. The WDA has played a significant role in Wales. I am not one of those who knock the WDA. There are shortcomings, and there is not a single body that has not make mistakes at some time. By and large, the overall benefits to Wales have been massive.

I shall now discuss amendment No. 374, in the names of the right hon. Member for Llanelli (Mr. Davies) and the hon. Member for Merthyr Tydfil and Rhymney, and amendments Nos. 523, 519 and 540, which we tabled. Although there is a need for a social dimension in the Bill, I understand the arguments made by the right hon. Member for Llanelli and the hon. Member for Merthyr Tydfil and Rhymney. I believe that the primary role of the Welsh Development Agency, in its new form as in its old, must be the economic regeneration of Wales. It must be about creating job opportunities throughout Wales.

Some aspects of the work of the Development Board for Rural Wales have had a social edge—we heard some examples earlier. I could quote examples such as the provision of television masts, with which the DBRW was able to help in the rural counties of mid-Wales, but for which there was no facility outside that area, so other areas could not benefit. Obviously, if the work of the DBRW is now to be included in the overall work of the new powerhouse agency, there needs to be some function to continue such provisions, in the areas where they are appropriate.

I agree with the right hon. Member for Llanelli that it is fundamental to get the economic emphasis right. What will happen if the focus of the Welsh Development Agency is shifted entirely to trying to respond to initiatives that are not strictly economic? Unless there is work for the communities living in the old towns and villages of the slate-quarrying areas of my county of Gwynedd, as in the old coal mining areas of the valleys of Glamorgan and Gwent and in east Dyfed, we shall have depopulation, an aging population and all the social and economic problems that flow from that. Therefore, the organisation must do a positive job in providing the economic base that sustains social and cultural life and the other aspects of life in those areas.

This has been a useful debate, in which valuable arguments have been made from the Conservative Front Bench. I am glad that among Conservative Members there appears to be a change of emphasis and approach to this issue. Perhaps the Leader of the Opposition is giving a lead in rethinking his policy on devolution. If so, I welcome it.

I hope that when the Under-Secretary of State for Wales, the hon. Member for Neath (Mr. Hain), replies to the debate, he will put to rest the issue of the balance between the agency's social and economic responsibilities. I hope he will tell us that the Welsh Development Agency will have primarily an economic role, and that the social role will facilitate the economic role but not take over from it. It is a question of getting the balance right.

I shall now speak to the amendments standing in my name and those of my hon. Friends. Amendment No. 523 inserts, instead of the words "or any", the words "and every". That may seem a very simple amendment. It refers to the need for economic regeneration to occur in all parts of Wales, not just in the pockets of Wales that have benefited so much recently. I shall not bore the Committee by repeating our arguments about unbalanced development in Wales. I summarise by saying that, until fairly recently, during the period of Conservative government, the Welsh Office had a strategy that accepted that 80 per cent. of new jobs coming to Wales by way of inward investment went to two small pockets—one around the M4 corridor in south-east Wales and one around the Wrexham-Deeside area in north-east Wales.

I grant that, in March 1997, a month before the general election was called, the Conservative Government had a change of mind—a deathbed conversion—and changed that distribution to 50:50. I believe that the incoming Government have changed the distribution a little more, but the pockets of severe unemployment in Wales are to a large extent outside those two catchment areas.

Development needs to take place so that there are economic opportunities and job opportunities within reasonable travelling distance of every part of Wales. I am not saying that it is possible to have equal development in every town and village—obviously, that would be nonsense—but it is reasonable to expect that there should be a fair range of job opportunities within travelling distance.

In areas such as south-west Wales, in Pembrokeshire and other parts of the old county of Dyfed, in north-west Wales—in my constituency and that of my hon. Friend the Member for Ynys Môn (Mr. Jones)—and in other pockets, there are severe on-going levels of unemployment. The strategy is not yet meeting that challenge. Perhaps the Minister will announce some good news for some of those areas. I hope that there will be a change of emphasis in that direction.

We are seeking to alter the wording in the Bill so that the new powerhouse agency will know from the start that it is not a matter of ensuring that the overall figures for Wales look all right and forgetting the pattern throughout Wales. The agency has a responsibility towards every part of Wales—not just those lucky corners that have done so well recently. Amendment No. 519 would promote social equity in Wales. In undertaking its economic responsibilities, the agency must guard against the gulf that can grow between areas of severe social and economic deprivation and those that are doing very well thank you. As I have said, we must strike a balance.

Amendment No. 540 is timely. It deals with encouraging the development of Welsh exports and the interface between the Welsh Development Agency and the rest of the world. I am very much aware of the press reports this week about that issue. Yesterday's edition of the Financial Times referred to the apparent need for the Welsh Development Agency to cut expenditure and overseas staff. The report said that the agency is facing a £3 million cut in administrative costs. The Financial Times states: After staff costs, the area being targeted for savings is expected to be the 11 overseas offices, where the agency is believed to be considering using Invest in Britain Bureaux".

Mr. Letwin

On a point of order, Sir Alan. I may have misunderstood, but I thought that the timetabling prevented discussion at this stage of amendments that relate to lines beyond line 11. The right hon. Gentleman is discussing amendment No. 540, which relates to line 26.

The Chairman

Order. The hon. Member for West Dorset (Mr. Letwin) may not realise it, but he is questioning my selection of amendments. The fact is that the amendments are perfectly in order if I have selected them in this way.

Mr. Wigley

I am grateful, Sir Alan. I think that the Minister wishes to contribute.

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

I am grateful to the right hon. Gentleman for giving way. I take this opportunity to deny specifically the Financial Times report. There is no truth whatsoever in the claim that the WDA intends to close its overseas operations, which have played an important role in encouraging investment to Wales under both this and the previous Administration.

Mr. Wigley

I am very glad to hear that. On Monday morning, I met Brian Willott, the chief executive of the Welsh Development Agency, to discuss the implications of the cut—I had heard rumours of them before the story appeared in the Financial Times. Mr. Willott was concerned about having to cut costs by £3 million. I assume that the Minister does not refute the idea that there will be a £3 million cut—it is simply a matter of where it will hit.

Mr. Hain

I do not refute the fact that the Government have asked the three quangos that will join to form the new powerhouse under the WDA to make administrative savings. I am sure that the right hon. Gentleman will agree that we must have an efficient operation. There must be scope for savings among three bodies that performed similar functions, many of which were duplicated.

Mr. Wigley

I am sure that there will be scope for savings—the question is whether it will come from the overheads at the headquarters of those bodies in Cardiff and elsewhere or whether it will come from the administrative budget and undermine the WDA's activities at the sharp end. That matter concerns the agency and hon. Members who represent Welsh constituencies. We want the agency to build on its established track record.

We are aware of the on-going attack on the ability of the Welsh Development Agency to attract overseas investment to Wales. There is constant sniping from certain people outside Wales whose agenda seems to be to pull down the work of the Welsh Development Agency. I realise that Wales has benefited: we have received 20 per cent. of inward investment to the United Kingdom, which is more than "our share". However, we certainly needed it. If there is a feeling in north-east England that Wales is doing particularly well, surely that area should rise to our level rather than trying to pull Wales down. This structure is helping to deliver the goods in Wales. If there are lessons to be learned about attracting inward investment to the north-east or the north-west, I wish those areas the best of luck. However, the Welsh Development Agency must not be shackled.

5.15 pm

I have read and heard of the rumblings in the Department of Trade and Industry, which—even before the advent of the new Welsh Development Agency—is trying to tie up the new super-body and establish a hold over it. That would be a severe disservice to Wales. I ask Welsh Office Ministers to provide some assurances in that regard when they respond to the discussion.

I have tabled parliamentary questions about exports. Encouraging exports is the flip side of attracting inward investment. The creation of the interface and the networks and the generation of faith in the economy that provides the exports can be significant factors in identifying and helping to develop overseas investment in Wales. Manufacturing opportunities in Wales or in other parts of the United Kingdom may be identified and products may be exported to the country of origin or to other parts of the world.

Mr. Evans

The WDA is already doing that to a great extent through "Source Wales". Those activities would be damaged if the WDA pulled back any of its people from abroad, particularly from countries such as Japan. The WDA is doing a good job, but there is a fear that indigenous Welsh companies will suffer.

Mr. Wigley

We must develop the "Source Wales" approach. There is immense untapped potential. Much good work has been done, but there is scope for more. Components imported from Japan, Taiwan and the far east that are used by companies such as LG and ACER could be made in Wales—or at least nearer the source. That would benefit the economy of the United Kingdom in general and of Wales in particular. That area must be developed. Proactive work must be undertaken in countries such as Japan, South Korea and Taiwan to achieve our objectives.

I hope that the WDA office in Tokyo is receiving the full, proactive support of our embassies and other United Kingdom organisations. We must not see the sort of infighting that sometimes occurs—the petty jealousies, the empire building and the desire to take credit for any achievements. It is true that the Welsh Development Agency has done some tremendous work, but it would be hamstrung if it were not working as part of a team. I seek the Minister's assurance that the team approach will continue and that the WDA will receive support from all United Kingdom representative bodies, whether they are embassies, the Invest in Britain Bureau or the DTI.

I received an interesting answer from the Scottish Office when I asked a question about the statutory provisions that enable it and its agencies to help firms located in Scotland to develop export markets overseas. The Minister for Education and Industry, Scottish Office replied: My Department, through Scottish Trade International, a joint organisation between The Scottish Office and Scottish Enterprise, assists the delivery to Scottish-based companies of support from the Government's Overseas Trade Service, funded by my right hon. Friend the President of the Board of Trade. In addition, Scottish companies benefit from export advice and assistance from Scottish Enterprise on the basis of section 1(a) of the Enterprise and New Towns (Scotland) Act 1990 and from export advice now funded by my own Department under the Industrial Development Act 1982."— [Official Report, 10 February 1998; Vol. 305, c. 147.] In other words, the Scottish Office has a positive, proactive role which will transfer to the Scottish Parliament to develop overseas trade. That is clearly beneficial.

I asked a similar question of the Welsh Office and the Under-Secretary of State for Wales, the hon. Member for Neath, replied on 10 February. He stated: Section 1 of the Welsh Development Agency Act 1975 provides the necessary statutory powers for the activities of the Agency. The Agency has a number of initiatives and schemes which assist companies in Wales to develop overseas business opportunities."—[Official Report, 10 February 1998; Vol. 306, c. 156.] The Minister said that he would arrange for me to have a letter from the chief executive of the agency and for a copy to be put in the Library. Such a letter has not come, nor has it reached the Library, but no doubt it will arrive some time.

From comparing those two answers, I get the strong impression that the role of the Scottish Office has been considerably more advanced than the role of the Welsh Office in developing that trade aspect, and that that is beneficial to Scotland's attempt to attract inward investment. The best of luck to Scotland—I do not begrudge it. The Scottish Office is going out and doing the job. On three occasions during the past two years, I happened to be in places overseas where Scottish Office Ministers had just been, trying to draw in investment. That has helped to create the networks that Scotland needs to attract inward investment.

We need that same proactive approach. Bodies such as the Department of Trade and Industry and Invest in Britain must understand that our agenda is to achieve as advanced a model as the one from which Scotland benefits, not to be reined in because of the agenda that the DTI seems to have.

If the Welsh Development Agency and its successor body are to do the job that we need, they will need resources. I hope that the Under-Secretary will respond to the points made by the hon. Member for Merthyr Tydfil and Rhymney and the right hon. Member for Llanelli about the need for resources to deliver the objectives.

In recent months, we have seen the danger of large-scale projects such as LG, which of course is valuable and worth having in its own right, swallowing up the available resources; resources are not available for other parts of Wales where, by now, there is an even greater need for economic stimulation and job creation. If the new body is to have a chance of attacking the agenda that awaits it, it needs those resources. I hope that some assurance will be given that, although we read in the Financial Times about cuts in resources, adequate resources will be made available.

Finally, as this is our debate about the WDA, I hope that there will be some clarification of the appointment of people who will take over the responsibilities in the new super-body, and what will happen with regard to the senior jobs in the new structure. There is great uncertainty in all the bodies. People in post want to know where they stand. Will they be appointed by existing bodies, or can the appointments be made only after the new body has come into existence? I realise that that is tangential to the debate, but it all comes together in our amendments. We need a structure in place to develop exports and promote balanced development throughout Wales.

The Chairman

Order. I remind the Committee that this is not the only debate about the Welsh Development Agency. There are several groups of amendments that relate to it.

Mr. Rhodri Morgan (Cardiff, West)

Taken as a whole, the amendments in this group relate to the question of how social, as well as economic, the Welsh Development Agency cum economic powerhouse should be, after the merger with the Land Authority for Wales and the Development Board for Rural Wales.

I shall not reminisce about the period in the mid-1970s, almost a quarter of a century ago, when the three agencies were set up under the previous Labour Government, because obviously I was not there, unlike my right hon. Friend the Member for Llanelli (Mr. Davies) and my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), but I recall the period. The curious fact about our debate today about a three-way merger and the terms on which it should take place is that that was also true at the setting up of the WDA.

The WDA was a merger of the derelict land unit, the Welsh Industrial Estates Corporation, which built the factories, and the Development Corporation for Wales, which was the punter-hunter for the body that marketed Wales in England and the rest of the world. It tried to draw companies in to occupy the factories that would be built by the Welsh Industrial Estates Corporation, sometimes on cleared land that used to be covered in slag heaps from the coal mines.

In that three-way merger, probably the same consideration of priorities took place that we are undertaking in debating the amendments. We should not expect the functions of a body on day one of a merger to remain the same over the next quarter of a century. Clearly, the priorities will change. When the original merger took place, one of the main priorities back then would have been to clear the slag heaps. It was not all that long after the Aberfan disaster, and people were still conscious of it from eight years previously.

People saw that as a high priority for two reasons: first, it released land; and, secondly, it improved the environment and made the environment in the valleys of north-east Wales and especially in industrial south Wales more attractive to industrialists. Accordingly, factories were built on the cleared land, and the parts that could not be made flat enough on which to build factories were landscaped.

Rather than discussing how social the Welsh Development Agency cum economic powerhouse should be, at that time we would have been discussing how environmental it should be, and to what extent it should be allowed to dilute—

Mr. Denzil Davies

That is made perfectly clear in the Welsh Development Agency Act 1975. One of the four purposes set out in the Act is to further the improvement of the environment in Wales". That means clearing the slag heaps. Another purpose is to further the economic development of Wales".

Mr. Morgan

That is precisely my point. The question was how environmental the WDA should be. The question now is whether the social aspect dilutes that function. That was the point made earlier by my hon. Friend the Member for Merthyr Tydfil and Rhymney. In other words, if functions are added to an economic development agency, is its focus diluted?

There was great criticism of the environmental aspects of the early WDA. [Interruption.] My right hon. Friend the Member for Llanelli denies that, but I can tell him that it is true. I wrote an article on the subject. My right hon. Friend is not the whole of the human race and he may not remember that, so he should not rush to denials too quickly. He may not remember my article in the Western Mail, but that is his problem, not mine.

The issue is the same: is the focus of an economic development agency diluted when functions are added to it? Is it better for the agency to concentrate solely on economic agencies, and for other agencies to specialise in other functions? Are merged functions a good idea, because they would help along the general process of improving the wealth and prosperity of the Welsh nation? Should that be done by several agencies, or by a merger of three agencies, as we did when we set up the WDA in the mid-1970s and as we are doing now?

The issue is complicated by the fact that one of the predecessor agencies had a social function. For the DBRW, the main problem was not unemployment, but depopulation. Unemployment was quite low, but the young people would not stay because they had none of the facilities of town life. The DBRW thought that, with more social development, people would not mind staying in the area. People did not want to stay on the farms and little villages.

Mr. Lembit Öpik (Montgomeryshire)

Does the hon. Gentleman agree that exactly the same problem persists, particularly in areas such as mid-Wales, and that that is one of the most powerful arguments for the proposals in hand?

Mr. Morgan

I think that the hon. Gentleman is confirming what I thought about the basis of "social". If the word is put into the Bill, will there be a dilution throughout Wales in both rural and urban areas? That point was made by my right hon. Friend the Member for Llanelli. Such a dilution would put pressure on the social side of the budget. If the word is not inserted—I think that that is what the Tory amendment seeks to achieve, although I did not hear the hon. Member for Ribble Valley (Mr. Evans) arguing this—and social development does not feature at all, it cannot be applied in mid-Wales, let alone urban Wales. It seems that that is the meaning of the Tory amendment. The hon. Gentleman may not wish to advance that argument but it seems that that is the meaning of the amendment.

5.30 pm

Mr. Evans

I am not sure whether the hon. Gentleman was listening carefully enough. The right hon. Member for Llanelli (Mr. Davies) suggested that we could either demarcate the rural areas that now receive social development aid to ensure that they, and only they, continue to receive it, rather than places such as Swansea, Port Talbot or Neath, which would have arguments to advance for social development, or devolve down to the local authorities. Both suggestions could be carefully considered.

Mr. Morgan

The hon. Gentleman is saying that he was speaking in defence of the amendment tabled by my right hon. Friend the Member for Llanelli. I was saying that the hon. Gentleman was not speaking to the Conservative amendment, which would remove the ability of the economic powerhouse or super-agency even to continue what the three predecessor agencies are now able to do, especially the Development Board for Rural Wales, in promoting social development in mid-Wales.

I hope that my hon. Friend the Minister will deal with whether the addition of the words "and social" will allow the merged agency to continue what the DBRW does now in mid-Wales and with whether the intention is to extend the social development function to rural areas of Wales that are not in mid-Wales. Finally, is it intended that there should be social development in any part of Wales, be it urban, non-mid-Wales rural or a continuation of the area of mid-Wales?

Mr. Denzil Davies

There is no question of intent; we are dealing with what the legislation will provide. Social development will cover the whole of Wales. It will not be restricted to Powys or rural areas generally. It is not a matter of intent. Perhaps my hon. Friend will read the proposed legislation.

Mr. Morgan

I do not know why my right hon. Friend thinks that I do not understand that. Perhaps the issue is whether ministerial replies have any purpose. I am saying that ministerial replies have a function in the proceedings of the House of Commons. That being so, there is some purpose in asking the Minister to explain what the clause is intended to mean in terms of the operation and budgeting of the agency and what the merged agency will be told to do, for as long as he has any influence over it. My hon. Friend will be aware of the influence of judicial reviews in grey areas. We know that what Ministers say at the Dispatch Box counts in grey areas. That is why I am asking the Minister to perform the usual function that Ministers undertake when they reply to debates in Parliament.

It is obvious from the way in which the Bill is structured that we are terminating, through the legislative structure of the Bill, the DBRW and the Land Authority for Wales. We are making the WDA the taking-over body, legislatively, of the other two agencies to which I referred. This may be a merger in the minds of Ministers, but legislatively there will be a takeover. That is clear from the structure of the Bill.

The issue is whether we should try to buy off the possible opposition of those who work in or are served by, in the case of mid-Wales, the DBRW, including those who have a particular interest in urban regeneration and land development, by saying, "Do not worry. As we are making the WDA the superior agency, we shall try to curry some favour with you by doing something for you in the wording of what will be an Act—for example, adding the words 'and social'—so that it is clear that the DBRW will have a continuing influence even though its legal being has been terminated."

The same process is occurring with staffing levels. My right hon. Friend the Secretary of State has already said that the chairman of the WDA will be the successor chairman, and that the chief executive will be the successor chief executive. Including the words "and social" could be seen as the quid pro quo for these two processes. Even this is being said, "The WDA can take over the other two bodies and we shall be the superior body, but we shall draw back from some of the activities of the WDA that the DBRW never undertook, including inward investment from abroad by having offices abroad." The international division of the WDA feels very much under threat precisely because of that quid pro quo.

We have the words "and social"; a parallel in terms of the staffing structure is that the WDA gets the chairman and the chief executive. At the same time, the DBRW-type attitude that business services are important while inward investment is not so important will be reflected in the staffing structure. That is an alarming prospect. The parallel structure to what is proposed in the amendments will gnaw away at the international division and the overseas representation of the WDA.

The WDA is already the smallest of the bodies that serve the British Isles through overseas representation. The development authority for Northern Ireland has 57 people working abroad. The Locate in Scotland office has 37, the Northern Ireland Industrial Development Board has 33 while the WDA has 25 from 1 April. Perhaps these words are being used, "We know that the WDA will have the chairman and the chief executive, but do not worry. There will be a lot of DBRW and LAW influence below that level. We are showing you that by shrinking the international division. The DBRW was never so involved in mid-Wales because the WDA always acted for you. The styling of the agency is to withdraw from some of the overseas markets and no longer to have a presence abroad." That would be a tragedy.

The parallel that can be drawn from the amendments is a structure that will work away at staffing levels. Given the staffing structure being devised in the merged arrangements and the announcement that was made a few days ago about the chairman and the chief executive, we shall have not an economic powerhouse but an economic power mouse. There will no longer be the ability to draw in firms from abroad. The pass will have been sold. In effect, it will be said, "The WDA can have the top jobs, but after that we shall start drawing in the horns of the old WDA function because it was expensive. There were offices in Seoul, Tokyo, north America and elsewhere. If we pull out of that, the Invest in Britain Bureau in London will be very happy, as will the Department of Trade and Industry. We shall pull out of all that."

That having been done, the WDA will not be an entirely dominated organisation in future, because it will not involve excessive resources and savings of £3 million will be achieved, at least partly by pulling out from some of the admittedly expensive offices abroad. However, if the WDA is already the smallest of the big four organisations that represent the parts of the United Kingdom—Northern Ireland, Scotland and Wales—and is already operating at a level that barely amounts to a critical mass in most of the key markets for inward investment, there will be difficulties. If there were a cut while trying to maintain a share, which the right hon. Member for Caernarfon (Mr. Wigley) was talking about—cutting a body with only 25 staff abroad to 15, for example—the agency would not be viable. There would then be pressure from the IBB to wind the whole thing up because it would not be worth running.

Mr. Livsey

I am grateful to the hon. Gentleman to allow me to intervene, because it seems that I shall not be able to make a speech during the debate. I apologise for being absent earlier. Some Territorial Army units in my constituency are under threat and I had to leave the Chamber on that account.

The news yesterday was that the international division of the WDA might be cut by four people while the DBRW might be cut by 60. If that is true, the social development and business connect functions of the DBRW are under threat. I hope that the Minister will reassure us that these cuts will not take place as a result of amalgamating and restructuring the WDA into a powerhouse.

Mr. Morgan

If what the hon. Gentleman is saying is true, we want to know from the Minister from where the savings of £3 million will come. Will each part share the cuts and misery proportionately so that ex-DBRW parts are subject to a cut, along with the WDA and its international division? Will it be proportional? The suspicion is that the international division will be subject to the biggest cut and may, as a result, fall below the level of a critical mass in overseas matters.

Mr. Letwin

I shall be brief, as time is pressing. My speech flows from the remarks, as has often been the case during the Bill's consideration in Committee, of the right hon. Member for Llanelli (Mr. Davies). I draw the Committee's attention to a constitutional question that arises as a result of the definition of social development.

I remind the Committee that there is something procedurally odd about what is going on in this clause, as clause 29(1) gives the Welsh assembly enormous powers to redefine, as the Secretary of State has eloquently described on other occasions, the role of the Welsh Development Agency, and, indeed, to terminate its functions entirely, if I am not mistaken. It is therefore odd that the Government have chosen to extend the WDA's role by statute of the House rather than allow the assembly to make that decision, as the assembly will be allowed to do in relation to the continuance or restriction of the WDA's function. We must therefore look at what importance will be attached to the change in the WDA's function.

Like the right hon. Gentleman, I have looked at different sources for a definition of "social development". The European literature, which will be extremely important guidance to United Kingdom courts in determining this, has a much wider definition than that suggested by the right hon. Gentleman. The transfer of functions order lists all the classes of activity that could be classed as economic.

When one sees the classes of activity that will be transferred to the assembly, it could be argued—if time permitted, I would do so—that each and every one of the remaining non-economic functions could be classed as social development. There is at least a risk—perhaps a severe one—that the WDA, if it so chose, could gradually establish a right to intervene in every area of government in which the assembly will also have a right to intervene.

Section 1(6) of the Welsh Development Agency Act 1975 states what the agency's powers are in relation to its scope. It says: The Agency shall have power to do anything"— a remarkable statement— whether in Wales or elsewhere, which is calculated to facilitate the discharge of their functions … or is incidental or conducive to their discharge. That is the widest definition that could be given of the powers that a body could have, given to it by statute. If the scope of power given to it by statute broadly approximates that given to the Welsh assembly, there will be two bodies in Wales—one will be reformed; the other established—both of which appear to have, within roughly the same scope, broadly unlimited powers to do broadly anything, so long as they do it procedurally in the right manner.

We must then look at where the money flows. We have, I fear, a confused picture. Perhaps the Minister can reassure us that I have misunderstood the position. I believe that, although the assembly will be responsible for the current expenditure of the WDA, under section 18(3) of the Welsh Development Agency Act 1975, which does not appear to contain an order-making power that is being transferred under the transfer of functions order, the Treasury and the Secretary of State will determine the total expenditure of the WDA, because it falls to them to determine its aggregate level of external financing.

Looking some years ahead, to an assembly that is dominated by a political party or parties different from those that dominate the House and constitute the Government of the United Kingdom, we see the classic recipe for constitutional tension: an agency which can do everything which, broadly speaking, the assembly can do; which has the widest powers in relation to that scope; which is funded, at least in part, directly from the Government of the United Kingdom; and which can set itself up in opposition to the Welsh assembly.

The assembly will, of course, in part be the agency's paymaster. What a fertile field in which constitutional problems can arise, for example, if the Secretary of State of the day or the Treasury seek to use the WDA as a means of directing funding through the external financing limit powers, against the interests of its nominal paymaster—its current expenditure paymaster—and the body that is meant to be in charge of it.

I am not trying to argue that all these problems will arise at once; I am trying to argue that, by inserting the word "social", with its wide connotations—I doubt that whatever the Minister says at the end of the debate will much influence the judges in this matter—the Government will have created the ability for the two bodies to be in tension in a way that the Government, or their successors, will come to regret.

5.45 pm

Mr. Hain

I am sorry to have to reply to the debate at this point. I realise that I might have stopped some of my hon. Friends from speaking, for which I apologise.

Amendments Nos. 374 and 493 would mean that the social development powers of the Development Board for Rural Wales were lost with the abolition of the board.

That is the important point. The White Paper "A Voice for Wales" set out the Government's plan to consolidate the functions of the DBRW and the Land Authority for Wales into the WDA, to provide a unified and comprehensive range of services for the whole of Wales. Indeed, that is done at local authority level, where regeneration plans reflect a comprehensive approach, involving economic, social and environmental development.

In the past, the DBRW has made effective use of its social powers to contribute to the development of rural communities, complementing the role of local authorities—for example, a £25,000 project in Ceredigion to convert a warehouse into a sports centre. Other instances include support for jazz and music festivals, opera performances and youth clubs.

The Bill clearly establishes the powers of the new agency to be a full and effective partner in economic and social development schemes all over Wales. Obviously, the way in which this power is used in the future will be subject to the wishes and guidance of the assembly, but these amendments would deny any prospect of progress in that direction.

I shall respond specifically to the typical probing and forensic points made by my right hon. Friend the Member for Llanelli (Mr. Davies). He raised legitimate points, in contrast to the somewhat legalistic points of the hon. Member for West Dorset (Mr. Letwin). I would not for a moment accuse the hon. Gentleman of misunderstanding the Bill, but he missed its point entirely and sought to confuse it in an argument—one that is fundamental to the Conservatives' opposition to the Bill—about tension between Westminster, which sets the funds for the assembly, and the assembly, which would control the new WDA powerhouse agency.

The social activities envisaged are pretty small-scale. I gave examples a moment ago. They would not threaten the overwhelming industrial and economic focus for the activities of the powerhouse. The new WDA will, of course, be accountable to the assembly. Its programmes, including social development, will therefore be subject to scrutiny by the assembly under section 1(14) of the Welsh Development Agency Act 1975. No Treasury consent will be required. If there were any question about the activity of the powerhouse veering too much, say, in a social direction, the assembly would be able to call it to account. It would scrutinise that and deal with any problems that arose.

My right hon. Friend the Member for Llanelli and my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) asked about the definition of the term "industrial" and the balance between business and industry. We propose to substitute the term "business" or "businesses" for "industry" or "industrial", which is used in the Welsh Development Agency Act. We have made that change simply to use a more up-to-date expression which better captures the nature of the modern Welsh economy.

I note that my right hon. Friend accepted that that change was fine, but he made some specific points, to which I shall come later. The change does not imply that the term "industry" provides too narrow a definition of the type of body that could be supported under the Welsh Development Agency Act or any other legislation.

With regard to my right hon. Friend's point about profit, the definition in the Bill, in particular in paragraph 10 of schedule 10, is really to ensure that there is no attempt to exclude, for example, co-operatives. The intention was to make the WDA's remit as wide as possible. Other examples might be a business conducted by a charitable trust on a break-even basis, or a village shop run by a local community. Therefore, there is not a great deal to be concerned about, although my right hon. Friend was right to press us on that.

Mr. Evans

Why does the definition of "business" also include public bodies? Does not that mean that even the Welsh Office could apply for grants for, for example, business efficiency? Why is the definition so broad as to include public bodies?

Mr. Hain

The hon. Gentleman should read the Bill carefully.

Mr. Jenkin

Answer the question.

Mr. Hain

If the hon. Gentleman will allow me to do so, I shall answer the question.

The definition in schedule 10 is clear. It rightly gives the new WDA extremely wide powers. Unlike the hon. Member for Ribble Valley (Mr. Evans), we do not want to shackle it.

My hon. Friend the Member for Merthyr Tydfil and Rhymney asked about service. I agree that the heart of any successful economic strategy for revitalising the Welsh economy must focus on manufacturing and industry. That has been terribly neglected in the past couple of decades—a point on which we have often agreed, and I continue to do so. I think that my hon. Friend claims that the birth of manufacturing took place in Dowlais, and he may have a point there.

It is important that service industries are included. For example, a call centre might well be classed as a service business rather than a manufacturing industry, self-evidently. I agree that manufacturing must be given priority, both in terms of inward investment and indigenous investment, which has particularly been neglected in the past 18 years.

Mr. Rowlands

In the past, when motor vehicle repair businesses or garages applied for some support from the WDA, it said that that was not a service sector which it should support. In the changes that have been made, would it now be included in the responsibilities of the WDA?

Mr. Hain

It is quite possible that it would be. The broad remit for the powerhouse would reflect that. It is an attempt not to shackle it, but to empower it, so that it can conduct the necessary economic support activity.

The right hon. Member for Caernarfon (Mr. Wigley) raised some pertinent points, for which I thank him. I emphasise that the balance must be in favour of economic, industrial and business activity. We have set specific targets to shift investment westward. It is difficult, but we are determined to continue with that.

As to the wish to make it a function of the agency to promote social equity in Wales, I remind the Committee that, for the first time, the Bill empowers the agency to address social development. Social equity is better achieved by a cohesive partnership between public and private bodies involved in service provision. That means not just the agency but the assembly, local authorities, the voluntary sector and many other bodies. I am sure that the social development powers of the Development Board for Rural Wales, which the Bill will transfer to the agency, will help it to contribute to the effort. Amendments Nos. 374 and 493 would prevent that transfer.

Mr. Letwin

If the Minister is admitting that social equity could be included within social development, can he name any activity that would devolve to the Welsh assembly which might not be considered as falling within the remit of the WDA?

Mr. Denzil Davies

Not many.

Mr. Hain

That is probably true. We intend to create a powerful agency.

The hon. Member for Ribble Valley made an important and legitimate point—for a change—about whether the assembly would be meddling in the WDA's activities. The answer is no. The assembly will set clear targets for the new powerhouse. It will monitor it and hold it accountable for delivering the strategy which it determines as an assembly. But decisions on day-to-day matters, such as inward investment and the level of grants in attracting inward investment, would be made by the powerhouse, not by some Committee of the assembly.

I am aware of the interest of the right hon. Member for Caernarfon in the comparative arrangements for export promotion and development in Scotland and Wales. He made some important points. I am pleased to reassure him that the existing WDA legislation provides the necessary powers for it to undertake export promotion activities, so his amendment is not necessary.

At the moment, the Welsh Office is the main provider of export and advice services throughout Wales, while the services provided by the WDA are often sector specific. Other bodies, such as the chambers of commerce, training and enterprise councils and export associations, have been working with the Welsh Office to review and improve services to help small and medium enterprises in Wales to export more. We will bear the right hon. Gentleman's points in mind.

I also listened with care to the right hon. Gentleman's points about the WDA's vital international role, and his Scottish point, which we note with interest. My right hon. Friend the Secretary of State has made it clear that there will be no Whitehall veto over his powers in respect of financial arrangements and so on, and therefore over the assembly's powers with regard to inward investment.

My hon. Friend the Member for Merthyr Tydfil and Rhymney asked whether there would be a Welsh energy policy. The power to give consents for power station development will still reside with the Department of Trade and Industry, but the WDA will obviously have an interest, as it has at the moment in promoting the power station development at Baglan.

Mr. Denzil Davies

Will my hon. Friend give way?

Mr. Hain

I am sorry, but I have only a couple of minutes left.

I can tell my hon. Friend the Member for Cardiff, West (Mr. Morgan) that I deny emphatically that there is any attempt to run down the international activity of the WDA. I owe my hon. Friend a letter on that point, and I shall write to him addressing the points that he raised.

My right hon. Friend the Secretary of State has asked for the resignations of all 27 members of the three quangos which are to be merged to form the economic powerhouse for Wales—the WDA, the DBRW and the Land Authority for Wales. They will stand down this autumn, when the new body is created and a new body is appointed. We shall shortly advertise those appointments, and, in addition to new candidates, I have no doubt that many of the existing members who have given dedicated service to Wales will wish to put their names forward.

We are determined that all other board members of the new powerhouse will be appointed in the same fair and open way as the chair of S4C. The new board will not be open to accusations of cronyism; nor will any other appointments made in the new Wales. People are looking to Wales to give a lead in establishing new, more open and accountable ways of managing public bodies and the Government are giving the lead. We are making a clean break from the old, scandal-ridden quango state, and I urge my right hon. and hon. Friends not to press the amendments.

Mr. Denzil Davies

My hon. Friend the Minister made it clear that the Government have no intention of shackling the WDA, and that the purpose of the changes was not to do so. There will thus be a considerable extension of the WDA's powers.

I realise that I will not get an answer now, but may I ask my hon. Friend rhetorically whether the money will still be shackled? If the powers are to be unshackled, will the moneys be similar in quantum to the current powers?

Mr. Hain

rose

Mr. Davies

I am sorry, but I shall not give way to my hon. Friend. I have one minute, and I intend to use it. I am sure that he wants me to withdraw the amendment when the time comes.

Let us have extra powers for social development, but let us also have the extra money that goes with it.

Mr. Hain

indicated assent.

Mr. Davies

My hon. Friend is nodding, so I presume that the Secretary of State will go to the Treasury and say that we want more powers.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6 pm

Mr. Cynog Dafis (Ceredigion)

I beg to move amendment No. 517, in page 56, line 11, leave out from `Wales' to first 'and' and insert 'leave out "economic" and insert "sustainable economic, environmental".'.

The Temporary Chairman (Mr. Barry Jones)

With this, it will be convenient to discuss the following amendments: No. 518, in page 56, line 13, at end insert— '(c) after paragraph (d) insert— (e) to promote the environmental sustainability of economic activity in Wales; and".'. No. 522, in page 56, line 26, at end insert— '(3A) After subsection (4) there shall be inserted— (4A) In allocating its resources and setting its priorities, the Agency shall have regard to the need for sustainable economic development throughout the whole of Wales.".'. Government new clause 38—Sustainable development.

New clause 18—Principle of sustainable development— '(1) The Assembly shall make appropriate arrangements with a view to securing that its functions are exercised with due regard to the principle that there should be economic and social development which is environmentally sustainable. (2) The arrangements referred to in subsection (1) shall include an annual review of the implications for Wales of any relevant quantitative targets for the United Kingdom set by Parliament or by Ministers of the Crown. (3) After each financial year of the Assembly, the Assembly shall publish a report containing—

1. (a) a statement of the arrangements made in pursuance of subsection (2) which had effect during the financial year, and
2. (b) an assessment of how effective those arrangements were in promoting sustainable development.'.

New clause 37—WDA board member to have responsibility for sustainable development— '.—Section 2 of the Welsh Development Agency Act 1975 shall be amended by inserting the following subsection— (3A) One member of the Agency shall be responsible for monitoring progress on the sustainable development aspects of the Agency's work.".'.

Mr. Dafis

I welcome the opportunity to debate at last, after several attempts, sustainable development. There is hardly a more important topic in considering a national future for Wales and the roles of the national assembly and the new development agency.

Some of the amendments and new clauses in this group apply to the assembly and others apply to the development agency, but none applies to both. We welcome the Government's long-awaited new clause 38, which applies to the assembly but not to the development agency. Inserting that new clause in the Bill may mean that our national assembly will be the first national legislative body to have a statutory duty to consider sustainable development. That is welcome and, if it is taken seriously, it could be highly significant for the future of Wales. We strongly believe that both the assembly and the development agency should be subject to such a duty, and I shall explain why later.

Amendment No. 517 inserts the words, "sustainable economic, environmental" in place of the word "economic" in relation to the WDA's functions. Amendment No. 518 would add the words: to promote the environmental sustainability of economic activity in Wales in line 13. Amendment No. 522 refers to the need to allocate resources and set priorities for the agency, and says that those shall have regard to the need for sustainable economic development throughout the whole of Wales. The concept of the "whole of Wales" has already been discussed and I am sure that it will be discussed under the next group of amendments when we consider rural policy.

New clause 37, which I like to think is ingenious, would require one member of the agency's board to be responsible for monitoring the progress of the sustainable development aspect of the agency's role. Just as some organisations have a sustainable development unit, it would be useful to have one person on the board with the job of monitoring progress.

New clause 18 concerns the assembly and would have a similar effect to the Government's new clause. By the way, a small error appears in new clause 18, subsection (3)(a), in which reference should be made to subsection (1) rather than subsection (2).

Sustainable development is not just environmental protection, important though that is. It is certainly not just preservation, which has its place. Nor is it about keeping matters as they are. It is about making improvements in efficiency, prosperity and people's quality of life in a way that sustains and strengthens the natural environment and social equity. The concept of social equity was discussed briefly under the last group of amendments. I shall not spend too much time on it, but it might be worth bearing in mind the development advocated by David Adamson of the university of Glamorgan as part of the process of economic regeneration. He advocates taking hold of an area where there is social deprivation, helping the people to acquire skills, empowering them to use fashionable terms, and bringing about economic regeneration from the bottom up as well as from the top down. That example of using an agency's powers for social purposes is functional in relation to economic development. It is also an aspect of sustainable development.

Thus, sustainable development means integrating—that is the important word—environmental and social equity considerations into all aspects of policy. Implementing sustainable development means identifying and then actively pursuing opportunities for development that bring those three elements together. It is not possible for the Welsh Development Agency or the assembly to pursue only sustainable development. We live in a world where a great deal of development is unsustainable. That may come to an end at some stage, but if one is committed to sustainable development, one is always looking out for opportunities that bring those three elements together. It is not always easy, but the scope is great and it will become greater as policies change at all levels: global, European, British and Welsh.

I am confident that the national assembly will meet as sustainable development rises to the top of the political and economic agenda. Achieving the transition to sustainable development will be the dominant theme of the new century. We are all caught up in that global process to a greater or lesser extent. The latest phase is the Kyoto agreement on greenhouse gas emissions. The process extends from the global to the local level through the Agenda 21 process.

We have a serious opportunity to put Wales at the forefront of that transition to sustainable development, just as Wales was at the forefront of the transition to industrialism 200 years ago, when our resources of energy were a crucial consideration. The assembly therefore has every reason to adopt sustainable development as a central theme for Wales. Until now, there has been a significant failure in Welsh Office policy in that regard. In 1993, the Government published their first sustainable development strategy and established an advisory panel on sustainable development, chaired by Sir Crispin Tickell. It established a useful round table, which has been meeting regularly and proposing policy recommendations. Both those bodies have done useful work.

On the day in February when that launch occurred, the Scottish Office, when Ian Lang was Secretary of State for Scotland, set up an advisory panel on sustainable development and a sustainable development unit within the Scottish Office. I am told that both do useful work within the Scottish Office. That did not happen in Wales. The then Secretary of State for Wales refused to do that, and opportunities have been lost as a result. No working group was set up and the previous Administration rejected my request in a debate in this House, and requests from others, to establish such a process. We have had nothing of that seriousness in Wales.

Consultations on the Government's new sustainable development strategy document, "Opportunities for Change", which was published a fortnight ago, will be completed by the end of the year. That process must be used to develop a distinctive Welsh agenda on this subject: it should not be an appendix or a pale imitation of what is happening in England or throughout the United Kingdom.

If the Government have ideas that are ready for implementation and that will put Wales at the forefront, the assembly will hit the ground running when it meets in the summer of next year. A distinctive agenda could be part of the brand image of Wales and establish Wales's reputation in Europe and the world. How will the Secretary of State use the consultation process for such purposes?

The energy sector is relevant to sustainable development. Wales has major sustainable and renewable energy resources. The Government are committed to generating 10 per cent. of electricity from renewable resources by 2010. That would enable us to develop diversity and security of supply at competitive prices.

Mr. Denzil Davies

I am following closely the hon. Gentleman's argument about energy and sustainable development. Does he agree that nuclear power stations do not transgress the principles of sustainable development?

Mr. Dafis

No, I do not. Some people suggest that nuclear energy enables us to meet CO₂ emission targets because carbon is not used. However, it is unsustainable because of problems with decommissioning nuclear power stations and disposing of wastes. There is a debate on the issue. My view is that substituting nuclear for fossil fuel-based energy is not sustainable, but other options are.

Sustainable or renewable energy involves a dispersed and decentralised pattern of production and offers significant wealth creation and job opportunities in rural areas. Many of those opportunities are frustrated by the nature of the debate on renewable energy in Wales. The assembly and the agency should ensure that we have a more sophisticated understanding and a more intelligent debate. Wales could take a lead. The debate is not just about renewable energy. Offshore oil and gas resources will not be subject to decisions of the assembly, but it should influence the way and degree to which they are exploited.

Environmental technology—pollution control, emission measurement, end-of-pipe technologies and alternative clean production systems—is an expanding industrial sector that is set to overtake the chemical industry at the global level by the end of this century. The WDA should target this key sector for inward investment. There will be important opportunities in forestry and agriculture and the Secretary of State's initiative on the all-Wales agri-environmental scheme will be helpful.

Sustainable tourism—which is the right sort—and links with economic activities such as farming should be encouraged, and sustainable agricultural areas and woodlands could be a focus for tourism. Sustainability is a pervasive theme that will be terribly important in the planning process. The planning process should actively facilitate rather than frustrate renewable energy projects. Sustainability should be prominent across the curriculum at all levels of education and a key factor in research. Organisations such as the Institute for Grassland and Environmental Research are involved and universities in particular are doing good work and could do more.

6.15 pm

Mr. Rowlands

Wind farms are contentious in certain communities. Is the hon. Gentleman suggesting that the right to object should be reduced to make planning more positive and proactive? What is he suggesting in that respect?

Mr. Dafis

I am suggesting that the planning process should be part of an all-Wales strategy. There should be targets for electricity produced from wind power, and that might lead to a search for, and designation of, appropriate sites. I do not favour removing the right to object—that would be dictatorial—but the planning process can be used positively. Planners must understand the significance of a scheme when they make their decision. I believe that many planners are not sufficiently well informed.

Mr. Öpik

Does the hon. Gentleman agree that acrimony arises in local communities over issues such as wind farms precisely because of the absence of a sustainable energy development strategy? If there were such a strategy, perhaps wind farms would not be built piecemeal and communities would not be upset.

Mr. Dafis

I do not want to get into a protracted argument about wind farms.

The Temporary Chairman

Please do not.

Mr. Dafis

If we are to have a sustainable development strategy for Wales, we must also have a sustainable energy strategy.

The assembly will have transport responsibilities. Wales needs an integrated transport policy to reduce road traffic. As the Government are committed to achieving a reduction in road traffic, how will the assembly develop such a policy? The Welsh road and rail network was conceived outside Wales. It is peripheral to the English network—no wonder we have poor north-south links. A sustainable communications policy must contain the right mix of transport modes—road, rail and air—which the Welsh Office has been promoting recently.

Getting investment priorities right will be difficult because the assembly will no more be responsible for rail than is the Secretary of State. There is a clear case for further devolution. The assembly will have to co-operate closely with the Office of Passenger Rail Franchising, the franchising authority. Opraf should be in that list of bodies, set out in schedule 4, that the assembly can require to attend its meetings. I hope that the Minister will consider tabling an amendment to bring that about. The successor body to Opraf—the strategic railway authority—will subsume the franchising functions.

Electronics play a crucial role in communication policy, enabling communication without physical movement, rendering distance irrelevant and reducing the need for road traffic.

Sustainable development is about opportunities, and opportunities for all parts of Wales. It is about industrial areas just as much as rural areas. We shall discuss rural policy later, but it is worth noting that Professor Gareth Wyn Jones, an expert on the subject, suggests that a comprehensive strategy for the sustainable use of renewable natural resources in rural Wales could create about 10,000 new jobs". Given the multiplier effect, the professor reckons that as many as 14,000 jobs could be created.

That is just one reason why I consider it essential for sustainable development to be a duty for the new WDA, not just for the assembly. A revamped WDA will, after all, be up and running before the assembly meets, and sustainable development should be one of its key considerations from the outset—it has not been one in the past. The agency needs to build a sustainable development culture. It needs to get its head around the philosophy and the principles of sustainable development, and it needs to develop expertise.

The Welsh Development Agency Act 1975, which the Bill amends, refers to the environment, but the wording shows that the agency's environmental functions are seen separately from its other functions. It has tended to interpret the Act's provisions in aesthetic rather than deep sustainability terms. After all, the Act predates Brundtland, Rio and the process that has resulted from all that.

I understand that sustainable development is to be a duty of the English regional development agencies. That is in the Bill, and I want to know why the same does not apply to the WDA. May I also ask whether the Secretary of State has received any representations from the WDA opposing the duty of sustainable development? It should be at the heart of the agency's responsibilities, not at the fringe. It should not be an add-on, as it has tended to be in the past. The agency should be able to explore the environmental implications of development at an early stage, in order to avoid many of the damaging, costly conflicts that can develop during the process of pursuing a particular kind of development.

The subject is linked to the question of land use planning. I hope that the Secretary of State can assure us that the assembly will have the power to produce strategic planning guidance for Wales, which would help the agency—for instance, in relation to the location of inward investment projects. It would be stimulated, or indeed required, to locate inward investment projects, and other development projects, on previously developed land—what the Deputy Prime Minister now calls recycled land; it used to be called brown-field sites. In that way, we could integrate land use in industrial development. The use of such areas, rather than green-field sites, should be preferred, if not exclusive.

We have a major opportunity to make sustainable development a defining theme for Wales and its assembly. I hope that I have shown how important it is that the WDA, as well as the assembly, has a duty to bring about such development.

Would the Secretary of State consider strengthening the wording of new clause 38 at a later stage? It uses the word "promoted", but it has been suggested to me that we should instead refer to the "achievement" of sustainable development, as other legislation does. For example, the Environment Agency has a responsibility to bring about—or aim to bring about—the achievement of sustainable development. It is a small point, but that duty should be seen as really important, and there should be no way of avoiding its implications. However, I admit that some of our amendments also refer to "promoting".

I look forward to hearing from the Secretary of State, and from other hon. Members.

Mr. Chris Ruane (Vale of Clwyd)

I intend to make only a short speech, based on my personal experience of the area that I come from in north Wales.

I welcome new clause 38, which recognises the importance of sustainable development. If the Welsh assembly adopts a strong sustainable development policy, we shall lead the way in the United Kingdom on the issue. Sustainable development is important in all areas of Wales, but especially in areas that depend on the environment for employment. In my constituency, the towns of Rhyl and Prestatyn developed, grew and prospered because of their location and their seaside environment. As well as its coastal environment, however, my constituency is blessed with an area of outstanding natural beauty, which straddles the Clwydian range and sweeps down into the vales of Clwyd and Elwyn.

Unsustainable economic development has had a devastating effect on all parts of Wales. The whole north Wales coast has suffered from environmental degradation caused by past Governments, councils and industries that have used the environment as a cheap means of disposal. There has been a knock-on effect for subsequent generations—including this one—and on today's environment and economy.

Let me give an example drawn from my own constituency in the 1960s. Rhyl urban district council decided to use a 60-acre salt marsh on the River Clwyd—one of only three north-facing rivers in north Wales—as a rubbish dump. It was seen as a cheap option. Domestic and industrial waste was taken across north Wales and dumped on that haven for wildlife. No record was kept of the rubbish that was dumped there over a 20 or 25-year period, and no one knows to this day what was dumped. It is a chemical time bomb. The rubbish was piled 40 ft high, and bulldozed over with a metre of topsoil. The land is now so polluted that it cannot be used for housing or industrial purposes. Methane is bled out of the rubbish tip by valves, and rain water washes out leachates into the surrounding mud banks and into the Irish sea. The land has been polluted for over a generation, and will probably be polluted for many generations to come.

That is just one example. I could give many others. There is the dumping of sewage into rivers and the Irish sea; the dumping of radioactive waste from Sellafield into the Irish sea; chemical and industrial dumping along the River Mersey; the dumping of armaments, including chemical weapons, into the Irish sea over the past 50 years; and the cleansing of ships' tanks in Liverpool bay. A Welsh assembly armed with a sustainable development policy will drastically reduce the possibilities of such environmental degradation in the future.

I am pleased that the implementation of the new clause will not be delegated to a committee or an individual. I am glad that the sustainable development policy will be monitored and updated regularly, and I am also glad that the assembly will consult appropriate bodies before making, remaking or revising the scheme. I hope that the assembly will consult widely and listen carefully to the expert advice that it is given, in order to draw up a policy that will learn the lessons of the past and serve this and future generations.

Mr. Evans

I support new clause 38. I hope that the Secretary of State will not fall off his seat when he hears me say that. [Laughter.] Even I do not believe what I am saying. I think that the new clause is a sensible way of approaching an issue that is vital not only to all of us, but to future generations. That is what sustainable development is all about. It involves thinking about present and future generations.

Everybody is "green" nowadays and it will be interesting to see whether the Secretary of State chooses a green-field site, or recycles city hall or the guild hall in Swansea for the assembly. I understand that there will shortly be an announcement about how green he intends to be on its siting. I am told that Ministers are giving up cars and walking. As Gwydyr house is not far from here, I expect that the Secretary of State is doing that. Perhaps his car follows him carrying his red box or perhaps he carries it himself.

Mr. Dafis

The hon. Gentleman speaks about the assembly building. I hope that he and the Secretary of State agree that it presents an opportunity for energy efficiency. It may produce some of its electricity by means of new technology such as photovoltaics, and it is important that it should be accessible by public transport.

6.30 pm

Mr. Evans

I am sure that if the hot air from the Chamber was recycled, it would heat the Palace of Westminster and some other buildings. The hon. Gentleman makes an important point, and if the Secretary of State chooses a green-field site for the development, it will be necessary to examine the project at the planning stage. That is the best way to ensure energy efficiency, and I hope that that will be taken into account.

We are building on Agenda 21 and the second Earth summit, which was preceded by the Rio summit in 1992. New clause 38(6) refers to a yearly account to show exactly how the assembly has implemented its proposals, and that will enable people to measure how seriously the assembly takes sustainability. I hope that the partnership council's discussions with local authorities will give direction and a fresh impetus to an all-Wales strategy. The hon. Member for Ceredigion (Mr. Dafis) spoke about that. It will also enable people to see how local authorities are fulfilling their agendas.

Mr. Ron Davies

The hon. Gentleman mentions an interesting concept. Perhaps he will explain why he and his colleagues voted against the partnership council.

Mr. Evans

We voted against it because we thought that it would not have any teeth and that it was to meet only once a year. As the right hon. Gentleman knows, I spoke about it meeting perhaps eight times a year. I hope that the other place can look again at the partnership council and give it some real teeth. There should be proper discussion between local authorities and Members of the Assembly on matters such as sustainable development. One of the assembly Committees could examine sustainability as part of its environmental remit. It must be given impetus in Wales rather than lip service.

The hon. Member for Ceredigion mentioned other areas that we should examine; one of them is traffic. I know that local authorities will look at traffic problems in their areas; we appreciate that large cities are not the only places with such problems. The assembly can offer guidance and support to local authorities on traffic management. For example, perhaps the railways could carry much of the freight that will result from new investment in Wales.

I was born in Swansea, and I suspect that if sustainability had been on our consciences in the 1960s, the Mumbles railway would still be operating in Swansea. Because of a wanton act of vandalism, that railway is no more. It is unlikely that it will be brought back, but at least its fate enables us to learn from our mistakes and discover ways in which we can protect other features in Wales for future generations. If the Mumbles railway had been retained, it would not have produced the amount of exhaust gases that are currently pumped out by cars using the Mumbles road.

The hon. Member for Ceredigion spoke about giving the WDA a bigger role. The assembly can give guidance and encourage development and new investment on brown-field sites. At the design stage of buildings for new industries, more heed could be paid to sustainability and more environmentally friendly ways of building. On energy policy, we all carefully follow planning policy guidance 22. Wind energy was mentioned, and it would be remiss of me if I did not speak about that, because Wales has suffered more than most areas from the erection of wind turbines in places where they should not be.

Mr. Dafis

Does the hon. Gentleman agree that Wales enjoys a large amount of wind energy development? Such energy is clean, and involves no extraction, transport, processing, combustion or emissions. Can the hon. Gentleman think of a better way of producing electricity?

Mr. Evans

As the hon. Gentleman knows, I disagree with him on that issue. I am president of Country Guardians, and I was in touch with Ann West, who lives in Powys and has written to me today about the problem of wind energy generators in Wales. If the wind turbines are put in suitable areas in accordance with guidance that is issued by the Department of the Environment, Transport and the Regions under PPG22, they are acceptable. If changes are proposed, I should be interested to hear about them.

The assembly could give its views on sustainable energy. The hon. Member for Ceredigion spoke about a target of 10 per cent. of renewable energy by 2010. We support that, but it could mean that an area the size of Birmingham would be covered in wind turbines. We must examine all renewable sources and concentrate not just on an inefficient one, which is the wind turbine. Hydro power is far more efficient. Future wind turbine technology may make that system more efficient, so that fewer turbines are required.

As the Minister knows, some wind turbines are 300 ft high and create noise problems. Sunshine is reflected from them into houses, and they scar the countryside because they can be seen for miles. They cannot be hidden because their purpose is to catch the wind. People who live close to large farms of wind turbines take a certain view of them. I hope that any scheme or strategy that is presented by the assembly will ensure that people can have a say about the sustainable or renewable energy that they want for the future.

The hon. Member for Ceredigion spoke about the new branding for Wales. Of course, it is a green and pleasant country. We want to ensure that it remains just like that.

The Welsh assembly has a great opportunity. I am delighted that the Government have tabled new clause 38, and I hope that the people of Wales and the assembly will grasp that opportunity.

Ms Julie Morgan (Cardiff, North)

I am pleased to speak in the debate, and I especially welcome the Government's new clause 38 on sustainable development. Like the hon. Member for Ceredigion (Mr. Dafis), I think that the new clause will provide an opportunity for Wales to be in the forefront of thinking, by enshrining the principle of sustainable development in legislation. We do not want the public to continue to think that it is always a matter of the environment versus the economy: we want them to realise that one is strongly linked to the other. We want also to integrate successfully economic and environmental goals with social objectives, and to safeguard the environment of Wales.

The debate on this group of amendments and new clauses—especially new clause 38—is therefore a very exciting occasion. I think that sustainable development will be at the heart of the assembly's policies, and I hope that it will be considered as a part of every action taken and policy developed by the assembly.

I have thought about the sustainable development issues that might arise in my constituency of Cardiff, North, which should be dealt with within a strategic framework. In my constituency, the town is gradually encroaching up the M4 towards the mountains, and the A470—which is probably one of the busiest roads in Wales—comes down from the valleys, surging through the Taff gorge and into the constituency, with traffic pouring down towards the centre of Cardiff.

We want a strategic plan to deal with those issues: to preserve the green belt; to maintain the gap between Cardiff and Caerphilly, and between Cardiff and Newport; to allow development in specific areas; to encourage a strong integrated public transport corridor; and to deal with issues such as transportation of radioactive waste, which is one of the big issues in my constituency. If we have an integrated strategy to deal with all those issues, we shall be able to make not only my constituency but all of Wales a much more pleasant and better place to live in.

The location of the assembly has been mentioned in the debate. I should like to say very strongly that I hope that the assembly will be located on recycled land in the centre of a city, in a recycled building and very close to good transport links—such as a five-minute walk from a major station. Only one place fits that description.

Environmental groups have raised some issues on certain aspects of new clause 38, and I should like to have the Secretary of State's reassurance on some of them. One is the use in the new clause of the phrase "with due regard". Does that mean that a duty will be placed on the assembly? Will it require the assembly to promote sustainable development? I am not accustomed to the legalistic language used in Bills, and I should therefore like the Secretary of State to clarify that point.

The new clause also does not mention any measurable targets or indicators. I therefore assume that the Secretary of State expects that the assembly will include such targets in its annual reports. Nevertheless, I should like his reassurance on the matter.

The hon. Member for Ribble Valley (Mr. Evans) mentioned establishing some sort of forum in which environmental groups could meet, and referred to the partnership council. Does the Secretary of State think that the assembly will establish such a forum? Does he think that establishing one should be encouraged?

The Government's new clause represents an historic occasion, putting sustainable development at the very heart of the National Assembly for Wales.

Mr. Öpik

One of the greatest things about living in Montgomeryshire is that it is such a beautiful place: unspoilt, with such a good quality of life that—[Interruption.] I shall deal in a moment with wind farms, although I am not terribly convinced that the hon. Member for Ceredigion (Mr. Dafis) was entirely feasible on the subject. [Interruption.] With the potential exception of wind farms, the view is quite nice, if one looks on misty days or in certain directions—

Mr. Elfyn Liwyd (Meirionnydd Nant Conwy)

Yes—towards Meirionnydd.

Mr. Öpik

I shall take the hon. Gentleman's advice and look toward Meirionnydd, and be grateful that I do not have even more wind farms than I currently have.

6.45 pm

The quality of life in Montgomeryshire is good. In the rural areas of Wales, that quality of life is determined largely by the cleanliness and rejuvenating nature of those areas. I agree with the suggestion of the hon. Member for Ceredigion that we could use an environmental theme as a branding point for Wales. In the company that I formerly worked for, Procter and Gamble—I stress that I have no vested interest in saying this—

Mr. Evans

Whiter than white.

Mr. Öpik

Yes, it has a very white image, even at today's lower temperatures. It woke up to the fact—[Interruption.] It awoke—

Mr. Ron Davies

Ignore them.

Mr. Öpik

I shall take the Secretary of State's advice and ignore the comments on Procter and Gamble, which realised that there was a marketing opportunity in being serious about the environment. The same is true for the Welsh assembly and for all of Wales.

We should remember that Wales, particularly rural Wales, is experiencing difficult times economically—it is perhaps even in a deep recession. In the past two months, we have lost almost 100 jobs in Montgomeryshire. Therefore, there is a most urgent employment and economic aspect to including environmental considerations in decision making. Perhaps we could tie in our work on the environment with job creation. However, I shall not dwell on that matter, as it diverts from the main point dealt with in this group of amendments and new clauses.

We should remember also that we are not debating sustainability simply as a nice-to-have policy: it will crucially determine our descendants' quality of life. If we do not wake up to the fact that, as a society, we must include sustainability in our strategic outlook, we shall—at the very least—bequeath serious problems to future generations, and they will have to pay dearly to clean them up.

Wales has great opportunities in many spheres such as energy, which has already been mentioned in the debate. I whole-heartedly support any suggestions that hydroelectric and solar energy should be pursued emphatically as alternative energy sources.

I must now refer to wind power, which—although it has a place—has been non-strategically implemented. In Montgomeryshire, we have had the most terrible divisions in local communities, for the simple reason that wind turbines are a form of pollution. It is incorrect to suggest that there is no social or environmental cost to covering hillsides with wind turbines. I recognise that there is benefit in having a sensitive approach to wind farm power generation, and there might be some creative solutions that offend no one—for example, coastal farms could make a substantial contribution. However, we should make it clear that a visual scar on a hillside should be regarded as every bit as damaging as some other forms of environmental pollution.

The hon. Member for Ribble Valley (Mr. Evans) made some good points about noise and other concerns. It may not always be possible to quantify them in financial terms, but if we are serious about sustainable energy production, we must also be serious about taking into account the more unusual consequences of investing in, for example, wind turbines. There are also some concerns about safety. I am currently holding discussions with at least one of the wind farm companies, because there was recently a fire at a wind turbine. I dwell on that point only because I do not want the Committee to be misled into thinking that there are no social or environmental consequences of wind farm generation. Having said that, I believe that it is appropriate for the Welsh assembly to consider how best to mix its energy generation solutions in the context of a green Welsh agenda.

We sometimes forget that if we could reduce the need for energy, we could adopt an even more sustainable approach. We could have greatly reduced our energy needs in the United Kingdom, as could western society as a whole, if, in the early stages of planning buildings and an integrated transport system, we had thought of the environmental consequences of what we were doing. In that sense, we should encourage the Welsh assembly in its deliberations on sustainability to adopt a formal strategy for reducing energy requirements across Wales, thereby obviating the need for quite so much energy production.

In the context of sustainability, I shall deal briefly with transport, brown-field development and agriculture. We all agree that we must create an integrated public transport system, and I applaud Ministers' comments in that regard. I must point out, as I always do when I mention transport, that there are potentially substantial environmental benefits to be gained from having an integrated air network across Wales. A well-used twin-engine commercial aircraft can use less energy getting people from north to south Wales than a car, which is probably the alternative.

It goes without saying, of course, that any such network would be guaranteed success if it used what I hope will one day be Welshpool international, or at least regional, airport. I have nothing but praise for Ministers' enlightened attitude to that proposal, which I have made many times.

We have discussed various aspects of creating a sustainable economy in the countryside. As I said at the beginning of my remarks, it is vital to recognise that the crisis in agriculture also presents Wales with an opportunity to invest in agri-environmental schemes, which might create not only jobs but a sustainable agri-environmental strategy. I hope that the Welsh assembly will be absolutely wedded to the idea of creating a more sustainable agricultural environment.

We might even recognise that having a sustainable environment in the countryside might not mean having the most efficient system in terms of the number of people employed on the land. We might want to increase the number involved in producing food, on the basis that that might be the most sustainable way to run the countryside.

I deal now with brown-field sites. I agree with hon. Members who have suggested developing the perhaps slightly more expensive brown-field sites rather than running to the countryside when we need new buildings and areas for industry. I must sound a word of caution, however. Our policies for sustainability have to recognise that some development on green-field sites is necessary. We have to strike a careful balance between the need for rural housing and the necessity of not giving in to the temptation to build on green-field sites when brown-field sites are available.

Finally, I shall cite a rather persuasive document provided by the Royal Society for the Protection of Birds. It states that sustainable development means pursuing those options for development which maximise the benefits for present and future generations. It goes on to mention the quality of life, an integrated approach and landscape improvement. All those things underline the importance of taking account of the big picture. We must think of the environment not as a separate issue, but as one which should affect all the work of the assembly.

New clause 38 will greatly improve the Bill. Proposed subsection (6) states: After each financial year of the Assembly, the Assembly shall publish a report of how its proposals as set out in the scheme were implemented in that financial year. They are perhaps the most important words that we are debating. I should like to think that they are our insurance policy, to ensure that the Bill's provisions do not simply end up as more rhetoric about the environment, but are implemented.

The future will be our judge, but we have a great deal to be responsible for at this point. We must ensure that the Welsh assembly cannot run away from some of the difficult decisions that it must make with regard to the environment. If we carry out the actions that go with our fine words, we have a good chance of achieving the dream of the hon. Member for Ceredigion, which is to create an attractive brand image of Wales as a green and pleasant place.

Mr. Martin Caton (Gower)

Like all hon. Members who have spoken, I warmly welcome new clause 38. The requirement on the assembly to carry out its functions with due regard to the principle that sustainable development should be promoted is an historic measure in the constitutional history of this country.

Sustainable development has become one of the buzz phrases of the past decade. Like much terminology that becomes fashionable, it is in danger of losing its real meaning in knee-jerk repetition. The thought discipline and philosophy that gave birth to the concept risk being lost behind the jargon. People legitimately ask, "Are there theories at the bottom of your jargon?" To be honest, one of the problems with sustainable development might be that there is a whole family of theories at the bottom of our jargon.

Definitions range from "an intention to maintain and even accelerate economic growth, while seeking to protect the environment as far as possible" through to "a commitment to leave future generations with the same capacity as now for improving human well-being by living within this planet's environmental limits". Like the hon. Member for Ceredigion (Mr. Dafis), I think that we should be aiming to move towards the latter. However, despite the breadth of interpretation, I would not want to narrow the term "sustainable development" any further in the Bill.

I believe that it will be up to the assembly clearly to identify its objectives for environmental protection and improvement when it establishes the scheme that the new clause requires. It will then be up to Members of the Assembly to make sure that, in every aspect of their work, their environmental objectives, as set out in the scheme, are adhered to.

The annual report, to which the hon. Member for Montgomeryshire (Mr. Öpik) referred, is an important safeguard for ensuring that the sustainable development scheme is more than just fine words, but I hope that the assembly will consider developing further mechanisms for keeping environmental sustainability at the heart of its decision making. I hope that it will look to develop means of measuring every action that it proposes to take against its sustainable development policies—a sort of environmental impact assessment for every proposal.

It is vital that the assembly finds a way in which to hold sustainability at the centre of all policy making, because the subject and service areas for which the assembly will have responsibility are some of the most important in terms of environmental protection and improvement: agriculture, forestry, fisheries, economic development, highways, housing, transport, industry, tourism, planning, water and flood defence, and health. Almost all the policy areas that will be dealt with by the subject Committees of the assembly are crucial for the future of the environment in Wales and for ensuring that our contribution to the global environment is positive. The new clause provides us not only with theories at the bottom of our jargon, but with the basis for best practice.

7 pm

Mr. Letwin

The hon. Member for Ceredigion (Mr. Dafis) spoke, as the Committee would expect, powerfully and thoughtfully about sustainable development. Like many other Conservative Members, I greatly sympathise with his argument. Listening to the debate, however, one would have thought that we were talking about certain matters of substance, not about a constitutional Bill which will establish a set of bodies.

Amendment No. 517 and Government new clause 38 illustrate beautifully the problem that the Government face. As my hon. Friend the Member for Ribble Valley (Mr. Evans) said, new clause 38 is a slight but admirable restriction of the sort that might be applied to a local authority. Amendment No. 517 moves in the opposite direction. Although the arrow of the hon. Member for Ceredigion is excellent, he aims at a target that I think he would dislike if he contemplated it further, as the amendment would further extend the scope of the Welsh Development Agency.

Who would run what and who would pay for what in terms of sustainable development if, as the hon. Member for Ceredigion suggests, both the amendment and the new clause were agreed to, or if, as is more likely, only the new clause were accepted? Under clause 80, the Secretary of State shall from time to time make payments to the Assembly … as he may determine. He will be the all-powerful paymaster of the assembly. Under the Welsh Development Agency Act 1975, the Secretary of State and the Treasury can grant unlimited borrowing powers to the WDA.

What will happen if the WDA chooses to move in a direction, in terms of sustainable development, wholly opposite from that of the United Kingdom Government and the Welsh assembly, regardless of whether the assembly is constrained by new clause 38? Which body will prevail in this hypothetical case? Manifestly, the United Kingdom Government will prevail, as the Secretary of State and the Treasury will be able to ensure that their favoured policy is pursued through the WDA; they will fund the agency through the borrowing power and deny funds to the assembly.

Before we debated these measures, I had naively understood that the Government wanted to avoid creating a quangocracy. However, the Bill will allow a quango, based on the great powers retained by the Secretary of State and the Treasury, to fight against an ostensibly democratic institution, which, because it will be limited by the new clause as if it were a local authority, will be entirely subject to the fiscal powers of the Secretary of State and the Treasury.

In those circumstances, the assembly will be the loser, which might not be a bad outcome for those of us who favour the integrity of the United Kingdom. However, if the democratically legitimate body opposes the quango, which is the servant of the UK Government, there will be a devil of a fight, and the matter may be referred to our old friend the Judicial Committee of the Privy Council as a devolution issue. Who, in such circumstances, will genuinely hold the power over sustainable development in Wales?

The Secretary of State may shake his head but, given that the Minister spent little time on this question earlier, it would help the Committee if, instead of concentrating on the important matters of substance—which, in fact, will largely be for the assembly to debate at a later date—he said who will be in charge of this domain, regardless of whether new clause 38 is accepted.

Mr. Paul Flynn (Newport, West)

The hon. Member for West Dorset (Mr. Letwin) repeats the depressing cry that we have often heard from the Conservative Benches—that every situation that could arise when the Senedd is established will lead to conflict, and not, as we believe, to co-operation. People throughout Wales will be happy to see the new clause included in the Bill. By voting for the parties that currently represent it in the House of Commons, Wales has taken a great lead in understanding the need for sustainability.

This weekend, there will be a conference in Merthyr to commemorate the 16th anniversary of a remarkable declaration by the people of Wales speaking with one voice. Every county council, representing the entire population, resolved to make Wales a nuclear-free zone. That was long before the decision was taken elsewhere. Democratic Wales had spoken, and if it had spoken on other issues at the time, it would have made a similar resolution about sustainability. The man who took the declaration to Strasbourg has now become immensely successful—and possibly prosperous—in organic farming in Ceredigion.

When I heard what the Estonian Biggles, the hon. Member for Montgomeryshire (Mr. Öpik), said about sustainable air flights in mid-Wales from the Heathrow at Welshpool that is bound to be developed, I was fascinated by the prospect.

Sustainability is understood in Wales. Labour Members share the fears about the future for farming, especially as we face a particularly difficult problem in Wales. If we lose the small farmers, we lose the language, which is a terrible threat. Labour Members support the Government's policy, as we realise that, although many of the changes in farming are painful, they are inevitable—there is a shrinking market for many products. Nevertheless, we want small farms to be preserved, as they have a special cultural importance to Wales.

I urge farmers to achieve sustainability by planting new crops and farming organically. The British Isles imports 60 per cent. of its organic products. Moreover, organic farming is highly labour intensive, and it works well in areas without especially promising land. Several farms in remote communities in Ceredigion have, despite a difficult start 20 years ago, defied all the critics and been prosperous and successful. Why cannot farmers realise that they can cultivate other harvests, which have a future? I am thinking, for example, of flax and hemp, which has unique properties other than those that prompt people's desire to smoke it—farmers could plant hemp with non-addictive qualities and low-quality THC.

The new clause will muster great support. It will give the assembly a new impetus and role, and express what Wales has shown that it can do when, on those rare occasions, it speaks with a united voice. We want to ensure a sustainable future that will be in harmony with nature.

Mr. Ron Davies

I hope that my hon. Friend the Member for Newport, West (Mr. Flynn) will forgive me if I do not follow him down the path of the prospect that he opened up. When he was describing the growing conditions in remote farms in Ceredigion, I suspected that he would suggest some novel crops—I was not disappointed. However, I would get into difficulty with my Cabinet colleagues if I suggested that the sole purpose of devolution, was to bring about a different policy in Wales on growing cannabis. Nevertheless, I welcome my hon. Friend's support.

The term "historic" has been used several times this evening, and I must use it again. The debate has been historic. The policy advocated by the Government has been endorsed not only by the spokesperson for Plaid Cymru—or should we now call it Plaid Newydd?—and by the Liberal Democrats but, I was astonished to note, by four of our own Back Benchers. In our debates on devolution, that is a rare and welcome occurrence. Moreover, not only did four of our Back Benchers speak in support of Government policy, but not one spoke against it. This truly is a historic debate.

I welcome the contribution by the hon. Member for Ribble Valley (Mr. Evans). In the absence of the right hon. Member for Devizes (Mr. Ancram), he found himself waxing eloquent in favour not only of the Government's policy in new clause 38 but of the assembly.

Mr. Evans

indicated dissent.

Mr. Davies

The hon. Gentleman spent several entertaining moments telling us of all the great benefits that would come to Wales as a result of the assembly. Indeed, during the referendum campaign not even the Under-Secretary, my hon. Friend the Member for Neath (Mr. Hain), in his most enthusiastic of speeches, would ever have dared suggest that if we voted yes on 18 September we would be able to bring back the Mumbles railway, yet it appears that that is the conclusion of the hon. Member for Ribble Valley. We welcome support from whichever quarter it comes. The hon. Gentleman is a late convert to the cause of devolution, but he is an enthusiastic one, and he is welcomed as such.

The debate was opened by the hon. Member for Ceredigion (Mr. Dafis). I am grateful for the way in which he spoke. Of course he has a great and deep conviction on such matters and he has argued his case consistently, as he did this evening. Later, I shall answer some of his specific questions.

My hon. Friend the Member for Vale of Clwyd (Mr. Ruane) was supportive and gave us some good examples of how the Welsh assembly, in pursuance of the duty placed on it, will be able to give expression to the principles of sustainable development. He made it clear that he regarded the principle of protecting the environment as an important, but not exclusive, part of sustainable development.

I welcome the support of my hon. Friend the Member for Cardiff, North (Ms Morgan). She was right in her assertion that sustainability must now be at the heart of politics. What we can do, as we frame the legislation, is to place the duty on the assembly. However, as my hon. Friend the Member for Gower (Mr. Caton) said, it is those in charge of the political process who must develop the politics and policies to give expression to the duty that we shall lay on the assembly to have regard to the principle of sustainable development.

My hon. Friend the Member for Cardiff, North asked three questions. She asked whether we would set targets and whether there would be a forum for the matter to be discussed by the assembly. The answers, of course, will be a matter for the assembly. What we shall do is to place a duty on the assembly. My hon. Friend's third question was what precisely that meant. I refer her to new clause 38(1), which makes it clear that the new clause will impose a duty on the assembly to have regard to sustainable development in the exercise of all its functions.

The hon. Member for Montgomeryshire (Mr. Öpik) raised that point too, and I agree with what both he and the hon. Member for Ceredigion said about the branding of Wales. It is important that, at the heart of the new Wales that we want to create, we put the idea of respect for the environment and for the principles of sustainability. Both transport and agricultural systems should work with the grain of the environment and according to the principles of sustainability.

Several hon. Members have gently teased me about the site of the assembly. I know that it will come as a great surprise and regret to the hon. Member for Ribble Valley when I say that I shall not tell him this evening the outcome of our consultation and discussion process.

I can make one important announcement to the Committee. I know that everybody will be greatly interested to know that the assembly will not be on a green-field site. As colleagues who have followed our deliberations carefully will know, all the sites under consideration are brown-field sites, so that information will not come as a great surprise.

I am afraid that the hon. Member for West Dorset (Mr. Letwin) rather spoiled the debate, which was well informed and considered until his intervention. I am sorry about that. The substance of his contribution is something for the hon. Member for Ceredigion to take up, but he also returned to the idea of trying to raise conflict all the time.

I genuinely suggest that the hon. Member for West Dorset has have chat with the converts who now sit on the Opposition Front Bench. They will be able to explain to him that the idea of eternal conflict being institutionalised into our constitution is fantasy. The new arrangements will not work like that.

The hon. Gentleman asked the question about the Welsh Development Agency in our previous debate, and my hon. Friend the Under-Secretary, in reply to that debate, told him the position.

7.15 pm

Mr. Letwin

He did not.

Mr. Davies

Of course he did. The position is clear. The responsibility for funding the Welsh Development Agency will pass to the assembly, as will the responsibility for laying down the strategy for the agency. The responsibility for monitoring the WDA will also pass to the assembly. There is no possibility whatever of a conflict developing between the wishes of the Secretary of State and those of the assembly, because the Secretary of State's responsibilities in respect of the WDA will have passed to the assembly.

Mr. Letwin

Will the external financing limit powers under the 1975 Act pass to the assembly?

Mr. Davies

The responsibility for funding the assembly now rests with the Secretary of State. The funding for the Welsh Development Agency comes out of the block grant. Under the new arrangements, it will be the responsibility of the Secretary of State to consider the expenditure that is necessary and appropriate for the Welsh assembly in the exercise of all its functions. It will then be a matter for the assembly itself to decide what proportion of the grant that it is given shall be allocated to the Welsh Development Agency.

As for raising the WDA's external financing limits, the hon. Member for West Dorset will know that, about 12 months ago, the Conservative Government passed an amendment to the provisions, to allow an increase by means of secondary legislation. That power will pass to the assembly.

Mr. Letwin

I am grateful to the Secretary of State; he may actually be helping me. Is he saying that, from now on, the agency's external financing limit will be a matter not for the Treasury but purely for the Welsh assembly?

Mr. Davies

When the assembly is established, in more than 12 months' time, it will be for that body to decide how to use the powers that it has been given. The hon. Gentleman is now asking a particular question about the Treasury's residual role. My present understanding is that the ability to raise the financing limit of the Welsh Development Agency will pass to the assembly, but the hon. Gentleman is asking a specific question—[Interruption.] I am trying to deal with the hon. Gentleman on the basis of the information that I currently have.

My understanding is that the responsibility will pass to the assembly. If there is any requirement for the assembly to seek approval from the Treasury, I shall write to the hon. Gentleman and let him know. Without having had the opportunity to check, it is my understanding that such consent will not be required, but I shall write to the hon. Gentleman and let him know.

Mr. Rowlands

rose

Mr. Davies

I shall give way to my hon. Friend, but I want to return to the substance of the debate now. I do not want to be sidetracked into the funding of the Welsh Development Agency, because we have already had a lengthy debate on that subject.

Mr. Rowlands

As I recall, we recently changed the legislation. Originally any increase in the borrowing powers of the WDA required primary legislation, but now that can be done through an order-making power.

Mr. Davies

That is precisely the point that I just made in answer to the hon. Member for West Dorset.

If there are any questions that I have not answered—apart from those asked by the hon. Member for Ceredigion—I apologise. If there are hon. Members who feel that I have omitted to respond to their questions, perhaps they will let me know and I shall attempt to deal with them in correspondence.

I shall talk about our new clause 38. It is appropriate that the hon. Member for Ceredigion who, as I said earlier, has a long record in such matters, has provided us with the opportunity to debate sustainable development as part of our proceedings on the Bill. I agree with the hon. Gentleman that sustainable development is about ensuring a better quality of life, both now and for generations to come. I also agree with his definition of sustainable development, which encompasses economic, social and environmental goals. It is concerned with achieving economic growth, while protecting and, where possible, enhancing the environment. It is about making sure that those economic and environmental benefits are available to everyone and not just to a privileged few. Sustainable development is about a new and integrated way of thinking that influences choices across government and throughout society.

The Government have committed themselves to placing the environment at the heart of their policy making and are engaged in a wide-ranging consultation process which will lead to a revised strategy for sustainable development. The hon. Member for Ceredigion raised that point and I assure him that it is my desire that that development work should continue between now and May next year, so that when the assembly is established much of the preparatory work will have been done.

Paragraph 1.24 of the devolution White Paper states: The Government will … ensure that the Assembly … promotes sustainable development". On 8 December last year, I told the House that one of the Government's amendments would most certainly place a duty on the assembly to have regard to the principle of sustainability."—[Official Report, 8 December 1997; Vol. 302, c. 752.] The new clause gives expression to that intent and I am genuinely grateful for the wide support that it has received from all parties represented in the Chamber.

New clause 38 meets the commitments that we have given. It places the assembly under a duty to publish a scheme setting out its proposals for securing that its functions are exercised with due regard to the principle that sustainable development should be promoted. The hon. Member for Ceredigion was quite right when he said that here was a case of Wales breaking new ground. No such duty applies to the UK Government in exercising their executive functions or to the UK Parliament in framing legislation.

Mr. Dafis

New clause 38(1) is somewhat convoluted and there appear to be several stages between the words "scheme" and "sustainable development" where the whole process might fall down. Are we talking about the assembly drawing up a sustainable development strategy for Wales?

Mr. Davies

The hon. Gentleman has to accept that the wording of new clause 38 makes it clear that the assembly will have to draw up a scheme, just as the Welsh Language Board requires public authorities in Wales to draw up schemes. The question of strategy is a wider matter and it will be for the assembly to decide that for itself through the development of its policies. It will want to develop separate strategies for sustainable development in the countryside, for sustainable development of transport policy and for sustainable economic development generally, and those strategies will inform all aspects of assembly policy.

What we are talking about here is a statutory duty to be placed on the assembly to produce a scheme to give expression to the desire that it should promote sustainability across all of its functions. That is the scheme; the strategy will be the way in which the assembly develops all of its policies, and that is a matter for the assembly and the elected representatives who sit in it.

Mr. Dafis

Will the Secretary of State confirm that, in reality, the scheme will amount to nothing if it does not generate, or oblige the assembly to generate, a strategy? He spoke of several strategies, but surely those would have to be encompassed within an overall strategy, which the UK Government already have and which Governments all over the world were obliged to draw up after the Rio agreements?

Mr. Davies

No, I do not accept that interpretation. It is clear that there will be a requirement on the assembly to produce a scheme. That scheme will have to be published, subjected to the normal processes of accountability and reviewed regularly, so it cannot be set aside, as the hon. Gentleman suggests would be possible. The assembly will have had that duty placed on it. However, I acknowledge that what counts will be the enthusiasm with which the political parties that contest seats in the assembly embrace the principles of sustainability. It will be their policies, for which they will seek the electorate's approval, that will determine how successful and meaningful the scheme becomes.

I agree with the hon. Gentleman that this is a case of Wales breaking new ground. No such duty applies to the UK Government in exercising their executive functions or to this Parliament in framing legislation. The scheme that the assembly must prepare will extend across all its functions, although—this is the point raised by my hon. Friend the Member for Cardiff, North—obviously the "due regard" to be given to the principle of promoting sustainable development may vary from function to function. As the hon. Member for Montgomeryshire said, there will be a need to develop strategies for transport, for agriculture, for economic development in the countryside, and so on. The assembly will also be under a duty to keep its scheme under review and to publish an annual report setting out how its proposals in the scheme were implemented in each financial year.

The other amendments in the group express Plaid Cymru's concerns for the environment in Wales and the wish to ensure that all economic development is sustainable. Naturally, the Government prefer their own provision, new clause 38, to new clause 18, although there are similarities between the two.

New clause 18 raises the additional point that the assembly should review annually the implications for Wales of any relevant quantitative targets for the United Kingdom set by Parliament or by Ministers of the Crown. That recognises that there are policies that affect sustainable development in Wales over which the assembly will have no control, because they will continue to be dealt with by the UK Government—for example, taxation issues, such as the level of duty on petrol and value added tax on domestic fuel. When he opened the debate, the hon. Member for Ceredigion asked whether schedule 4 should be extended to include Opraf. I shall consider that question and, when I have taken advice, I shall get in touch with him.

In exercising its functions, the assembly will need to have regard to the international obligations into which the UK has entered, for example, after the Rio and Kyoto summits. However, it is unnecessary for the Bill to refer explicitly to such matters, as the assembly could take account of them in framing its scheme under new clause 38.

The Welsh Development Agency is required under existing legislation to further the improvement of the environment in Wales. The overarching requirement on the assembly to have due regard to sustainable development will inform the strategic guidance and targets that it sets for the agency. That and the agency's own governing legislation are sufficiently robust to ensure that environmental concerns are taken into consideration by the agency in the exercise of its functions. Given those two additional provisions, the Government's view is that amendments Nos. 517, 518 and 522 are unnecessary.

New clause 37 provides for a board member of the agency to be assigned specific responsibility for environmental sustainability. I can say only that that has to be an organisational matter for the agency. The hon. Gentleman asked whether I had received any representations from the agency in respect of that matter and the answer is, no, I have received no such representations. I have recently announced to the House of Commons that I shall appoint members to the agency on the basis of fair and open competition. I shall not make any predecisions, but I hope to be selecting from a pool of candidates with a wide range of skills and experience, so I hope that someone on the board will have a measure of experience and competence in this area. It will then be for the agency itself to assign particular responsibilities to individual members. On the basis of the reassurances that I have provided in respect of the assembly and the Welsh Development Agency, I hope that the hon. Member for Ceredigion will ask leave to withdraw his amendment.

Mr. Dafis

I am grateful to the Secretary of State for his response and I have enjoyed the debate. The amendments have served their primary purpose, which was to give us an opportunity to debate sustainable development. It is good to know that there is widespread support for the principle and that the idea that the assembly should take sustainable development as an informing theme and that Wales will do so has been widely accepted here. I certainly acknowledge that the Government's new clause will ensure that the issue is high on the assembly's agenda when it meets, which is very important.

The debate has been useful, although not all of it has been well informed. The debate about energy illustrated the need for people to become much more well informed about the options that we face on energy supply. No development is without its impact. If we talk about dispersed development—which sustainable development is, by definition—the visual impact will be real, although much less than the visual impact that exists in our environment. I had better leave it there. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

7.30 pm

Mr. Llwyd

I beg to move amendment No. 520, in page 56, line 13, at end insert— '(2A) After subsection (2) there shall be inserted— (2A) The Agency shall establish a department with the responsibility of drawing up and ensuring the implementation of, policies in furtherance of the purposes set out in subsection (2) appropriate to rural areas.".'.

The Second Deputy Chairman of Ways and Means (Mr. Michael Lord)

With this, it will be convenient to discuss the following amendments: No. 524, in clause 121, page 56, line 40, leave out from beginning of line to end of line 2 on page 41 and insert 'be transferred to the Welsh Development Agency.'. No. 525, in clause 122, page 57, line 6, leave out 'cease to exist' and insert 'are transferred.'.

No. 526, in clause 123, page 57, line 19, leave out 'or Schedule 11.'.

No. 527, in page 57, line 21, leave out 'cease to exist' and insert 'are transferred.'.

No. 528, in page 57, line 28, leave out 'cease to exist' and insert 'are transferred.'.

No. 529, in page 57, line 33, leave out 'cease to exist' and insert 'are transferred.'.

No. 530, in page 57, line 41, leave out 'cease to exist' and insert 'are transferred.'.

No. 531, in clause 124, page 58, line 2, leave out 'and Schedule 11.'.

No. 532, in page 58, line 11, leave out 'cease to exist' and insert 'are transferred.'.

No. 533, in page 58, line 13, leave out 'cease to exist' and insert 'are transferred.'.

No. 534, in page 58, line 16, leave out 'cease to exist' and insert 'are transferred.'.

No. 535, in page 58, line 22, leave out 'cease to exist' and insert 'are transferred.'.

No. 536, in page 58, line 25, leave out 'cease to exist' and insert 'are transferred.'.

No. 537, in page 58, line 35, leave out 'cease to exist' and insert 'are transferred.'.

No. 538, in page 58, line 40, leave out 'cease to exist' and insert 'are transferred.'.

No. 539, in clause 125, page 59, line 11, leave out `ceasing to exist' and insert 'being transferred.'.

Mr. Llwyd

Amendment No. 520 is straightforward, saying, in other words, that there should be a Department charged with formulating policies of relevance to the rural economy.

I wish to draw attention to amendment No. 524. Clause 121 currently reads: The functions of the Development Board for Rural Wales shall cease to exist. The amendment is a probing amendment. I believe that the functions do exist, but I accept that, if it is meant in terms of functus officio, that it is a right and proper use of the word. I would prefer the Bill to refer to the transfer of those functions to the new body, which would secure the position. The Minister, being a Latin scholar, will no doubt deal with this point in due course—or perhaps not.

I ask the Government to consider my proposal that the word "transfer" is preferable to the phrase "cease to exist". Surely the functions are still very much in existence—perhaps more than ever in view of the agriculture crisis. The Minister should give thought to that matter in his response.

Many people in rural areas in Wales are worried because of the changes occurring in the agencies charged with ensuring the economic development and well-being of rural areas. I speak as a Member representing a constituency which was very well served by the Development Board for Rural Wales. Other hon. Members in the Chamber were equally well served by that board, and they have shown in the past, and will show in the future, their concern about this matter.

People who live in mid-Wales have for some time enjoyed great assistance from the Development Board for Rural Wales, a body specifically set up to tackle the problems of rural Wales. Over the years, the board amassed considerable expertise and experience. The task of economic regeneration in rural areas is far more difficult, and requires more application and creativity than in an urban area, where at a stroke of a pen—frequently on a cheque—many hundreds of jobs can be created.

Many of us look with envy at the recent developments in north-east and south-east Wales. Who would not accept 6,000 new jobs at a plant such as LG at Newport? That underlines the dichotomy. In that instance, 6,000 jobs were created, thus having a dramatic effect on the unemployment figures and the economy of that area—which is to the good. To create 6,000 jobs in rural areas is, by comparison, a mammoth task. A more sympathetic approach is required, together with an intimate knowledge of the needs and requirements of rural areas.

One grave concern is the fact that WDA and the Development Board for Rural Wales moneys have been used to bring in such plants as Sony and LG, but, without being niggardly—I do welcome their arrival—I must question what price has been paid for their success. There is no doubt that, proportionately, far higher spending has occurred in the eastern areas of south Wales and in the industrial eastern area of north Wales than in the rest of Wales. By and large, the rural areas of Wales are and have been let down.

I am not saying that that was in any way intentional, but the budget was finite, and a great deal of money was taken out of the overall cake and went into some of those schemes.

Mr. Gareth Thomas

Does the hon. Gentleman believe that the lack of democratic accountability and transparency in the development of economic policy in Wales may have had a bearing on the fact that there has been an imbalance not only between east and west, but between rural and urban, and between small businesses and large projects?

Mr. Llwyd

The hon. Gentleman makes a good point, and he may be correct. I am hopeful, as he will be, that the new set-up under the assembly will put paid to that aspect, and will introduce a more equitable distribution of funding for inward investment throughout Wales.

I know that political influences can come in to play, as I almost lost a plant in my constituency. I prefer not to give all the details, but I was called at the eleventh hour to try to save the plant. The persons running the plant were told that, if they relocated to Breconshire, everything would be fine and they would have all the money they needed. In Bala, they could not have it. It was only by sheer good fortune that I intervened. A local councillor in Bala rang me that evening, and, the following morning, that was reversed. There was an admission that some skulduggery was afoot, and I hope and pray that the assembly will ensure that that kind of nonsense will not recur.

Several of us campaigned for a change of direction in terms of funding of the agencies in Wales as there was an acknowledged imbalance between east and west. For example, the hon. Member for Swansea, East (Mr. Anderson) said last week that, for every £1 spent on job creation and inward investment in the Swansea area, £5.25 was spent in Cardiff. We now know that the WDA agreed to expend a moiety of its inward investment budget in the western areas of Wales. That was agreed last year, and sanctioned by the Welsh Office. That was announced and it was most welcome, especially to those of us who had campaigned for it.

However, it shows that different parts of Wales were dealt with differently. Following the LG announcement, the Welsh Development Agency and the Development Board for Rural Wales received savage cuts to their budget. To put it simply, some money had to be obtained to honour the cheque that was paid to bring in those new plants. There is great anxiety throughout Wales that such inward investment is brought in at too high a price—certainly at a very high price to rural Wales. In my view, that imbalance must be addressed, and I am sure that many hon. Members share my unease. We must all ensure that every part of Wales receives its fair share.

I always use the word "inclusiveness" in these debates. I always feel obliged to do so, as Ministers always do. If it is to mean anything, we must ensure that it means an equitable distribution of all moneys throughout Wales; I am sure that that will be a guiding principle of the national assembly.

However, rural Wales has extra problems, for the reasons that I have given, and because it is a far more difficult task to create growth in the small and medium sector than in large enterprises. We have the problems of remoteness. Infrastructure is inadequate. The sparsity factor is of great importance, and that translates into a higher cost of delivery of services, especially in remoter areas.

The Bill provides for the creation of a powerhouse—a new body which will be an amalgam of the Welsh Development Agency, the Development Board for Rural Wales and the Land Authority for Wales. That is acceptable, but the loss or dilution of the expertise that was possessed by the Development Board for Rural Wales should never be acceptable. Some of the worries in that sphere have been identified by many Welsh bodies in the past few months.

For example, the Country Landowners Association in Wales briefed various hon. Members a few months ago. I shall quote briefly from a letter that it wrote. The association questions whether the assembly's procedure for determining and managing its spending priorities will recognise and protect the special needs of rural Wales. It questions whether there will be sufficient provisions to ensure that the advice of the regional committees will be heard in the Assembly". It seeks an assurance that the enlarged new authority, having taken over the functions of the Development Board for Rural Wales, will address the particular needs of rural areas". The association also sought assurances that the subject and executive Committees of the assembly and the board of the WDA would have rural representatives. That is very important.

Mr. Tam Dalyell (Linlithgow)

Pardon an intrusion from a Scot. Much of this is familiar, but what can a Welsh assembly do to overcome the very real problem that the hon. Gentleman outlines that enlightened Ministers in the Welsh Office cannot?

Mr. Llwyd

I believe that the basic problem has been the tug of war between the Department of Trade and Industry, the WDA and the Welsh Office. We all know that it has been going on behind closed doors, and we know that there is a finite budget, even in a Welsh context, but equally in a United Kingdom context. There has been far too much toing and froing, and far too much of that tug of war between Departments.

At least when we have a national assembly, there will be no tug of war within that body. I hope that, within the assembly, there will be an overall view of the needs of the whole of Wales, and I trust that the assembly will be guided by expert committees on the needs of rural areas and so on. Does the hon. Member for Linlithgow (Mr. Dalyell) wish to raise another point?

Mr. Dalyell

Is not the proposed Welsh assembly stretching the goodness of human nature rather far?

Mr. Llwyd

That is not an unusual comment from the hon. Gentleman. He has been saying that for 25 or 30 years. I say that with respect, because I have a great deal of respect for him. I have heard it said that the assembly might well be a cure for flu, and I have heard other people say that, if we had had an assembly, we should not have had the miners' strike.

Surely, with respect to the hon. Gentleman, it is not beyond the ken of any type of national assembly to address the real economic needs of rural and urban areas. I realise that finance will be needed, but at least we shall not have this tug of war, which has taken much time and energy.

I remember, with my right hon. Friend the Member for Caernarfon (Mr. Wigley), arguing with the late great right hon. Member for Wokingham (Mr. Redwood), who at one time walked the streets of Cardiff very occasionally. The first thing we discussed with him after he became Secretary of State for Wales was the idea of giving a new development status to the southern part of my right hon. Friend's constituency and the northerly part of mine, following the closure of a large plant. Everyone, including the Welsh Office, seemed to support that proposal, but it was stopped at the last minute by the Department of Trade and Industry. I hope that that type of thing will not happen when we have the national assembly. It is inconceivable to me that it will happen.

I realise that there is a finite budget, and that there will be a certain amount of creative tension regarding that budget, as there is in the setting of priorities, but at least we shall do away with that time-wasting exercise.

Mr. Wigley

My hon. Friend mentioned one example of difficulties with the DTI. He will remember that, as recently as last year, Steven Spielberg wanted to make a film in Wales. The Welsh Office supported the idea, but unfortunately it could not carry other Government Departments with it, and the film was made in Ireland. Surely, in a similar situation, we should have much more clout with our own assembly.

On rural or urban matters, a consensus can be achieved in the Welsh Grand Committee on what is needed in Wales—a consensus that cannot be achieved on the Floor of the House. I believe that, in our own national assembly, there will be an opportunity for a consensus in a Welsh context that, unfortunately, we cannot get within the existing structures.

7.45 pm

Mr. Llwyd

I am grateful to my right hon. Friend. Needless to say, I agree with what he said.

To return briefly to what I said earlier, I believe that it is highly desirable that the national assembly has an explicit duty to promote and sustain the interests of rural Wales. Rural Wales amounts to more than 85 per cent. of the land mass of the country, and Wales has a very strong rural character.

I shall not repeat an argument made some weeks ago, but the Environment Act 1995 sets a clear precedent. Under the 1995 Act, national park authorities have a duty to foster the economic and social well-being of local communities, and to co-operate with public agencies whose functions include the promotion of economic and social development in their areas.

Surely we cannot leave the situation as it is. It is a very, very important—indeed, all-important—remit, and if we merely leave it to the area committee structure, we shall fail the people who voted in favour of the national assembly. I believe that there must be a thorough appraisal of current thinking and current policy in creating sustainable economic and social development in rural areas.

The Government have responded positively to many of the far-sighted suggestions of my hon. Friend the Member for Ceredigion (Mr. Dafis) about sustainable growth. Surely what I am now suggesting is part and parcel of the same important debate.

We are in the teeth of a fierce storm in agriculture. We know that there will be a change in the very near future, because common agricultural policy reform is imminent and the industry will have to change; of that we can be sure. However, our rural communities and rural economies will also have to change. It is vital that the national assembly is able, and is speedily given the right and the responsibility, to input policy suggestions into that discussion. I hope that there will be a subject Committee dealing with agriculture and rural development, as that would seem to be a sensible vehicle to assure sympathetic and effective development.

Recently, via the European Commission, the European Union issued a plan for agri-environmental policies and those dealing with the development of the rural economy to be brought within a single framework. The National Assembly for Wales would do well to emulate that move.

I hope that I have established that there is a vital need for forward thinking in terms of the rural economy. Agriculture is a central consideration, but so is transport infrastructure, the creation of sympathetic light industry, telematics, electronic infrastructure and agricultural diversification. There are numerous other important facets. I trust that the Government will look favourably upon the amendment, which would introduce into Wales the same sort of forward thinking exercised by the Countryside Commission in England.

I am not too proud to say that I would seek to borrow some of the commission's ideas—I would also like to borrow some ideas from the English rugby team—because they tackle a breadth of subjects regarding rural life and the economy. The commission deals with those issues very effectively under the one roof. Huge challenges will face rural Wales in the coming months and years, and they must be met. If we begin by giving the agency responsibility for addressing those issues, it will be a valuable step towards meeting that all-important challenge.

Mr. Gareth Thomas

In speaking in opposition to amendment No. 520, I acknowledge that it raises the converse of the issue explored so well by my right hon. Friend the Member for Llanelli (Mr. Davies) and my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands). They asked whether, under the enhanced WDA, there would be a lack of focus in terms not only of the industrial economy of Wales but of rural areas. I resist the amendment because I do not believe that it is simply a question of structure: it is more a matter of educating Members of the Assembly and Welsh citizens about the need to strike a balance between the treatment of rural and urban areas in Wales.

Establishing a regional affairs department, which is the subject of this amendment, will not of itself guarantee adequate funding or attention to rural areas. We must accept that there is a risk with devolution that the role of the Secretary of State as an honest broker or umpire will be lost. However, hon. Members—including my legalistic friends on Labour Benches—and I support devolution because issues must be exposed to the light of day and debated openly.

One of the strengths of the Government's proposals is that they will allow genuine, open, democratic debate about issues that have arisen under the quangocracy fostered by the Conservative party for 18 years. The imbalance between north and south Wales in terms of economic development might be defined more precisely as an imbalance between west and east, as there is substantial inward investment in north-east Wales—especially along the A55 corridor. We must address that matter.

I welcome the establishment of the National Assembly for Wales as an opportunity to consider that issue openly and democratically. We must also address the imbalance of investment between urban and rural areas in Wales. If there is genuine, open debate, I feel confident that the quality of decision making will improve and that both rural and urban areas will feel well served by the new institution.

How does the Minister view the role of rural policy within the enhanced WDA? It seems that the Government are not minded to pursue a policy of ring-fencing funds for rural development. None the less, there must be some focus on rural areas. I would be interested to hear the Minister's comments in that regard. I would also be interested to hear his views about the issues raised by the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd).

Do the Government intend to require the WDA to comprise persons who have experience in agriculture and rural affairs? I am sure that the Minister is aware that that matter has caused great concern. I appreciate that the Government have adopted the legitimate position that they cannot be too prescriptive and tie the assembly's hands—after all, it is a democratic institution that will be capable of making its own rules and decisions. However, in view of the difficulties facing Welsh agriculture at present, some clarification or an idea of the policy would be appreciated.

I also seek clarification of whether the Government, through Standing Orders or some other means, will require the WDA to have regard to the requirements not only of agriculture and efficient land management—I refer to section 1(4) of the Welsh Development Agency Act 1975—but of the economic and social well-being of rural areas. I should be grateful if the Minister would clarify those issues.

Mr. Evans

I wish to make a short contribution in the guise of a few questions to the Minister. He will be delighted to learn that normal hostilities have resumed after new clause 38. I apologise for my raw voice, but I was at Twickenham on Saturday: never has so much energy been expended for no good purpose.

I asked earlier about the vital European Union regional aid that is channelled to rural Wales. What has happened in the discussions about revising the way in which that aid is calculated? The calculation is to be based only on unemployment, which will disadvantage whole swathes of Wales in favour of other areas, including some parts of Spain, that are thriving. It could put a £1 billion hole in expenditure for Wales.

The Development Board for Rural Wales was established in 1977, and has successfully examined specific problems, such as depopulation in rural areas, and vital issues such as public transport, social housing and industrial investment in rural areas. It serves 40 per cent. of Wales. When the board is meshed into the super-quango, how will the Government ensure that its remit extends sufficiently to rural areas? A favourable reply would render these amendments unnecessary.

We must not lose sight of the reason why the Development Board for Rural Wales was invented. Rural areas must not be disadvantaged or forgotten because of extra demands on the WDA. Much has been said about LG coming to Newport and creating 6,100 jobs. That employment is vital—as is the spin-off of between 9,000 and 15,000 extra jobs—and the whole of Wales will benefit from it. Do the Government have any plans to bring the Wales tourist board within the remit of the Welsh Development Agency? Tourism is vital for rural Wales.

Another remit of the DBRW was its support for farming. Will that remit be taken on by the Welsh Development Agency? That question is particularly important in the crisis currently facing Welsh farming.

In an earlier debate, it was mentioned that the DBRW had a remit to steer a certain percentage of development away from the M4 and A55 corridors. That is extremely important, as there are parts of south-west Wales into which it is difficult to attract inward investment, whereas it is much easier to attract it into areas such as Newport and along the M4 and A55 corridors.

Can the Minister tell us what is to be the steer for the new super-quango? Will it be to ensure that a specific percentage of the inward investment that comes into Wales finds its way into rural areas, away from the main corridors? As new clause 38 deals with sustainable development, I assume that it is intended to allay fears for rural areas.

Having kept my contribution brief, I hope that that will leave a little more time for the Minister to cover those points.

Mr. Denzil Davies

I have considerable sympathy with the amendment which, as my hon. Friend the Member for Clwyd, West (Mr. Thomas) said, seeks to ring-fence rural affairs within the DBRW. For economic, cultural and social reasons, it would be a tragedy if the new quango neglected rural affairs. It may be unrealistic, as my hon. Friend suggested, to expect that the agency would ring-fence rural affairs.

I shall put two questions to my hon. Friend the Under-Secretary. First, what about the money? We are discussing not just a merger of three bodies—quangos—but an extension of powers. With regard to social development, there will be an extension of powers wider than the present Meirionnydd, Powys and Cardiganshire. Social development will go to all the rural areas outside that area covered by the development board, and to urban areas.

The new super-quango will have increased powers over those areas in that sphere. Will it have to make do with the same amount of money, plus annual increments, as is now geared to its existing powers, or will it have more money to enable it to perform its new functions, as set out in the amendment? Those new functions will need money. If new money is not forthcoming, money will be taken from existing functions. People will put pressure on the new quango for social development money, if I may so describe it, in areas outside the present development board areas.

My second question, which was also raised by the hon. Member for Ribble Valley (Mr. Evans), is: what about farming? Farming was not thought of as industrial, and so was probably not considered to be within the original remit of the WDA. Now that the reference is to business, which can be industrial, commercial or professional, it must obviously cover farming, especially when it is said that the business does not need to make a profit—we all know that farmers do not make any profit.

On a legalistic reading of this legalistic document, farming would be included under economic or social development. There are clear social ramifications to farming in rural Wales. I should have thought that farming would fall within the remit of the new social and economic powerhouse, unless the European Community claims that it is the only body allowed to spend money on farmers. If that is not the case, there should be a glimmer of hope for farmers under the new, more powerful super-quango. Will more money be provided for that purpose?

Mr. Livsey

I commend the remarks of the right hon. Member for Llanelli (Mr. Davies). One of the huge problems of the DBRW was that it could not support farming because it did not have the powers under the legislation that set it up. There were many frustrating moments when we were unable to support the agricultural industry with co-operatives for the marketing of lamb and so on during the 1980s. It would be a great advantage if farming as a business could be incorporated into the remit of the agency.

I strongly support the amendment and congratulate the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) on tabling it. There must be redress in the rural areas, through the creation of a rural affairs department. I have long advocated an additional Welsh Office Minister responsible solely for the rural areas. The Under-Secretary is responsible for other matters, such as education under the previous Administration, and health under the present Government. Such is the importance of the rural areas that they deserve a strong focus.

I agree with the hon. Member for Clwyd, West (Mr. Thomas), who said that the resources should be ring-fenced. As a consequence of amalgamating the bodies, resources may find their way to the centre. I hope that I am wrong. We have heard an analogy with rugby. It is significant that one of the reasons why the English rugby team is so successful is that a certain proprietor of The Sun has enabled an £85 million deal to be done. It is ironic that the Government gave an £85 million support package to agriculture recently, but that was across the United Kingdom. Only £12 million of that came to Wales, so we are losing out again.

We must demonstrate the needs of rural Wales. Agriculture is vital. In some parts of Wales, 25 per cent. of the population is engaged directly in agriculture or in support industries. Family farms are in crisis. The farm management survey figures for the year 1997–98 suggest that farmers in Wales will earn only £2.50 an hour on a 40-hour week, and in 1998–99 are unlikely to make anything at all. We have heard reference to sustainability—we need sustainable incomes as well.

I know of many instances where rural businesses have collapsed in mid-Wales.

Mr. Öpik

Does my hon. Friend share my view that there has never been a more important time to get support right? The closure of DC Evans in Newtown and Welshpool has cost 35 jobs, and the closure of the former Laura Ashley factory—now called Merchant Design Manufacturing—in Machynlleth cost 60 jobs. People are looking to the Bill to provide real support, so that a rural crisis is not allowed to turn into a deep and lasting recession.

Mr. Livsey

I know that my hon. Friend has had many problems in his constituency as a result of the crisis to which I have referred.

Social development, which has already been debated, is extremely important. In the context of rural affairs, national parks are similarly important. One of the purposes of a rural affairs department must surely be to hammer out a rural strategy in conjunction with the assembly. That will create something coherent for the rural areas of Wales.

Amendments Nos. 524 to 539 relate to the transfer of powers from the Development Board for Rural Wales to the Welsh Development Agency. The use of the word "transfer" is extremely important as it identifies what will and should happen. As I have said, we have already debated the transfer of powers for social development.

Business Connect for Wales has given an excellent service throughout the DBRW area and it has been a great success, but it requires staff to service it with expertise. A report yesterday referred to the possibility of 60 jobs being lost in the DBRW. If that happens, it will not be possible to service a business connect network throughout rural Wales. That is serious. We must demand answers.

I have two questions for the Minister. How does he intend to maintain the rural premium in funding the new agency to ensure that the Government's stated aim, which is to see effective business development delivered throughout Wales through business connect, is achieved? Secondly, how is the Minister using the funding mechanism of the new agency to ensure that its new divisional structure delivers the quality and extent of service that he says he wants to see, given that there is the possibility of staff reductions? I should say that that possibility was denied yesterday, but I hope that the Minister will refer to it.

The rural premium, because of sparsity, has been £100 per person in the DBRW area. It used to be £605 per person in the WDA area, but that premium has been subsumed. It has found its way into local authorities and has been lost. Will that happen to the rural premium, which has been made available with success, in the DBRW area? Perhaps that puts the question of the ring-fencing of resources back into the park.

The Government should accept the amendments as a form of insurance for rural Wales, for agriculture, for rural businesses and for people living in the rural areas. Present powers must not be lost. Instead, they must be transferred. If the hon. Member for Meirionnydd Nant Conwy puts the amendment to the vote, we shall support him.

Mr. Caton

I shall speak in favour of the policy for rural areas as set out in the Bill and, therefore, against the amendments. In doing so, I have much sympathy for the fears and concerns of Members who represent constituencies which come within the area of the Development Board for Rural Wales, which is to be merged into the Welsh Development Agency.

I used to live just outside Aberystwyth. That being so, I am aware of the high-quality work that the DBRW has done, including the use of its social powers. Its special expertise in taking up economic problems in our country towns and villages has proved valuable. The Mid-Wales Export Association, which was established and funded by the DBRW, has undertaken superb work recently.

I represent and live in a rural constituency that is not included within the DBRW boundary. Like many of my colleagues in rural south Wales, west Wales and parts of north Wales, I am concerned that the current situation is not sustainable, to borrow a word that was used in a previous debate. We do not have access to the expertise and experience that was once available to us. In the perception of the DBRW, we have in the past been overshadowed, often understandably, perhaps, by the acute problems faced by neighbouring urban and industrial areas.

8.15 pm

The new WDA must make rural development policy one of its key functions, using best practice from both the DBRW and the WDA. We must use the experience and the expertise of both. It must serve the whole of rural Wales, not a particular geographical segment. If we do that, I am sure that the whole will produce rather more than just a sum of the parts.

The agency must have a dedicated rural section, call it a rural affairs department, a rural policy unit or whatever.

Mr. Llwyd

That is precisely what the amendment seeks to achieve.

Mr. Caton

The hon. Gentleman interrupted me just as I was about to say that I do not believe that this is a matter for legislation in the way that is set out in the Bill.

The assembly and the agency should give serious and sympathetic consideration to the proposals of Professor Peter Midmore and Joan Asby of the Welsh Institute of Rural Studies in Aberystwyth, which are that an integrated rural development fund should be established to foster co-operation and indigenous growth, which realistically will be the main source of new jobs and economic activity in most of rural Wales in the coming years.

I can understand that subsumation into an all-Wales Development Agency for some people in mid-Wales represents a threat. I believe that for them, as for the rest of the people of rural Wales, it provides a tremendous opportunity. I hope that we grasp it.

Mr. Ieuan Wyn Jones (Ynys Môon)

I am grateful for the opportunity to say a few words in support of my hon. Friend the Member for Meirionnydd Nant Conwy (Mr. Llwyd), who made an excellent speech in support of the amendment. Having listened to the debate, I think that there is general agreement that there is a need for the Welsh Development Agency to have a rural remit, although there is disagreement about the way in which that is best achieved.

I cannot support any move towards the ring-fencing of cash within an organisation such as the WDA. Although I have supported ring-fencing in the past, I now believe that it can be an extremely rigid way of allocating money. It does not allow flexibility for any agency in any particular way, and that flexibility is important.

I make a particular plea—this has been touched upon by the right hon. Member for Llanelli (Mr. Davies)—for agriculture. He was right to say that it is a vital industry in rural Wales. It is now the biggest employer of any productive industry throughout Wales. In Wales, 53,000 people are employed directly in agriculture. The Development Board for Rural Wales has estimated that, over the next 10 years, 5,000 of those jobs will be clearly under threat.

We are facing a crisis in the rural economy, which is a crisis in rural Wales. Rather than approaching those matters in the disparate way that we have done historically, with some money coming from the common agricultural policy, some through structural funds, some from the Welsh Office and some from local authorities, we should adopt an integrated rural approach. I believe that the new powerhouse agency will have an opportunity to integrate within Wales all of the money that should be coming through into the rural economy. We should consider agriculture as the basis upon which we drive up the rural economy while ensuring that we consider the ancillary industries.

I hope that the Minister will acknowledge the strength of feeling about the need for particular concern to be paid to rural Wales and to drive forward the agenda for an integrated rural policy.

Mr. Hain

I begin by thanking everyone who has contributed to an excellent debate. I acknowledge that there is a real crisis in agriculture and in rural economies generally. I hope that some of my remarks will provide some reassurance. However, there is no point in denying that a crisis exists. The Government are doing their best to tackle it.

I thank the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) for the way in which he moved the amendment. In doing so, he made some extremely pointed and inclusive remarks. In asking him and his hon. Friends not to press this group of amendments, I do not for a moment wish in any way to underplay the valuable and much-praised work of the Development Board for Rural Wales over the past two decades. However, much of the rationale for its establishment was a reflection of the need to develop new towns in mid-Wales. That work was completed some time ago, and the board's activities now very much overlap, and, in some cases, duplicate, those of the WDA.

That overlapping and duplication is, in the Government's view, inefficient and is a waste of public money: such waste is one of our key motivations in attempting to reduce the number of non-departmental public bodies in Wales. The legislation as it stands provides for those functions of the DBRW and the Land Authority for Wales that are not at present enjoyed by the WDA—I stress that point—to transfer to the agency on merger. I am convinced that the skills and experience of the DBRW's staff will provide an invaluable addition to those of the agency, in particular in rural affairs. The transfer of all the board's functions rather than just those not currently enjoyed by the agency would not enhance the agency's powers or functions in any way. That is an important point.

I shall pick up on a point that the hon. Gentleman raised—whether or not I am a Latin scholar—about the issue of "cease to exist". I understand his concerns in that respect, which were echoed by hon. Friends behind me. I shall clarify what the Bill means. In saying that the functions cease to exist, all it is saying is that the DBRW ceases to exist. That is how the Bill achieves that objective. There is, however, a selective transfer of functions that the DBRW exclusively has at present, which the WDA does not have, to the new agency under clauses 121 to 125. That achieves the objective that the hon. Gentleman is seeking.

Mr. Llwyd

The Minister used the word "selective". Does he mean that some powers currently enjoyed by the DBRW will not transfer? Or does he mean that all the powers over and above those that the WDA has, which the DBRW has, will transfer? To what does selective refer?

Mr. Hain

There is an overlap of powers and functions at present, so there is no need to transfer all of them; only those that are not enjoyed by the WDA at present will be transferred.

I now take up the issues raised, quite rightly, by my hon. Friend the Member for Clwyd, West (Mr. Thomas), who made several valid points. I hope that Members of the Assembly will have expertise in agriculture and rural affairs. That is essential. I cannot guarantee it by legislation, but I hope that all the parties will ensure that that is secured. My hon. Friend also raised a point about the importance of agriculture in the assembly's objectives, and, indeed, those of the WDA. The assembly will be obliged to set out a clear strategy to safeguard—indeed, defend and improve—conditions in rural communities. Section 1(4) of the Welsh Development Agency Act already says: In exercising their functions the Agency shall have regard to the requirements of agriculture and efficient land management. That will remain. I think that that answers the point, which was also made by my right hon. Friend the Member for Llanelli (Mr. Davies).

The point was well made by many hon. Members, but in particular by the hon. Member for Brecon and Radnorshire (Mr. Livsey), that rural areas have been facing a crisis. That is why the Government announced today that they will fund the entire start-up costs and first-year running costs of the new British cattle movement service. In addition, the Government have decided that the charges for implementing new specified risk material controls on cattle, sheep and goats will not be recovered from the industry from 1 April. That amounts to the Government giving £70 million to agriculture. I can assure all hon. Members that a substantial portion of that money will go straight into Wales because of its needs.

Mr. Denzil Davies

As my hon. Friend said, the agency shall now have regard to agriculture, but that is not the same as making it one of its main purposes. Section 1(2)(b) of the Act talks about promoting industrial efficiency. If "industrial" is replaced with "business", which has been defined, surely agriculture must mean promoting agricultural efficiency.

Mr. Hain

I expect that it does. It is valuable that my right hon. Friend has put that on the record. He made the point powerfully.

Mr. Livsey

May I thank the Minister for his announcement about SRM materials and expenditure? It was a helpful statement.

Mr. Hain

I am grateful for that kindly intervention.

Amendment No. 520 relates to the functions of the WDA and its organisational structure. Although I appreciate the concern of the hon. Member for Meirionnydd Nant Conwy, and that of his hon. Friends, I cannot agree that the level of detail is a matter for legislation.

I understand and share the view that the needs of rural areas throughout Wales should be very much part of the focus of the exercise of enlarging the agency's functions that we are undertaking. My right hon. Friend the Secretary of State has already spoken of his wish to see a rural policy unit established within the agency, possibly to be located within one of the regional directorates. It is inconceivable that the rural policy unit—this may be of particular interest to the hon. Member for Montgomeryshire (Mr. Öpik)—could be located in Cardiff. It is a matter for the agency, which is currently reviewing all those issues.

My hon. Friend the Member for Clwyd, West was concerned that there might be a lack of focus for the new agency, and that agriculture may lose out as a result. I can assure him that that should not happen. I hope that all that I have said so far will go towards ensuring that it does not.

There is a problem with ring-fencing. Although my hon. Friend raised the matter, the hon. Member for Ynys Mon (Mr. Jones) replied adequately to it.

It is important that we do not compartmentalise rural policy. One of the advantages of the proposals, as my hon. Friend the Member for Gower (Mr. Caton) said, is that rural policy will assume centre stage in the economic powerhouse. Instead of being confined to one particular but important part of Wales dominated by agriculture, it will be part of the major strategic objectives of the agency as it drives forward its economic strategy, as set by the assembly.

The hon. Member for Ribble Valley (Mr. Evans) asked constructive questions—I must stop praising him, as it will get him pushed off the Front Bench—about regional aid and the definition. Those important points are relevant to Wales's needs, where gross domestic product is, of course, the key factor, and where there is much hidden joblessness. We are pursuing this vigorously with the European Union.

The hon. Gentleman also asked whether the WDA's remit sufficiently covered rural areas. I think that it does, but it will be for the assembly to hold the new agency to account and ensure that it does. I am confident that, with huge representation from rural areas, that will occur. He asked why the Wales tourist board is not coming under the powerhouse agency. I am not sure that that is a matter for this debate. We decided that the tourist board has enormous responsibilities in the coming two years with the summit, the World cup and other initiatives. It will, of course, be for the assembly to decide whether some reorganisation is necessary or desirable in future. We have set clear new targets for investment to spread not just westward but up the valleys and into much of the neglected rural areas.

My right hon. Friend the Member for Llanelli raised important points about money. There will be a budget of £200 million for the new powerhouse agency, bringing together the existing budgets. He raised important points about extending powers and social development functions to all areas. That will have to be taken into account by the assembly. His points will be carefully examined.

All the points raised by the hon. Member for Brecon and Radnorshire will be addressed in the assembly's economic powers. In the light of those comments, I hope that the hon. Member for Meirionnydd Nant Conwy will withdraw the amendment.

Mr. Llwyd

We have had a good and useful debate, although I believe that the Minister is wrong about agriculture. However, his response has been positive and I therefore beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

It being half-past Eight o'clock, THE CHAIRMAN, pursuant to the Order [15 January] and the Resolution [this day], put forthwith the Question necessary for the disposal of the business to be concluded at that hour.

Clause 118 ordered to stand part of the Bill.

Clause 119 ordered to stand part of the Bill.

Schedule 9 agreed to.

Clause 120 ordered to stand part of the Bill.