HC Deb 08 July 1998 vol 315 cc1008-29 10.59 am
Mr. Dafydd Wigley (Caernarfon)

I am very grateful for the opportunity to debate this subject and for Madam Speaker's choice of subject. I also thank the Under-Secretary of State for Wales, the hon. Member for Neath (Mr. Hain), who is here to reply. I had half expected a Treasury Minister to be present. Indeed, the Treasury can be said to have most to answer for with regard to the state of the Welsh economy. Perhaps Treasury Ministers know that all too well and that is why they are not here. Clearly, the problems of the Welsh economy go well beyond the competence of the Welsh Office; likewise, the solution, which is worth remembering in the context of the National Assembly for Wales, which is to be set up next year and which will have no greater remit than that of the present Welsh Office. Its powers may not be adequate to deal with the problems.

I am conscious that this debate follows the publication yesterday of "Pathway to Prosperity". No doubt we will have an opportunity to discuss that document in detail when the Welsh Grand Committee meets in Merthyr Tydfil next Monday, and I look forward to that debate. Suffice it to say now that the document is certainly strong on analysis. Indeed, it is brutally honest about the lamentable state of the Welsh economy—more honest than any previous publication. It recognises the appallingly low gross domestic product per head in Wales. According to the figures in that document, GDP in Ireland is 43 per cent. higher; it also admits to a job shortfall of about 260,000, which presents a massive challenge on any analysis.

Whereas the publication is strong on analysis, it is sketchy on how the problems will be put right and it offers no additional resources, which is its central weakness. It is remarkable for such a document to refer to the need for better education and skills, better road links, fibre-optic networks, strengthening business support services, creating industrial villages and providing basic rural services, when all that is to be achieved without one single penny of extra Government expenditure in Wales. It is appropriate that we are debating the matter this week—the week before the Government's spending review—as the Treasury has a lot of responsibilities to face up to in that context.

There are both disadvantaged people in Wales—people who may be disabled, unemployed, sick, poor or old—and disadvantaged areas, with high unemployment, low activity rates and low incomes. Those are areas of physical decay, with sub-standard housing, dilapidated social provision, old hospitals, schools and village halls and even old toilets—a decaying environment. They are areas of inadequate provision: a lack of new leisure facilities; a lack of doctors and dentists, which is a problem that is becoming more and more apparent in many areas of Wales, both rural and industrial; a lack of a modern transport system; and a lack of opportunity and hope.

The disadvantaged areas come in many forms and in several parts of Wales. Parts of our cities suffer acute deprivation and poverty. Equally, there are areas of acute rural poverty, which is being exacerbated by the present rural crisis. What is more, in the old industrial areas—the coal mining valleys, slate quarrying villages, iron and steel working towns and sea fishing ports—those old industries have gone, leaving only their relics behind, and new industry has yet to find them.

Between 1986 and 1996, while the M4 and the eastern A55 corridors gained 9,600 new manufacturing jobs, which we welcome, the western part of Wales and the valleys lost 9,200 manufacturing jobs, which is almost an identical loss. That shows how Wales is becoming polarised.

We often hear about Wales's success in attracting inward investment and we certainly welcome what has been achieved, but we are in danger of becoming victims of our own propaganda. There is a gross disparity in the distribution of the jobs created by inward investment within Wales. The six counties with most jobs in overseas-owned manufacturing plants are Flint, Wrexham, Bridgend, Rhondda Cynon Taff, Caerphilly and Cardiff. Between them, they have 52 per cent. of all the jobs that have come to Wales by way of such plants. As that pattern shows, they are mainly in the north-east and the south-east of Wales. The six counties with the least such jobs are Conwy, Gwynedd, Ynys Môn, Ceredigion, Pembroke and Carmarthen, which have between them only 8 per cent. Of course, those areas are all in the west. There is thus a massive east-west divide in inward investment and the creation of new jobs.

Needless to say, the prospects for disadvantaged people who also live in disadvantaged areas are acutely limited. Surely we must put a priority on Government action in those areas. Whereas the Government may not be able to answer the problems of every man, woman and family in every community and every company, they can and must create the conditions in which those problems can be met and overcome—problems of economic, social and environmental infrastructure. Only Government can provide those prerequisites.

Which areas am I describing as being disadvantaged? Some are economically and some socially disadvantaged, and the two overlap. One may be the consequence of the other or may cause a spiral with one leading to the other. Economically disadvantaged areas can be considered in terms of high unemployment. In May 1998—the most recent date for which figures are available—Aberdare and Blaenau Gwent had 10 per cent. unemployment and Ynys Môn and south Pembroke 9 per cent. Those are in the north-west and the south-west and the old coalfield valleys. The lowest unemployment is found near the border with England in the counties of Flintshire, Wrexham, Powys and Monmouthshire.

Clearly, Wales has a problem with low activity rates. Blaenau Gwent has one of the lowest, with 67 per cent., Caerphilly has 68 per cent., and Ynys Môon and Rhondda Cynon Taff, 69 per cent. Again, it is the same pattern. There is a massive gulf between incomes per head in Wales. The lowest incomes per head are due to part-time and seasonal jobs and low wage rates. The areas with the highest wages, on a band of about £340 to £350 per week according to last year's figures, include Cardiff, Wrexham, Neath and Flint. The lowest have wages of about £280 to £290 a week and include Conwy with £284, Gwynedd with £289, and Blaenau Gwent with £309. There is a gap of £60 between weekly incomes in the better and the poorer areas, a fact which reflects pockets of real poverty, both rural and urban, and the Government must do something to close that gap.

Some areas have low wage rates. There are variations within manufacturing industry, of course, and some assembly jobs pay abysmally poor wages—only £3 to £4 an hour. There are also areas with high manufacturing wages, for example in the steel industry, which mean that the Port Talbot and Neath area have a relatively high income per head.

Without doubt, the biggest problem is in the service sector because tourism, for example, pays relatively low wages and is seasonal. The service sector in Wales has a level of remuneration that is about 10 to 16 per cent. below the average for Great Britain because of the difference of the mix within that sector—tourism and other such elements in Wales, compared with financial services in south-east England. The problem of low incomes is acute and is increasing in agricultural areas, where farm incomes have fallen by 43 per cent. Many small family farms in Wales are subsistence farms. With that sort of reduction, if the farmer's wife did not have another job, the farms would not survive.

In the socially disadvantaged dimension, we have areas of high sickness and disability, particularly in the old industrial areas and the valleys—that is particularly true of Merthyr Tydfil. Indeed, eight of the 10 constituencies in the United Kingdom with the highest figures for long-term illness are in Wales, in the old coalfield areas of Dyfed, Glamorgan and Gwent. Many of those areas have poor housing stock, which worsens health. Housing renovation should therefore be a priority.

The four factors of unemployment, activity rates, low wages and widespread sickness mean that some areas have desperately low GDP per head. Of the five counties in Britain with the lowest GDP per head, three are in Wales—Mid Glamorgan, at 62 per cent. of the European Union average, Dyfed at 68 per cent. and Gwynedd at 72 per cent. Yesterday's publication showed that, for 1988–98, Gwynedd got just 3 per cent. of regional selective assistance spending in Wales, and Dyfed-Powys got only 4 per cent. RSA has certainly not started to solve the problem.

In addition to the disparity in GDP per head among areas of Wales, the gap is widening. Between 1982 and 1995, real GDP per head grew by 72 per cent. in Flintshire, 78 per cent. in Torfaen, 62 per cent. in Bridgend and the Vale of Glamorgan, 69 per cent. in Wrexham and 55 per cent. in Cardiff. In the same period, it grew by only 13 per cent. in Pembrokeshire, 16 per cent. in Conwy, 25 per cent. in Anglesey, 23 per cent. in Carmarthenshire, 23 per cent. in Blaenau Gwent and 31 per cent. in Rhondda. Unless action is taken to help the west and the valleys, the gap will worsen.

The western areas and the coalfield valleys are structurally disadvantaged. They are further from markets than other areas. They are at the fringe—sometimes they seem beyond the fringe—of the modern motorway network and of railway links. The population's age puts immense pressure on local government to provide personal services. The skills pattern is often geared to an industrial structure that has long gone. There is inadequate investment in modern educational and training facilities. Housing stock is often old and in need of renovation. Many of the remoter communities have long travel times to work, to hospital and to recreational facilities.

In many disadvantaged areas, money from grants, subsidies and social security immediately flows back out through the centralised structure of retailing and the banking sector. It is also difficult to retain maximum benefit in those areas from any Keynesian-type investment project. There are three approaches to those problems. First, there is the Thatcherite, free market response: "Let them decline; if they cannot regenerate, let them die." Plaid Cymru emphatically rejects that approach. Communities have rights; people are entitled to reasonable hope of decent jobs and services within reasonable reach of their homes. Young people should have a future within their localities, and should not simply be told to get on their bikes. Elderly people should not be left in limbo in aging communities that their grandchildren have left to search for work.

A second approach is Government intervention to help disadvantaged areas. What can the Government do? They could compensate for disadvantage by subsidising low wages through systems such as family credit. They could provide job creation schemes, although those may not survive in the long term. They could subsidise industrial premises, rents or capital.

However, a third approach, which we favour, is to work to remove disadvantage and to create better communications by air, rail, public transport and fibre optics. I was glad to see a reference to that idea in yesterday's publication, although there was no reference to the money needed. We could create better skills through investment in education. Ireland has used regional colleges of technology to boost the skills of its labour force, and to increase income per head. We need to make curriculums relevant to places of work, a point also referred to in yesterday's paper. We need to invest in infrastructure—hospitals, clinics, schools, energy conservation measures, housing and leisure facilities.

The second two approaches—subsidy to compensate for disadvantages, or action to remove the disadvantages—involve public spending, on social security and on rebuilding the capital stock of our communities. If we reject the Thatcherite approach, we must face the need for higher public spending. That is where the Government's juggernaut of promises crashes into the rocks of reality. It is not possible to implement a meaningful programme to rectify the disadvantages of western Wales and the coalfield valleys without higher public spending, a point ignored by "Pathway to Prosperity".

I can hear the Thatcherite mandarins, whose writ still seems to run in the Treasury, claiming that private capital will sort out the problems of the disadvantaged areas. However, private capital goes only to areas in which it will make a profit. It has not gone to western Wales and the valleys, because no profit can be seen. The private sector could be bribed to go there, but that would mean continuing subsidy, diverting public money into private pockets. It would be better to use public money to remove sources of disadvantage, and to harness public and private activity in competition or co-operation, as appropriate.

We cannot hope to tackle the problems of the disadvantaged areas if we adhere to Tory spending ceilings. We need to improve education with more teachers, schools and better equipment; to improve health care, build hospitals and clinics, and employ more doctors, physiotherapists and community nurses; to improve the housing stock through renovation and insulation, better rooms and replacement of defective doors and windows; to tidy up derelict buildings and the environment, bringing wasteland into proper use; to create a proper public transport system and new railways; and to develop recycling schemes.

If Tory orthodoxy were not in charge at the Treasury, we could choose between two options. First, we could divert expenditure from Trident and aircraft carriers to schools and hospitals, from millennium domes to fibre optic networks, and from nuclear weapons to energy conservation. The second option is to raise total public spending. The United Kingdom spends about 40 per cent. of gross national product in the public sector, less than in all but one EU country—Ireland, which ought to spend more in the public sector, too. Finland spends 52 per cent. of GNP in the public sector, Denmark 57 per cent. and Sweden 62 per cent. Yet those countries have high standards of income and quality of life, and of public services. We could raise taxes to allow ambitious plans to go ahead. We could, of course choose both options, changing spending priorities and raising taxes to meet our agenda.

If the Labour Government are not willing to put more public resources into helping disadvantaged people and communities, what on earth was the point of electing them? Were they elected just so that we could see different smiling faces at the Dispatch Box as they carried out the same old Tory Thatcherite policies? From May, responsibility for health and education, housing, roads, jobs and the environment will pass from the Secretary of State for Wales to the national assembly, to which the Welsh Office will be answerable. Where will the assembly get the extra resources to spend on disadvantaged parts of Wales to help attract private sector investment in new industry?

Are we restricted by the Barnett block, which Lord Barnett himself has acknowledged to have been inadequate to meet the needs of Wales? What new expenditure will there be? The figure seems to have fallen to £6.7 billion for 1998–99. Will that be the figure included in next week's spending review, or will we be allowed the £6.9 billion mentioned in April, or the £7 billion stated in the White Paper on which the referendum was fought? The White Paper provisions are being met in many other areas, so I hope that the spending priorities to be published next week will not take the figure below £7 billion.

What will happen if the Department of Trade and Industry changes industrial development policy by giving Wales higher status? In 1993, the Tories reduced development areas in Wales from covering 35 per cent. of the population to covering 15 per cent. Will resources additional to the Barnett block be available, or will money have to be diverted from education or health? Will the assembly be able to borrow to invest in infrastructure projects in disadvantaged areas? What are the prospects for the European structural funds, especially objective 1 funding? I am glad that the nomenclature of units of territorial statistics, NUTS 2, map has been accepted by Eurostat.

Wales has the lowest gross domestic product per head of any country or region in Great Britain and stands 68th in the league table of European regions. It is ridiculous that, unlike England, Scotland or Northern Ireland, we in Wales have never had any objective 1 funding. It is time that changed, and I hope that it will later this year with the announcement for the period 2000 to 2006.

What will happen if we get objective 1 funding? May we assume that the additionality rule will apply and that such funding will be over and above current expenditure patterns? If so, it would logically be over and above the Barnett formula. Will the Minister confirm that? If we need to find 25 per cent. matching funds to trigger the objective 1 money, will they have to come from within the Barnett formula; and will there be enough to meet that cost without depriving other necessary social projects?

Can the Minister give an idea of the timetable for objective 1 decisions? Can he confirm that Eurostat accepts the east-west NUTS 2 map, as I think he can? Will he confirm that 75 per cent. of GDP per capita will still be the threshold for objective 1 eligibility? Will he clarify the financial implications for the assembly and ensure that a beefed-up Welsh Office team will work on projects to take advantage of objective 1 money for disadvantaged parts of Wales?

Will the Minister clarify the position on the new regional policy map? When can we expect the details? I realise that that is not a Welsh Office decision, but it is no doubt involved in discussions. Does he accept that the UK regional map should reflect the UK NUTS 2 bid, as in all logic it should? We hope that significantly more than 15 per cent. of the population will be in the new development areas.

On direct public spending programmes, will the Minister take note of the great dissatisfaction among local job seekers and local subcontractors about the way in which capital projects are managed? In many disadvantaged parts of Wales, for significant capital projects such as the A5 scheme across Anglesey the companies with the contracts bring in their workers with them. It is not only the key workers; we realise that they must come. They also bring people in to do work when local unemployed people could equally well do it. They give subcontracts to outside companies when local companies could do the work.

I realise that the European Union public contract rules tie the hands of central and local government but there must be some way of maximising local employment from such projects. Unless that is done, we lose half the benefit of the investment programmes. If Wales is to get objective 1 status, the objective is surely to raise the standard of living in these areas, not to let the benefit leach away and so lose the maximum impact in the NUTS 2 and objective 1 areas. I hope that the Minister will consider that.

We hope that the Welsh Office will create a new European project department that has some clue about how to use European funds to the maximum benefit of disadvantaged areas. The main issue is how those resources can create long-term self-regenerative economic activity in such areas to ensure that they develop in a way that makes subsidy and grants unnecessary, as Ireland has succeeded in doing. I acknowledge that Ireland has not yet distributed its new-gained wealth to eliminate its pockets of acute poverty.

These are the basic issues. In our disadvantaged areas, how do we ensure that we maintain and expand employment in existing enterprises in manufacturing, agriculture and services? How do we make them more efficient to give better rewards? How do we create more indigenous enterprises and innovation? How do we attract inward investment to disadvantaged areas and create in them the social infrastructure that enhances the quality of life? What is the role of public expenditure in creating industrial, transport and communications infrastructure? How do we adapt UK and EU regional policy to that end? Can that ever be a priority here in London; and shall we have the vision, drive and resources for it to be an effective priority in the Welsh assembly?

We give the Welsh Office credit for recognising the size of the problem, but we are far from convinced that it is providing the answers. We do not believe that it is possible to create 260,000 new jobs and increase GDP per head by 40 per cent. in an environmentally sustainable manner without higher public spending. We suspect that the Welsh Office ministerial team share that misgiving but are constrained by Treasury rules. "Pathway To Prosperity" ends on a significant note. Paragraph 9.6 states: Our success in achieving the vision will be judged against how well we do in closing the GDP gap, raising employment rates, increasing average earnings, and spreading prosperity. We shall indeed judge the Government by those criteria. We look forward to working in our national assembly to achieve what Westminster has so far manifestly failed to deliver.

11.25 am
Mr. Alan Williams (Swansea, West)

I congratulate the right hon. Member for Caernarfon (Mr. Wigley) on raising this subject. It concerns all hon. Members that there is gross imbalance in the Welsh economy.

When I came to the House in 1964, regional policy was based on a uniform system. There were development areas, and the rest of the country. Areas had development area status or nothing. As a Back Bencher, I argued that parts of the development areas were as much worse than their neighbours within those areas as the development areas were worse than, say, south-east England. We therefore needed a differentiated regional policy. I was lucky as a Minister in the Department of Economic Affairs in 1967 to be able to take my proposition through Cabinet Committee. That led to the creation of the special development areas that were so valuable to the valley communities while they were allowed to exist. They were destroyed by the previous Administration, however.

What worries me is that I am more depressed today than I was in 1964 when I was arguing for differentiated policy. I jotted some points down as I listened to the right hon. Member for Caernarfon. I am sorry that my remarks are not as structured as his speech was. He mentioned the 200,000 job shortfall. That conceals a problem in itself. The important thing is that the shortfall is not uniform across Wales. Most of it is in the areas that hon. Members here today represent. That is an internal problem of imbalance within Wales. The Cardiff area is doing relatively well, and I am delighted that it is. I find it incredible that Swansea, which was once a sub-regional hub of industrial development, now has some of the most deprived wards in Wales. Hon. Members present can cite wards in their constituencies in the same situation.

The job shortfall is not evenly spread throughout Wales, but is concentrated in the areas that have the least prospect of being able to make up the shortfall. It is not only that there has been job loss but that there has been a downgrading of jobs. New jobs have in general not matched the quality of the jobs that have gone. Well-paid, skilled and manufacturing jobs have been replaced by part-time and low-paid jobs. Welcome as such jobs are, it is implicit that the ability of the areas that have experienced this to pull themselves up by their own shoestrings is diminishing. As income levels in those areas go down, their ability to generate redevelopment becomes increasingly dependent on resources from outside.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

My right hon. Friend provides a telling description of the dilemmas facing communities such as mine. I was astonished that the press and other media did not record more prominently the stark and startling 200,000 jobs gap. So that we can get an impression of how much of a mountain that is, can my right hon. Friend tell us what is the averaged and annual net job creation over the past 10 years?

Mr. Williams

I have to confess that I do not have that information immediately to hand, but if my hon. Friend would give me two or three minutes, I am sure that I could produce it. My right hon. and hon. Friends on the Treasury Bench have access to the collective wisdom in the Box in the corner, so perhaps they can come up with those figures by the end of the debate. My hon. Friend is absolutely right to say that it is important that we should have that information, so perhaps the Under-Secretary of State for Wales, my hon. Friend the Member for Neath (Mr. Hain), can produce it when he winds up the debate. If he cannot, I have no doubt that he will provide the answer in a parliamentary answer as soon as possible.

The structural imbalance is sad, because it is a divisive force in Wales. We do not want Cardiff and the rest of Wales to be turned against each other. I rejoice in the prosperity that Cardiff and the south-east have in prospect; but to return to the comments of the right hon. Member for Caernarfon about resources, that prosperity has been achieved by an abnormal distortion in the flow of resources within Wales. We know that massive sums from the public purse have been put into the Cardiff bay development. That has been a success—as the Welsh Office rightly boasts, it has also drawn in £800 million or more in private funds—but when one adds the massive injection of lottery money, one can see how Cardiff has become what I would describe as a black hole: it has developed the capacity to draw in all the significant new developments that come to Wales.

Mr. Denzil Davies (Llanelli)

My right hon. Friend makes the point that Cardiff is heavily dependent on public expenditure. Does he agree that some of that is old-fashioned public expenditure, in hospitals, universities, the BBC and other fields; and that that is where the danger lies, because restrictions on public expenditure could affect Cardiff's GDP?

Mr. Williams

My right hon. Friend is absolutely correct. One does not solve the problems of deprivation in an area as large as Wales without matching needs with resources.

I hope that my hon. Friend the Member for Merthyr Tydfil and Rhymney will forgive me for saying that part of the problem is that the valley communities, for example, were created as artificial economic units, bringing to previously sparsely populated areas people to drag the coal out of the ground. When we stopped mining the coal, economic logic ceased to be in the communities' favour. One needs only to look at an Automobile Association motorway map to see where the economic strength in Wales lies—at the focal point of all the motorways and of the Severn bridge.

Mr. Rowlands

All roads lead to Merthyr.

Mr. Williams

I desperately hope that Merthyr, too, will enjoy all the benefits that are currently flowing to Cardiff, but the fact is that, in addition to that capital and resource inflow, the south-east benefits from its strength of location, with its distribution network leading via the M5 and the M4 to the north of England, middle England, the east of England and the continent.

That enormous advantage is, as I said, creating a development black hole, which presents the rest of Wales with a double problem: we are in danger of being wedged in, because although we talk about what Ireland has achieved, we tend to forget that Ireland is our competitor. Those of us who represent western areas of Wales, not just the south-west, are competing against the attractions that Cardiff has to offer and against the massive incentives that Ireland has to offer. I remember my hon. Friend the Member for Merthyr Tydfil and Rhymney telling me that the ratio of European Community funds per head flowing into Ireland compared with Wales is about 5:1.

Recently, it looked as though Swansea was going to get a worthwhile electronic development, but we lost it. The Welsh Development Agency has suggested to me that the reason why that happened was not only the incentives that Ireland offered, but the fact that Ireland's tax regime is far more favourable to investment than is ours. It seems to me that that is a matter which we can solve without worrying about the EC. I recognise the constraints on Ministers and I know that, in respect of regional policy and incentives, we are in an EEC straitjacket—but we are free to set tax policy. When I was in charge of regional policy and inward investment in the last three years of a 1970s Labour Administration, we had the best tax regime of anywhere in Europe, with optional one-year 100 per cent. write-off with roll-on facilities, so a firm could choose the form of depreciation and write off that which best suited it. That enabled us to get a disproportionate share of new industry.

Ireland now occupies that position. It has probably the most benign tax regime in Europe, in addition to its regional incentives. The result is that new industry that looks beyond Cardiff has to ask itself whether it wants to go to the relatively low incentives available in west Wales, or whether it might as well go that little bit further and enjoy the tax regime plus high incentives available in Ireland. We are negotiating from a position of weakness, which is why it is essential that we do not lose out in the current negotiations in Brussels on the objective 1 status that Wales so desperately needs to keep. I welcome the announcement made by my right hon. Friend the Secretary of State about what appears to be a marked improvement in our prospects in those negotiations.

Let me conclude on the following point. Recently, my right hon. Friend the Secretary of State devised the term "powerhouse"; but a powerhouse that is created purely by merging three existing quangos, without providing extra resources, is a form of support that is only a marginal improvement on what was there before. All that can be achieved is a few efficiency gains. If a powerhouse is to work, it has to have power; and in this context, power is resources. I know that my right hon. Friend has been fighting his corner in the Cabinet, but so has every other Minister. We will see the result in the near future. It is important to recognise that the powerhouse is symbolic unless it has the resources to match the needs with which we expect it to deal.

11.39 am
Mr. Richard Livsey (Brecon and Radnorshire)

I congratulate the right hon. Member for Caernarfon (Mr. Wigley) on introducing this subject to the House. As we well know, there are many disadvantaged areas of Wales, including the valleys, Pembroke dock, Llandudno junction and areas to the west and the north as well as rural areas such as Powys and west Wales.

Rural and urban disadvantaged areas share similar problems in some respects, but there are causes and effects specific to certain areas. The key signs are poor housing, failure in education and training and, in many parts of Wales, low aspiration. That is a sad commentary.

The economy is the key to improving those social problems. The document published yesterday, "Pathway to Prosperity", is to be welcomed as far as it goes, but it does not tackle the issues of rural Wales comprehensively enough. It does not provide information or data specific to the area that I represent, which is Powys. Powys is lumped with Dyfed. I should like to know why no figures are available for Powys. It is a unitary authority. Will the Minister confirm that the Welsh Office does not intend to provide individual figures for the county of Powys? Why is it being ignored? The Office for National Statistics has the figures and I understand that it consulted civil servants in the Welsh Office, only to be told that the figures were not required.

I led a campaign in the early 1990s, when the previous Government were in office, to obtain economic indicators for Powys. I was told then that they were not available. I warn the Minister that I will bombard his Department with questions to get the answers as soon as possible because it is a serious matter. We need those indicators to quantify the problems.

The economies of disadvantaged areas of Wales must be addressed if Wales is to be successful within a United Kingdom and European context. According to 1995 figures, the weekly wage for males in Wales was £331: the figure for Powys was £278. As a result of work done by Bristol university, we know that in some areas of Powys, such as parts of Newtown and Cwmtwrch in my constituency, wages are as low as £159 and that in Ystradgynlais they are £188 per week. The average in Powys is £100 per week less than the UK average and that does not include figures for those who are not earning. These areas are really disadvantaged. According to Welsh Office reckoning, the whole of Wales must surely be disadvantaged, except the south-east and perhaps some corners of the north-east.

The economic disadvantage that exists already is worsened by the migration of educated young people. In mid-Wales, many young people leave at the start of their economically active life, as a result of which we cannot foster enough locally based entrepreneurs. I am glad that the document produced yesterday will address that problem.

In rural areas, there are many people over the age of retirement—20 per cent. is a common figure in many parts of rural Wales. Large sectors of the population are not economically active enough and place a huge strain on local public services.

There is very little mention in the document of the agriculture crisis. We cannot blame that entirely on Welsh Office Ministers because Treasury policy on the strength of the pound has had a great impact on agriculture and on manufacturing industry, of which Wales has a higher percentage than any other part of Britain. It is difficult for anyone to export now. Last week, I visited a factory in Wrexham that produces JCB machines. I was astonished to find that most of the parts that it uses are imported from Turkey. Eighteen months ago, the factory obtained 20 per cent. of its parts from Britain, but it now imports 80 per cent. of its parts for transmissions. That is a big problem and is a result of Treasury rather than Welsh Office policy. It demonstrates how hamstrung we are.

The agriculture crisis is felt throughout the rural economy in support and service industries. We have a low-wage economy with low expectations. Urban areas of Wales face problems of higher unemployment. Many parts of rural Wales do not have such high unemployment, but that is partly because of the migration of many of our young people. There is a lack of job security in urban Wales with low-wage, low-skill jobs. Many social problems stem from that, as the document recognises. Bad housing, low educational achievement and so on must be put right, but it is a mammoth task.

The document, "Pathway to Prosperity", and the economic proposals were announced to the press yesterday, but not to Members of the House. I had to seek out the information from the press. The electronic revolution may be proceeding well in Wales, but nothing came through on my fax machine or e-mail to tell me about the announcement. I looked for it on Monday when it became obvious that there was a planted question, but we did not hear anything until the middle of yesterday afternoon. It was announced by an all-Wales electronic network known as Link-up, of which I heartily approve, but some hon. Members struggled to find the information yesterday.

I want to address specifically the issue of average earnings, which is a problem that is hanging round our necks. Many jobs in rural areas, particularly in Powys, are manual and are agriculture related. What targets does the Welsh Office have for manual workers, or are they not in the equation? The economic powerhouse must regenerate the whole of the Welsh economy, both urban and rural.

Money for home improvements—

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

I apologise for intervening, but it is important to record the fact that "Pathway to Prosperity" was available to Members of Parliament at the same time as it was to the press conference. A parliamentary question was also answered at that time.

Mr. Livsey

I acknowledge what the Minister says, but we expected the document on Monday—it slipped out yesterday. We were not aware of its existence until well into the day. I have just been told that envelopes were made available during the morning, and, if that is true I apologise. I was not aware of that, and neither was the Vote Office because, when I asked for the document, it did not know that it existed. There is something wrong somewhere, as they say in some parts of the press.

I want to move on because many hon. Members want to speak. A Welsh Office Omnibus survey carried out in 1995 showed that almost a third of households in Powys suffered from some social deprivation and that almost one in six households suffered from material deprivation. Those figures were much higher than for Wales as a whole and they were much higher than for Dyfed. As I said, in many economic indicators for Wales, Powys is lumped with Dyfed. For example, the GDP figure is averaged out at 76 per cent. for Dyfed and Powys combined. That is not a satisfactory way to proceed and it must be put right.

The right hon. Member for Caernarfon stressed the needs of the valleys and west Wales. I am well aware of those because I lived in west Wales for many years. However, the needs of Powys are being lumped in with a NUTS 2 area excluded from Powys. We are not in the same income league as north-east or south-east Wales. We have many needs, but have practically no infrastructure—we do not know what an A55 or a motorway is.

Mr. Chris Ruane (Vale of Clwyd)

What representations has the hon. Gentleman made to the Welsh Office for his county? Is he aware that the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd), my hon. Friends the Members for Clwyd, West (Mr. Thomas) and for Clwyd, South (Mr. Jones) and I made strong representations to the Welsh Office at the 11th hour and managed to get Denbighshire and Conwy included in the objective 1 bid? What measures did the hon. Gentleman take to ensure that his county was included?

Mr. Livsey

The only official figure was 76 per cent. of average GDP, which, as the hon. Gentleman will realise, does not qualify for objective 1 status. The figures for Powys are lumped in with those for Dyfed. The county council had to commission and pay for a special study by Bristol university to produce many of the statistics that I am quoting in the debate, and that is not good enough. I want the Minister to promise that Powys will be considered for objective 2 funding from European Union structural funds because that is vital.

In future, we want better statistics about Powys. We know that it is very difficult to collect data for Powys because it is the most rural area in Wales. None the less, we need them.

Mr. Lembit Öpik (Montgomeryshire)

Does my hon. Friend agree that the people of Powys and we, as their representatives, have repeatedly impressed on Ministers, until they have probably become sick of hearing about them, the difficulties of rural poverty in our area and the need for objective 2 status?

Mr. Livsey

I certainly agree with my hon. Friend.

I realise that time is short, but I want to address one or two important issues; otherwise, as an agriculturist, I should be doing less than justice to the present crisis in rural areas. We are approaching common agricultural policy reform, which is very important for our family farms. CAP reform, as it affects rural Wales, must take into account the family farm structure, which differs from that in England. We must examine modulation and direct payments to farmers in the context of CAP reform. Direct payments will certainly be allowable within the context, for example, of the World Trade Organisation negotiations. It is vital that our family farm structure is maintained.

In the past two years, farm incomes have reduced by 90 per cent. Many of our farms are no longer viable—in fact, at DM3 to the pound, they are bankrupt. All these issues are causing enormous stress to farming families in rural Wales. I beg Welsh Office Ministers to influence the Chancellor to change his policy of high interest rates and high valuation of the pound to assist agriculture.

We are also having great problems with the domination of the supermarkets in purchasing livestock throughout Wales. I should be grateful if Ministers would take account of the Welsh Affairs Select Committee's report, which called for an investigation by the Office of Fair Trading, particularly into the marketing of meat through supermarket outlets and the possible problem of excess profits being made in that way and rock-bottom prices being received for livestock in markets in Wales.

We need—I am grateful that this is recognised in the "Pathway to Prosperity" document—much more effort in co-operative marketing of Welsh produce from our farms and added value for that produce so that more income can be generated in rural areas. That matter needs urgent action.

The creation of the Welsh Assembly and its start-up next year will undoubtedly assist the economy of rural Wales. The assembly's committees, particularly those that will focus on economic development in conjunction with the strategy for the Welsh Development Agency and the powerhouse, will certainly bring great benefit. However, those plans are long term—perhaps too long term for some parts of Wales that need immediate assistance.

The quangos must be made more democratic and responsive to the needs of many parts of rural Wales. I make a special plea for our local authorities, which need much more assistance and more generous support from the Welsh Office. I hope that Ministers succeed in their negotiations with the Treasury for the block grant so that local authorities can have greater assistance in the coming financial year. The Government will, I hope, propose targets for greater activity by local authorities, which have huge responsibilities throughout Wales and which, on the whole, have an excellent record of doing a good job.

Once again, I make a plea to the Minister on behalf of rural areas. In the past three months, 86 jobs have been lost in Powys from rural businesses. That may not sound like many, but if one examines the statistics, one realises that 100 jobs lost in Powys are the equivalent of 1,000 jobs lost in Merthyr. Those jobs are a huge loss. Some agricultural merchants have closed, as have two machinery firms in Powys. A multinational company has closed its feed mill. Many such closures have occurred. They may not be writ large on the pages of the Western Mail or the Liverpool Daily Post, but they are severe blows to some of our more remote rural areas.

The assembly has a huge task to improve the lot of people living in disadvantaged areas of Wales. Much poverty in urban and rural Wales must be dealt with. I know that Ministers' hearts are in the right place, but we need action.

11.56 am
Mr. Chris Ruane (Vale of Clwyd)

I congratulate the right hon. Member for Caernarfon (Mr. Wigley) on securing this important debate. I agreed with about 95 per cent. of what he said.

My county is hit particularly hard in a number of sectors. In the heavy industrial sector, we lost the Point of Ayr pit, which is on the outskirts of my constituency and used to employ 700 people. In the light industrial and service sectors, 1,500 jobs have been lost in my constituency in the past four months. Traditional British seaside tourism is in decline, which some say is terminal. Two of the biggest towns in my constituency—Rhyl and Prestatyn—have experienced that. Denbighshire has a large rural area which has suffered enormously in recent years. It has an abysmal record of attracting inward investment—that has created only 89 jobs in the past four years. I therefore share the opinions of the right hon. Member for Caernarfon.

I shall try to stress the positive aspects. We are very close to achieving objective 1 status for Wales. Last week's announcement by Eurostat that it has accepted the NUTS 2 map for Wales could provide the springboard for the long-term recovery of the Welsh economy. I am informed by Welsh Office civil servants that that would allow Wales to tap into £1.8 billion between 2000 and 2006. We have now jumped the biggest hurdle for achieving objective 1 status, but we are not there yet. Important negotiations must take place and decisions must be made before we have access to that money.

It is time to reflect on our success to date. Before we try to jump the final hurdles, we should assess our success so that we can go into the final straight invigorated and more determined than ever to secure the best possible deal for the people of Wales. There are many unsung heroes in the fight to gain objective 1 status. Many of the main movers have been castigated for their role. I want to take the opportunity to redress the imbalance and to mention a few of those key players.

I pay tribute to the work of the Under-Secretary of State for Wales, my hon. Friend the Member for Neath (Mr. Hain). I extend to him my heartfelt thanks, on behalf of the people of Denbighshire, for his decision to allow, at the 11th hour, Denbighshire and Conwy to be included in the objective 1 bid for Wales. My hon. Friend the Member for Conwy (Mrs. Williams)—who, unfortunately, is in hospital for two months—has asked me to pass on her heartfelt thanks on behalf of her constituents.

The acceptance of Denbighshire and Conwy has extended to two of the most economically crippled counties in Wales the opportunity to share in a huge aid package. I remind hon. Friends of the plight of those two counties. Conwy has had the worst record of foreign inward investment in Europe—no jobs have been created by foreign inward investment in the past five years. The county has the lowest pay rates in the country and the lowest gross domestic product in Wales. Denbighshire, my county, has experienced 1,500 job losses in the past four months—800 jobs at KwikSave Group, whose national headquarters in Prestatyn have relocated to Bristol, 180 jobs at Hotpoint, Bodelwyddan, and 50 jobs at Egatube in St. Asaph in the past eight weeks alone.

Some people urged my hon. Friend the Under-Secretary to forget about Denbighshire and Conwy because, they said, their inclusion so late in the day would threaten the objective 1 bid for the rest of Wales. They said, in ignorance, that the inclusion of Denbighshire and Conwy would raise the GDP level of the Welsh objective 1 bid above the crucial 75 per cent., which would have excluded us—despite the fact that Conwy has the lowest GDP in Wales. Some people said that Denbighshire and Conwy belonged to the prosperous north-east region or sphere of influence in Wales, and that to include the two counties would produce a NUTS 2 region that was not cohesive or coherent—despite the fact that, historically, geographically and linguistically, the two counties share more with west Wales, and therefore should be included in the west Wales and valleys bid.

My hon. Friends the Members for Conwy, for Clwyd, West (Mr. Thomas) and for Clwyd, South (Mr. Jones) and the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) and I put the case for Denbighshire. My hon. Friends the Members for Conwy and for Clwyd, West and I countered the opposing arguments strongly with facts, figures and logical argument. Many of those opposed to the inclusion of Clwyd and Denbighshire would not listen. I am pleased to say that the Under-Secretary did listen. He listened carefully to our case and, after due deliberation, he included the two counties. Many were upset by that decision, but he stuck to his guns and did not waver in his support. He was truly a good shepherd, who looked after his entire flock, maximising the area and population covered by the Welsh objective 1 bid.

I pay tribute to the work of my right hon. Friend the Secretary of State for Wales. He spoke up in Cabinet for the Welsh case for objective 1 status. I commend him for the way in which he acquitted himself in that task. He carried the Welsh case forward, convincing his Cabinet colleagues and the Prime Minister that Wales had a fair and just case for objective 1 status. He had to do so in a Cabinet whose other members represented other areas that wanted objective 1 status.

The Secretary of State's calm and measured approach paid dividends. The Welsh case received the backing of the Cabinet and the Prime Minister. Some people openly criticised the Secretary of State for not being blatant, dogmatic and vociferous. If my right hon. Friend had adopted that approach, he would have jeopardised the Welsh case in Cabinet instead of aiding it. Many of those accusations were not responded to. He took the statesmanlike approach, put his country before political sniping and let the accusations go unchallenged, for to answer them would have distracted his attention from his main goal—that of achieving objective 1 status for Wales.

I congratulate other Ministers on their role in connection with the objective 1 bid, including the Minister for Small Firms, Trade and Industry, the Economic Secretary to the Treasury and the Minister for the Regions, Regeneration and Planning. Their guiding principle was "fairness not favours". They have shown themselves ready to hear the cases put by all Members of Parliament, from all areas and all political parties. Their every word and intonation on objective 1 matters was subjected to detailed examination. They have walked a political tightrope. Some hon. Members challenged those Ministers to declare openly their support for the Welsh objective 1 case. For a Minister to do so would probably have meant the end of that Minister's career, and it would definitely have meant the end of the Welsh objective 1 bid, because favouritism would have been seen to have preceded fairness.

I thank the individuals, institutions and organisations who provided the hard-headed facts that enabled the debate to progress. I include among them the staff of the Library—I do not know whether I am allowed to name any individual, but I especially want to mention Jane Dyson, now Jane Hough. I also want to mention Cardiff business school and the Wales European Centre. They provided the factual information that was lacking. I share the concern of the hon. Member for Brecon and Radnorshire (Mr. Livsey) at the paucity of factual information available. I believe that that was due to the fact that Wales experienced local government reorganisation, and those facts were not available on a unitary authority basis. However, the Library and others dug out the facts, enabling us to prove our case.

The purpose of my contribution has been to recognise our achievements to date and to pay tribute to those who have worked behind the scenes, out of the glare of publicity, carefully making the case for Wales. I hope that, by recognising and celebrating our achievements to date, we can go forward with high morale, refreshed and united, in the final stages of achieving objective 1 status for Wales.

12.6 pm

Mr. Ieuan Wyn Jones (Ynys Môn)

I congratulate my right hon. Friend the Member for Caernarfon (Mr. Wigley) on his good fortune in securing this debate, which allows many of us from many parts of Wales to make a contribution, and on the way in which he introduced the subject. The speeches that have been made from both sides of the Chamber have revealed much common ground.

I make common ground with the hon. Member for Vale of Clwyd (Mr. Ruane), who represents an area that I know extremely well. He put his case for objective 1 for his area forcefully and, obviously, successfully. Now that the European Commission and Eurostat have accepted the plan we are on our way, and we hope that an announcement will shortly be made on objective 1 status for west Wales and the valleys.

The comments of the right hon. Member for Swansea, West (Mr. Williams) struck a chord with me, especially when he spoke of jobs in rural Wales being lost and replaced by jobs of lower quality. That is a significant factor in the reduction of gross domestic product in many of the areas that we represent. The response of previous Governments to the loss of jobs in, for example, Trawsfynydd and Trecwn was to appoint task forces. I make a plea to the Minister to forget the idea of using task forces as a response to the loss of jobs in rural Wales. We need a coherent policy that replaces those jobs with jobs of equal quality, although we accept that there are difficulties in ensuring that that always happens.

I should like to respond specifically to a point that the President of the Board of Trade made in the statement on energy policy. My right hon. Friend the Member for Caernarfon alluded to the very high unemployment in Anglesey and to the fact that all parties—including the Labour party—fought the last election in Anglesey on a manifesto of support for a gas-fired power station at Porth yr Ogof on the Wylfa site. As the Under-Secretary knows, there was another application for Rhosgoch. Therefore, the statement gave rise to great disappointment.

In a letter to me, the President of the Board of Trade acknowledged that the people of Anglesey were disappointed by the Government's energy policy proposals, which will prevent that gas-fired power station from being built. That disappointment is tinged with anger because we had a plan, agreed by all parties, that would have created hundreds of construction jobs in the next few years, created 100 permanent jobs and secured the future of Anglesey Aluminium, the other major employer on the island. The announcement by the President of the Board of Trade has jeopardised not only the construction plan and permanent jobs in the energy sector but the long-term contract for Anglesey Aluminium.

I understand that the Minister will see an Anglesey deputation next week to examine those issues. I stress the importance of looking again at plans to build the gas-fired station in Anglesey. It may be difficult for British Nuclear Fuels to do that itself, and it has highlighted the reasons for that. It is hard for a wholly owned Government company to breach the Government's energy plan. However, there is no reason why the plan could not be transferred to the private sector for section 36 consent. I ask the Minister to respond to Anglesey's concerns. If the path to prosperity is to be meaningful, quality jobs must be created in places such as Anglesey.

12.10 pm
Mr. Nigel Evans (Ribble Valley)

I am grateful for the opportunity to contribute to this important debate. I congratulate the right hon. Member for Caernarfon (Mr. Wigley) on securing the debate. It was wonderful to hear the old orthodoxy in his speech. Labour may have dropped socialism, but it is good to know that Plaid Cymru has picked up the torch and is running strongly with it.

I shall split my speech into several parts, but I do not want to rehash the speech that I may make next week in Merthyr Tydfil when we discuss the economic agenda for Wales. That is especially important because of the publication of "Pathways to Prosperity". It was not one of my most gripping reads and I have condemned it as being next to useless. It is full of apple pie and spin and has more waffle than Bird's Eye. Wales needs action, not rhetoric, which is what that document contains.

Wales came a long way during the 18 years of Conservative government. Before that, in 1970, some 270,000 people were employed in mining, but the figure is now down to 2,000. More than 30,000 jobs have been lost since the 1970s. Many jobs have transferred from heavy industry and mining to the public service, other service industries and tourism. Manufacturing is vital in Wales; I shall speak later about that.

We must consider the economic context in which Wales operates. The Government have inherited the longest period of low inflation for 50 years and faster growth and lower unemployment than in any other major European Union country. Britain was winning the lion's share of inward investment from outside the EU. With 5 per cent. of Britain's population, Wales gained 20 per cent. of that investment, but not enough of it was spread to west, north-west and south-west Wales. Much of it went to the M4 and A55 corridors.

I welcome the fact that the shift in investment emphasis started when my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) was Secretary of State for Wales. He ensured that it was more evenly spread and that there was greater emphasis on the Welsh Development Agency. One of its great challenges when it is turned into an economic powerhouse will be to compete with regional development agencies in England.

The golden legacy that I have mentioned is being wasted, frittered away. For the first time in many months unemployment is rising, and is doing so even before the introduction of the minimum wage. The Economist of 20 June stated: Ministers may make the situation worse in a number of ways: imposing a minimum wage will add to labour costs without any guarantee of improved productivity…By setting out his spending plans so far in advance Mr. Brown seems to have ruled out using fiscal policy to help bring the economy smoothly down to earth, leaving the bank to do the job alone by means of interest rates". Interest rates have risen six times in the past 14 months, and it is pointless to blame the Monetary Policy Committee under Eddie George because the Government set that up with the emphasis on controlling inflation, which is now rising. The target has been missed 12 times out of 13, and there is a threat that interest rates will rise again. If that happens, Welsh businesses, especially the smaller businesses of west and north-west Wales, will be hit again. Inflation is bad for their ability to predict, and higher interest rates are bad for those with loans and overdrafts. The minimum wage will have a knock-on effect on differentials, and the high pound, which has been mentioned several times in the debate, is bad for exports.

I spoke about the importance of manufacturing. The publication "Pathways to Prosperity" states that manufacturing accounts for 28 per cent. of the Welsh GDP. The strong pound is hitting exports, and higher interest rates mean a stronger pound. A non-competitive pound makes our exporters less able to compete with those in the rest of the EU. A CBI survey shows that export orders for May and June were the lowest since January 1983. In a document that it sent to me, the Federation of Small Businesses recommends the introduction of an export promotion board.

"Pathways to Prosperity" states that the Government will try to bring together a number of agencies so that there will be a one-stop shop and advice centre for exporters and those who want to export, It is said that that will be introduced at the end of this year, but manufacturers face problems now and cannot wait until then. I urge the Minister to bring that plan forward to ensure that as much support as possible is given to Welsh firms that could benefit from an increase in exports. If they can increase exports, more jobs will be created throughout Wales.

The right hon. Member for Swansea, West (Mr. Williams) spoke about investment in Cardiff. We welcome that tremendous success, but we must ensure that investment spreads to the rest of Wales. One of the local Welsh newspapers reported that about £110 million is to be invested in redeveloping Swansea city centre. I hope that that is a success and that it will attract more jobs to Swansea and, as a result of the ripple effect, to west Wales.

The Federation of Small Businesses also seeks a development bank for Wales to help indigenous firms. It is excellent that 20 per cent. of inward investment comes to Wales, but indigenous firms must be enabled to grow. In a letter to me, the federation states: Many small businesses currently find borrowing money over the medium term impossible because either the banks do not offer such facilities or the repayment conditions place an excessively heavy demand on cash flow. A development bank for Wales would ensure a greater degree of certainty that borrowing terms would be affected by cyclical factors such as inflation, recession or a housing market slump. Farming is another disadvantaged sector in Wales. A press release from Bob Parry of the Farmers Union of Wales refers to the rally in Cardiff at the time of the European summit. It states: Farmers must stand together and fight for their rights against the hostility shown to the countryside by some senior members of the Government. He condemned the Minister of Agriculture, Fisheries and Food and said that farm incomes in some places had fallen by 89 per cent. The press release continued: He is responsible for agriculture in the UK, but seems more interested in cutting costs and guarding the purse strings of the Treasury. He is the enemy within. Chancellor Gordon Brown is keeping a miserly grip on spending despite the overwhelming crisis that threatens to engulf our industry. Prime Minister Tony Blair is presiding over this farce as the entire fabric of rural life in Wales is torn to shreds. On Monday, I was in Welshpool, where I spoke to some farmers from Smithfield. They have no doubt about who is responsible for this crisis—the Government. The Government must take urgent action to assist farmers in Wales before it is too late. It is already predicted that, if this carries on much longer, 8,000 more farming jobs will be lost in Wales. That must not be allowed to happen.

All that the report says about farming is that we should think about putting greater emphasis on organic farming. Farmers want to do the job that they set out to do. Many have done it for generations, yet all the Government can offer them is greater emphasis on organic farming. The Government are simply not listening.

The economic report talks again and again about education. It says that the Government need to invest more in education to ensure that more people in Wales get a better education, yet what do we see? Apart from the fact that we were promised lower class sizes, which are increasing in Wales, yesterday, the House of Lords threw back to this House the amendment that proposed that students in Wales, England and Northern Ireland should pay £1,000 extra if they go to Scottish universities—£1,000 more than students from Scotland, Milan and Catalonia.

That has to be wrong. I hope that the Minister will put great emphasis on that, and will have words with Ministers in the Department for Education and Employment and with the Prime Minister to ensure that we do not throw that amendment back to the House of Lords, but accept it. It is common sense and it will help all the people of Wales and Britain with their further education.

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

I congratulate the right hon. Member for Caernarfon (Mr. Wigley) on securing this debate because it allows the Government to underline our absolute commitment to achieving economic prosperity for the whole of Wales.

May I immediately respond to the predictable tirade of the hon. Member for Ribble Valley (Mr. Evans)? Instead of being cheap and cheerful, he has become cheap and cheeky in his role in Welsh affairs. He attacked—I know that he is doing his job valiantly as an Opposition Member—"Pathway to Prosperity", saying that it is "next to useless." That is interesting. The document was written in careful partnership with the Confederation of British Industry, the Federation of Small Businesses, the Trades Union Congress, academics from the economic sector and others involved in the serious job of building the Welsh economy. The hon. Gentleman rejects it with a cheap and cheeky slogan.

The hon. Gentleman's Government presided over 20 years of destruction of west Wales and the valleys, from which we are now trying to recover and which the right hon. Member for Caernarfon addressed with great eloquence We never had an economic agenda from the Tory Government; it could have been written on the back of an envelope. At least we have produced 53 pages of closely argued analysis and action proposals, which need to be debated on their merits.

The higher pound is undoubtedly causing severe problems, especially for manufacturing exporters in Wales and elsewhere in Britain, but two thirds of the rise in the pound occurred under the Tory Government. The hon. Member for Ribble Valley cannot simply wish away or ignore that. I remind him that "Pathway to Prosperity" proposes detailed action plans, which we will have an opportunity to discuss next Monday in Merthyr Tydfil; in that sense, the pathway to prosperity leads to Merthyr Tydfil. We will address that when we get the opportunity.

I apologise on behalf of my right hon. Friend the Secretary of State for Wales, who is unable to be here for the whole debate, but he assures me that he will carefully read all the speeches—with the exception perhaps of the previous one—for the detailed points that they make, especially the speeches of my right hon. Friend the Member for Swansea, West (Mr. Williams), which included some valid points, and of the hon. Member for Brecon and Radnorshire (Mr. Livsey). I look forward to being bombarded with questions about statistics, but I tell the hon. Member for Brecon and Radnorshire that Powys will be a separate NUTS 3 area, so the Office for National Statistics has been asked by the Welsh Office to supply detailed figures, including those on gross domestic product, for Powys. I hope that that will therefore absolve him from the obligation to bombard me, and absolve me from the obligation to reply to him.

Mr. Rowlands

Anyone who has read "Pathway to Prosperity" will have been struck forcefully by the enormous job gap figure of 200,000. Earlier, I intervened on my right hon. Friend the Member for Swansea, West (Mr. Williams) to ask how we can measure that job gap by net job creation in Wales over the past 10 years. I do not know whether the Minister can reply to that point today, but, if he comes to Merthyr Tydfil, I hope that he will have an answer.

Mr. Hain

The broad answer to my hon. Friend's point is that, if we had the Tory strategy on job growth, it would take another 40 years to make up that gap, so it is not a strategy at all.

The hon. Member for Ynys Môn (Mr. Jones) understandably raised important points about Anglesey, particularly the future of Anglesey Aluminium. As the Minister most immediately responsible, and having worked with the Secretary of State, I assure the hon. Gentleman that we have been determined to protect the future of Anglesey Aluminium in particular, which is crucial to the local economy. I am confident that we will be able to do that and to secure its energy supply at a relatively cheap rate, if not at exactly the rate that it has enjoyed, which it was not expecting to maintain. Therefore, I do not think that there is doom and gloom ahead for Anglesey in general, or for Anglesey Aluminium in particular.

I express my gratitude to my hon. Friend the Member for Vale of Clwyd (Mr. Ruane) for his contribution and especially for the expert way in which he identified the plight of Conwy and Denbighshire.

Nearly two decades of woeful neglect have produced a real crisis in west Wales and the valleys. There has been a dramatic change in the economic and social fabric of Wales over the past two decades: rather than the historic north-south divide, there is now an east-west divide. That has been confirmed by an authoritative analysis from the department of city and regional planning at Cardiff university, which I understand is to be published next week.

I was particularly grateful that the European Commission has now designated west Wales and the south Wales valleys as a single NUTS 2 area and, in so doing, has recognised the new realities of the Welsh economy.

I agree with many of the points that the right hon. Member for Caernarfon made, and join him in rejecting the Thatcherite free-market approach that plunged Wales into such difficulty over 20 years. I gently point out that his contribution was strong on analysis, but weak on the action that he called for us to provide. I hope that when he inspects this pamphlet before making his speech in Merthyr—which, as my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) always reminds me, is the centre of the industrial revolution—he will read some of our detailed proposals and discuss them on their merits.

Mr. Wigley

My main criticism was the lack of resources. Will the Minister confirm whether there is any additional money to turn this into reality?

Mr. Hain

There is much money; indeed, tens of millions of pounds, if not hundreds of millions, is embedded in this strategy, but I point out that, next week, an announcement is due to be made by my right hon. Friend the Chancellor of the Exchequer on the comprehensive spending review, and the right hon. Gentleman would not expect me to anticipate that—at least not if I wanted to stay in this job.

GDP per head in west Wales and the valleys NUTS 2 area is about 72 per cent. of the European Union average. It is one of poorest areas of Europe, as the right hon. Gentleman rightly pointed out. That compares with the east Wales GDP per head, which is over 90 per cent. of the average.

A third of the working age population are jobless. They may or may not be on the unemployment register, but they are without work. In areas such as Pembrokeshire and Anglesey, the official male unemployment rate is more than twice as high as for the rest of Wales. Even those in work suffer among the lowest wage rates in Britain. Ill health and disability is rife in the south Wales valleys in particular, where the rate of limiting long-term illness is more than 60 per cent. higher than the Great Britain rate. That is a terrible indictment.

Those problems have been at the forefront of our thinking on the analysis in "Pathway to Prosperity", our new economic agenda for Wales, which the Government published yesterday. We did so for the first time with a video link conference throughout Wales. The Secretary of State was able to take questions, including some from Caernarfon, Wrexham, Newtown and Newcastle Emlyn, not forgetting Swansea. The chief executive of Gwynedd county council welcomed the document, and we are grateful for that.

The document is an important milestone and there will be a full opportunity to debate it next Monday. One of its themes is the need for a pronounced and decisive shift of effort to those areas that are most in need, notably west Wales and the valleys. The area must have the infrastructure that it needs, key industries must be fostered, small businesses must receive the support that they need to grow, and communities and individuals must be given the opportunity and facilities to sustain them. This programme depends on a powerful and productive partnership between the public and private sectors and we are determined to secure one.

Concern has been expressed about tourism. I fully acknowledge that the Welsh tourist industry, which is vital to the economy of west Wales, is under real pressure. Increasing competition—

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