Commons Sitting of 25 February 1999

Preamble
The House met at half-past Eleven o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
Oral Answers to Questions
Oral Answers to Questions
  TRADE AND INDUSTRY
  The Secretary of State was asked—
  TRADE AND INDUSTRY

    Automotive Engineering
    Mr. Richard Burden: If he will make a statement on the prospects for automotive engineering in the United Kingdom. [71592]
    The Secretary of State for Trade and Industry (Mr. Stephen Byers): With £3 billion of new investment and the creation of 6,500 new jobs announced in 1998, and with yesterday's announcement by Vauxhall that it will locate its European centre of research at Luton, it is clear that the overall prospects are good.
    Mr. Burden: I welcome the announcement by Vauxhall of the investment in Luton. Does not that show that it makes sound business sense for motor manufacturers to invest here in the United Kingdom? Against that background, would not it also make sound business sense for BMW to confirm production of a new model range at Rover in Longbridge? My right hon. Friend visited the plant a few weeks ago and I welcome the positive attitude that he has shown to that possibility. Will he confirm that Government assistance to back such investment by BMW would in no sense be a bail-out, but would be investment to transform the plant and ensure that motor manufacturing remains here in the European Union?
    Mr. Byers: I compliment my hon. Friend on the role that he has played in representing the interests of his many
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    constituents at the Longbridge plant in Birmingham. I was pleased to visit the Longbridge plant with my hon. Friend a few weeks ago to discuss the situation with management and representatives of the work force.
    The House will know that BMW is at present reviewing the position regarding the development of a new medium-sized car. I am confident that Longbridge is in a strong position. Provided that skills can be raised and improved productivity achieved—and also that BMW is prepared to make a substantial investment in Longbridge—the Government will do all that we can to assist the plant financially, to save the 14,000 jobs of people directly employed there, and to save the jobs of the many tens of thousands of people in the west midlands economy who depend on Longbridge.
    Mr. Nicholas Winterton: Will the Secretary of State accept that the automotive engineering sector is a vital part of the manufacturing element of the United Kingdom economy? Does he also accept that added social costs at a time of globalisation and increased competitiveness across the world are very dangerous to the sector, which is already highly competitive? Will he also have a word with the Chancellor of the Exchequer and suggest that he should not adopt such a hostile attitude to the motorist, who sources so much employment in this country?
    Mr. Byers: I am afraid that the hon. Gentleman is denying what is happening in reality. Yesterday, Vauxhall announced its new research and development centre here in the United Kingdom, and last month Nissan announced an extra 800 jobs in Sunderland. Those companies are looking world wide and choosing to invest in the United Kingdom. This is a good place to do business, and the Government are taking the steps and putting in place the measures to ensure that it will remain so.
    Jacqui Smith: Does my right hon. Friend share my concern about the comments that have appeared in a national newspaper calling for the withdrawal of support from the Longbridge plant, presumably with a consequent loss of jobs and investment there? Will he assure me that he will continue to give positive support to the west midlands and to the Longbridge plant? Will he call on the Opposition also to condemn the comments in that newspaper, which they usually support?
    Mr. Byers: The Opposition have been notable for their total silence on the question of support or otherwise for Rover at Longbridge. Not a word has been said—apart from by the right hon. Member for Wokingham (Mr. Redwood), who speaks on these matters for the Opposition and who sought to denigrate Longbridge in a debate a couple of weeks ago. I regret the words that he used on that occasion.
    I can however confirm that there is no question of the Government bailing out Longbridge. We are prepared to support the plant, to help to improve productivity and raise skill levels there, and to work towards leveraging in much more money from BMW. If we can secure that, the prospect for Longbridge is bright, and I look forward to visiting the plant in the not-too-distant future, when its future is secured.
    Mr. John Redwood: The Secretary of State should withdraw his last remarks about Longbridge.

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    The Opposition have made it very clear that we want a strong motor manufacturing industry in Britain, and we have supported the case for strong manufacturing in the west midlands.
    Does the Secretary of State accept that the problems experienced by Rover and other motor manufacturers stem largely from the high value of sterling, which is the result of this Government's policy? That has meant that it is one fifth dearer to make things in Britain than in France or Germany. Will he confirm that stability of exchange rates is crucial to the euro scheme? Does not that mean locking Britain into an uncompetitive exchange rate that will make it too dear to make things in Britain?
    We welcome the odd piece of good news, but the overall background is one of factory closure after factory closure and job loss after job loss. The Secretary of State does not care, and does not seem to realise the consequences of the Government's actions. Does he now accept that the Government's change of gear on the euro is a crash of gears for British industry?
    Mr. Byers: The right hon. Gentleman talks about a single piece of good news, which Vauxhall's decision yesterday certainly was. However, it was not the only one. Last month, Nissan created 800 jobs in Sunderland. Last year, Honda announced investment of £500 million in Swindon, creating 1,000 jobs. In addition, Peugeot has announced 900 jobs in the past three months, Vauxhall has announced an additional 1,000 jobs at Ellesmere Port and Toyota has invested £180 million at Deeside, which will create 310 jobs. That makes nearly 4,000 new jobs in the past 12 months.
    The right hon. Gentleman allows prejudice to rule over fact, and he cannot see the good news. He should listen to the managing director of Vauxhall, who has said that if the Government were to adopt the policies proposed by the right hon. Gentleman on the single currency, Vauxhall would not consider further investment in the United Kingdom. He should talk to the managing directors of Nissan, who say exactly the same. That is the reality that the right hon. Gentleman chooses to ignore because he is not prepared to recognise that our future lies in Europe. Business believes that it does, but for prejudiced reasons, the right hon. Gentleman will not recognise it.
    Mr. Dennis Skinner: My right hon. Friend needs no lectures from that lot opposite about the manufacturing base because 40 per cent. of it went during the 18 years of Tory Government. They shut nearly every shipyard in the country, and they closed every coal mine in Derbyshire. And Deadwood walked through the Division Lobby with the rest of the Tories to close down the pits.
    Madam Speaker: Order. The hon. Gentleman tends to get carried away. I thought we might have a good kick-off this morning, not an abusive one. Please use appropriate language when referring to Members of the House.
    Mr. Skinner: I did not think you had caught on, Madam Speaker.
    Madam Speaker: I am wide awake this morning.
    Mr. Skinner: I only got "Deadwood" from the Tory paper, The Sun, when the right hon. Gentleman stood for the leadership.
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    If BMW starts to throw its weight about and fails to honour the pact agreed with the Transport and General Workers Union and other unions by saying that Rover is worthless, will the Secretary of State tell BMW that we will take Rover back—just as we did when we nationalised Rolls-Royce—so that we can run it for the public benefit?
    Mr. Byers: I have to say that that is not one of the options being considered by the Government. To be serious, however, the work force at Longbridge showed their clear commitment to the future of the car industry by voting last autumn for radical changes to their working practices. We all want BMW to show a similar commitment to Longbridge.

    Transport Costs
    Mr. Christopher Gill: What assessment he has made of the effect upon the competitiveness of British industry of (i) United Kingdom transport costs and (ii) those relative to those of continental Europe. [71593]
    Madam Speaker: I am going to ask the hon. Gentleman to read out his substantive question so that it will be recorded correctly.
    Mr. Gill: Thank you, Madam Speaker. My question was correctly recorded in the Vote a fortnight ago, but it has been altered subsequently. It should read: "What assessment he has made of the effect upon the competitiveness of British industry of United Kingdom transport costs relative to those of continental Europe."
    The Minister for Energy and Industry (Mr. John Battle): The Government recognise that transport costs can be a significant factor in the competitiveness of some sectors, and comparisons have been made. My right hon. Friend the Deputy Prime Minister set out the Government's strategy for supporting economic growth through an improved and more efficient transport system in his White Paper, "A New Deal for Transport", which was published last year, and I am sure that the hon. Gentleman will have read it.
    Mr. Gill: The House will have noted that totally inadequate response. It can hardly have escaped the Minister's attention that 2,000 truckers massed outside the House of Commons yesterday to try to draw the Government's attention to their problems—problems that will not be solved by the integrated transport system. The difficulties are occasioned by the fact that truckers pay so much more for fuel and excise duty in the UK than their counterparts pay on the continent. Is the Minister aware that truck drivers can fill their tanks for £200 less per tankful of diesel on the continent than they must pay in the UK? Is he further aware that the continental hauliers against whom the British trucker is competing can employ two east European drivers for the price of one British driver? What is he going to do about that particular problem? The truckers will not be fobbed off by the pathetic answer the Minister has given.
    Mr. Battle: The hon. Gentleman, and the industry as a whole, might look to issues wider than the direct costs—indeed I know that the industry does so—because the

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    overall tax burden on the haulage industry is less than the European Union average. The industry here pays lower corporation taxes, lower employment taxes and lower social costs than it would in any other European country.
    I know about the demonstration that took place outside the House yesterday, and I note that the director general of the Road Haulage Association Ltd is none other than Mr. Norris, the former MP for Epping Forest. I seem to recall that, as Minister for Transport in London, he contributed to the disintegration of transport policy—remember his lines about those dreadful people who travel on public transport? Our Labour Government are introducing policies to integrate public road, rail, and vehicle transport in this country. It was the Opposition, when they were in government, who undermined the competitiveness of British industry; we are setting it on the right road.
    Mr. Barry Sheerman: My hon. Friend will hear a lot of special pleading as we run up to the Budget, but will he bear in mind the fact that we have an effective haulage industry in this country? The industry is competitive and very good logistically, and I hope that he will not take too much notice either of the question put by the hon. Member for Ludlow (Mr. Gill) or of the demonstration yesterday.
    Mr. Battle: I appreciate my hon. Friend's remarks and should like to point out that we have a good working relationship with the haulage industry. The industry endorsed our intentions to improve enforcement throughout the industry, through improvements in the efficiency of enforcement agencies and by considering the introduction of modern information technology systems to allow better co-ordination. The industry has been constructive in helping us to formulate proposals for hauliers in a competitive regime that will be fair and honest and will lead to reduced congestion, improved delivery times, efficiencies and profitability. That is the whole point of an integrated transport policy. The haulage industry realises that; it is only the Conservatives who have not yet caught on.
    Mr. David Heath: Is the Minister as alarmed as I am to hear Conservative Members calling for tax harmonisation? Does he recognise that many small haulage operators are facing a difficult period, with competition from continental European operators who are coming into Britain and taking British haulage jobs? Will he consider whether, without abandoning the quite proper environmental basis for Government policy, he can reach agreements with other European countries on fuel tax convergence, to ensure that we have a fair playing field for this important industry?
    Mr. Battle: The hon. Gentleman puts the point well, but I cannot speak for the contradictions that emerge from the Conservatives. I agree that it is important that the rules of the European Union be applied equitably and fairly throughout the whole of the EU and are applied to all on a level playing field. We shall do our best to ensure that that happens.
    I would add that it is right that there should be a balance between the amount paid by the industry in dues and environmental responsibilities. We cannot unlink those
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    responsibilities; the industry realises that taking its environmental responsibilities and its social obligations seriously is an important part of building and maintaining a competitive edge nowadays. I cannot understand why Conservative Members hanker after a single instrument all the time; they seem to be so locked in the past that they have not caught up with the agenda.
    Mr. Denis MacShane: Is the Minister aware that trucking companies on the continent admire the flexibility of their counterparts in the United Kingdom? They admire the fact that, because of the national health service, United Kingdom companies do not have to pay extra social costs and they would welcome the corporation and other taxes that apply in this country. The hon. Member for Somerton and Frome (Mr. Heath)—if I may go off message briefly—is quite right: we need harmonisation of these duties in Europe. If the Conservative party is now officially the party of harmonisation, I, for one, welcome it.
    Mr. Battle: Until 9 March, there is a kind of ministerial purdah preventing comment on tax and changes in duties. I must admit—in all honesty and in the privacy of this quiet room—that I do not know what is in the Budget. Changes in fuel duty will obviously be a matter for the Chancellor, but I am sure that he will take notice of all representations made to him—including those from hon. Members.
    Mr. Jeffrey Donaldson: In developing an integrated transport strategy for the United Kingdom, the Minister will be aware of the tremendous burden of the transport costs that apply to businesses in peripheral regions, such as Northern Ireland. Will the Minister clarify what consideration has been given to peripheral regions of the United Kingdom in developing an integrated transport strategy?
    Mr. Battle: The hon. Gentleman raises an important point. If he reads "A New Deal for Transport", which was published by my right hon. Friend the Deputy Prime Minister, he will find that rural areas and the regions—Northern Ireland, Wales and Scotland—feature in that report.
    It is important to ensure that "integrated" means the whole of these islands. We must have systems that work, not just for road but for rail. There will be an announcement today about our attempts to sort out the mess in the rail industry that we inherited from the Conservatives. We must ensure that road, rail, public and private transport and the haulage industry are integrated properly. That means having a decent system: ensuring that roads are maintained properly and so on and that the regions and outlying and rural areas are not discounted from the equation. It is not just an urban integrated transport strategy, but a strategy for the whole of Britain.

    Physical Sciences
    Mr. Ian Stewart: What plans he has to increase the budget for research in the physical sciences. [71594]
    The Minister for Energy and Industry (Mr. John Battle): The allocations of the science budget to the separate research councils following the comprehensive spending review provision of an additional £700 million over the next three years were announced on 27 October 1998. That increase compares with the last settlement of the previous Administration, which resulted in a real-terms reduction in spend. Spend on the physical sciences for the years beyond 2001–02, like all other areas of science, will be reviewed in due course.
    Mr. Stewart: Technical and engineering-oriented universities such as Salford will welcome this settlement—particularly as the physical sciences and engineering have done better from the comprehensive spending review than from 18 years of Tory rule. It was difficult for universities to train graduates and post-graduates because of the state of disrepair that the Conservatives permitted during their period in Government.
    Will the Minister join me in calling on all fields of science to work in partnership to make the most of cross-disciplinary projects and the joint infrastructure fund in order to advance knowledge in the United Kingdom? That fund—comprising £300 million from the Government and £300 million from the Wellcome Trust—is much appreciated. I hope that the Minister will ensure also that there is proper balance in the distribution of that fund throughout Britain.
    Mr. Battle: I agree with my hon. Friend's approach: yes, it is important that we adopt new cross-disciplinary strategies. However, it is important to stress that the Engineering and Physical Sciences Research Council budget will increase over the next three years by £86 million, from the already high figure of £380 million. For example, funding for maths will rise by 17.5 per cent. and funding for chemistry by 7.5 per cent. The £600 million joint infrastructure fund to which my hon. Friend referred may be used by science institutions in all fields to upgrade laboratories and other buildings. Bids are welcome.
    My hon. Friend mentioned cross-disciplinary activity. I believe that Salford university, Salford city council, local education, medical, industrial and social bodies and my hon. Friend are all involved in the Gemysis project. That is an example of how new technology can blend the traditional science disciplines with the wider world. If others follow Salford's example, we shall move forward much faster.
    Mr. David Chidgey: That is all very encouraging, but I am sure that the Minister is aware that this country devotes a lower proportion of investment to research into civil aviation than do any of our European Union competitors. Will he take the good news further and confirm that his Department will not cut, and indeed will maintain, the budget for the civil aviation research and development scheme?
    Mr. Battle: We are considering CARAD's budget in detail and sympathetically. CARAD is being supported. Since we came to power we have substantially helped the aerospace industry with launch aid to British Aerospace
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    and Rolls-Royce. That was significant investment in research and development projects, so the aviation sector cannot claim that we are not backing it fully.
    Mr. Ian Pearson: While I welcome the boost in research funding, is my hon. Friend aware that less than 1 per cent. of research council funding is devoted to the "D" part of R and D, or that only a paltry 2.5 per cent. of overall Government R and D funding is devoted to industrial development? In all friendliness, I tell him that that Tory legacy is simply not acceptable and is damaging our long-term competitiveness. What will he do about it?
    Mr. Battle: I would not like my hon. Friend to think that the science budget was all. The increase of £1.4 billion was intended to underpin the science base, but the comprehensive spending review has enabled the Department to increase by 20 per cent., to £220 million, the innovation budget, the aim of which is precisely to help to move ideas out of laboratories and into workshops. That will help a range of schemes to enable ideas to be turned into practical, productive, economic work.
    Mr. Christopher Chope: Is not the key issue the fact that the Minister for Science, Lord Sainsbury, is seen to be biased towards the biosciences rather than the physical sciences? Yesterday's decision by the public health committee of the Labour-controlled Local Government Association to recommend that 26,000 schools ban GM foods reveals that it is unwilling to trust the science Minister, whether he is involved in a blind trust or any other sort of trust. That also demonstrates how important it is to have a science Minister who can serve on Cabinet sub-committees dealing with these subjects.
    Unlike Lord Sainsbury, the Minister for Energy and Industry is not tainted by conflicts of interest and is directly accountable to this elected House. Why does he not ask for his old job back? If he asks to be science Minister again, we will support him.
    Mr. Battle: This Government's top priority has always been and will continue to be to ensure that GM crops and food do not threaten environmental health or public safety. We shall proceed with care and caution on the basis of the best available scientific advice. Scaremongering and spreading rumours, as the Conservative party has done in recent weeks, is most unhelpful. The attempts of Opposition Members to impugn the integrity of my noble Friend Lord Sainsbury demonstrate that when a team is losing badly its last line of defence is to go for the man, not the ball—and that is exactly what Opposition Members are doing.

    Small and Medium-sized Businesses
    Ms Helen Southworth: What measures his Department proposes to foster an entrepreneurial culture among small and medium-sized businesses. [71597]
    The Minister for Small Firms, Trade and Industry (Mr. Michael Wills): The recent competitiveness White Paper sets out 75 new commitments to help British businesses succeed, and fostering an entrepreneurial culture lies at their heart. The Department is participating

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    in the development of a national campaign for enterprise to create a more entrepreneurial culture. For existing small and medium enterprises, there will also be an enterprise fund to assist business growth. The Department continues to build on the extensive range of services offered to all businesses through the Business Link network.
    Ms Southworth: I thank my hon. Friend for that answer. Will he welcome the exciting and innovative initiatives taking place in my area? Warrington Business Connection, which is led by the local authority, will in April provide the opportunity for 5,000 small and medium businesses to meet, create networks and trade not only in the north-west or even in Britain, but internationally in many different marketplaces. Will he welcome also the newly formed Skills Forum, a public-private sector partnership in Warrington, based around identified business need to support and develop skills in the area? I welcome the prospect of my hon. Friend's coming to Warrington to see that Warrington means business and is effective.
    Mr. Wills: I am delighted to welcome that news from my hon. Friend, and I shall be delighted to visit Warrington and see it for myself, as soon as I receive an invitation.
    Mr. Peter Brooke: Does the Minister agree that entrepreneurs are entrepreneurs are entrepreneurs, and that what matters far more than encouraging entrepreneurs is not discouraging them?
    Mr. Wills: I am very happy to agree with that.
    Liz Blackman: My right hon. Friend the Secretary of State for Trade and Industry visited my constituency fairly recently and saw an enterprising small firm that managed to get into the niche market of carbon fibres, capitalising itself on the way. It has now reached a point where it wants to grow on. What help and support do the Government offer firms that want to move from the small to the medium sector?
    Mr. Wills: We are providing a range of support through the Business Link network. If my hon. Friend writes to me with details of the firm, I shall be happy to provide specific details for the area.
    Mr. Brian Cotter: Is the Minister aware that the cost to the smallest businesses—those with five employees or fewer—of introducing the working families tax credit will be £25 million? Does he agree that that is not encouraging for new entrepreneurs? Has he made representations to that effect to the Treasury, and if not, why not?
    Mr. Wills: We are introducing a range of measures that we hope will help low-income working families. We are proud of those measures and we will continue to pursue them. As regards helping small businesses, we have a range of measures. The costs to which the hon. Gentleman refers must be seen in context. We want small businesses in this country to prosper, and we are confident that we have the measures to enable them to do so.
    Mr. Barry Jones: Does my hon. Friend agree that an entrepreneurial business could take a
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    hard knock if its locality suffered the loss of assisted area status? Will he assure me that he will fight hard to keep assisted area status for my constituency, bearing in mind that 4,000 aerospace workers, who are the very spirit of the entrepreneurial British approach, want that status kept, as do the people who work with great enterprise in Deeside industrial park? I am sure that my hon. Friend will fight hard for my people.
    Mr. Wills: My hon. Friend is a famous champion of his constituency and his views are well noted. As he knows, the assisted areas map is under review. We shall report the results to the House in due course.
    Mr. Tim Boswell: Will the Minister concede that his extremely bland new Labour responses sit ill alongside the additional burdens that he is imposing on small and medium enterprises through the Employment Relations Bill that he is currently considering in Committee with us? Those burdens fall on top of the burdens of cost and book-keeping imposed by the national minimum wage and the working time regulations.
    Has the Minister noted the recent press report that South Korea, a country in real economic difficulties, has responded to them by going through its 16,000 regulations and abolishing approximately half of them—this at a time when the British Government have scrapped 20 regulations and imposed 2,400 new regulations? Is not that the wrong kind of productivity?
    Mr. Wills: We need no lessons from the Opposition, who introduced 45,000 regulations while they were in government—a record that we are striving not to emulate.
    As the hon. Gentleman knows, the Employment Relations Bill promotes a range of family-friendly policies. We are proud of them and we do not regard them as a burden on business. We regard them as fostering a spirit of partnership. We are promoting a new spirit of partnership in the workplace, which was sadly lacking from the measures introduced by the previous Government. Far from increasing burdens, we believe that our measures, seen in the round, will decrease the burdens by tackling the crippling cost to business of absenteeism.
    According to an estimate by the Confederation of British Industry, that cost was £25 billion in 1996. A new spirit of partnership in the workplace will help to reduce it.

    Rover Longbridge
    Mr. John Austin: What action he has taken to ensure continued production at Rover Longbridge. [71599]
    The Secretary of State for Trade and Industry (Mr. Stephen Byers): I am in close contact with both Rover and BMW. I have also spoken personally to the new chairman of BMW, Dr. Milberg. I am pleased to tell the House that he has confirmed that BMW will proceed with the planned investment at Longbridge for the new Mini. I welcome that decision.
    In addition, BMW is reviewing its medium car strategy. As part of that review, the Government will carefully consider any approach from BMW for assistance that will help to secure the long-term future of the plant, and will

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    help Rover to achieve the world-class performance that it needs to achieve if it is to operate successfully in this competitive, global marketplace.
    Mr. Austin: I welcome my right hon. Friend's support. Will he also commend the Rover work force at Longbridge for their positive contribution to ensuring continued production at the plant? Does he share my view that the ground-breaking partnership deal struck in December was struck between recognised trade unions and the board, and should be unaffected by any recent changes in the board? Does he also agree that the loss of 14,000 jobs at Rover Longbridge, and of up to 80,000 in the supply and service industries, would deal a devastating blow not just to the west midlands but to the British economy as a whole? Does he agree that, in a global market economy and given the inevitable rationalisation of the motor car industry, the victors will be countries that support domestic producers?
    Mr. Byers: This is clearly a time of uncertainty for the 14,000 people who work at Longbridge, and for the many more people in the west midlands who depend on Rover Longbridge for their contracts. It will be a period of change. In the autumn, the work force voted for change, demonstrating their commitment. The Government want to ensure that those workers can be partners in change, not victims of change. We shall do all that we can to support them, and to help BMW to decide where the medium car is to be produced; but I must repeat that there is no question of the Government's bailing out an unsuccessful industry. We are prepared to give financial support to the improvement of skills at Longbridge so that productivity can increase, on condition that that support levers in substantial extra investment by BMW. We believe that partnership approach is the best way in which to secure the long-term future of Longbridge, and of Rover in the United Kingdom.
    Miss Julie Kirkbride: I welcome a great deal of what the Secretary of State has said. As he may know, the Longbridge plant is in my constituency as well as that of the hon. Member for Birmingham, Northfield (Mr. Burden), and I should be grateful if, when he intends to visit it again, he would do me the courtesy of telling me.
    I associate myself with what was said by the hon. Member for Northfield, but also ask whether the Secretary of State will have the decency to accept that part of the problem at Longbridge has been caused by the Government's economic policy and the ruinously high exchange rate that operated during the early part of the Government's term of office, when Rover was unable to sell its cars abroad and was uncompetitive in the home market where it had traditionally sold them. Sadly, that will continue, because foreign car companies have bought forward sterling and will therefore be able to continue to undercut Rover in its home market.
    In view of the Government's partial culpability in regard to the present crisis, may I urge the Secretary of State to encourage his right hon. Friend the Chancellor of the Exchequer to be generous? There is a perfectly reasonable precedent in the investment in Longbridge that took place under the last Conservative Government.
    Mr. Byers: I can understand why Conservative Members try to score political points, but we should look
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    at the facts. The hon. Lady referred specifically to exports and alleged that the car industry faces particular difficulties in that respect because of the rate of sterling. A fact: car exports from the United Kingdom last year were the highest ever. A fact: United Kingdom car industry production was the highest for 24 years. United Kingdom sales are the highest since 1989. That is the reality of the situation. Conservative Members do not like to have the facts drawn to their attention. Those are the facts and here is another one: 6,500 new jobs have been created in the car industry in the past year under this Government, after years of neglect by the Conservatives.
    Dr. Lynne Jones: I am pleased that the hon. Member for Bromsgrove (Miss Kirkbride) associated herself with the remarks of my hon. Friend the Member for Birmingham, Northfield (Mr. Burden), but it is a pity that she did not dissociate herself from the calls of her former employer, The Daily Telegraph, to shut down the Rover operations at Longbridge. Despite the strength of the pound, which is a problem for Longbridge, Rover managed to increase its sales in Europe last year, largely due to the success of its higher range models. Such production is set to continue with the highly acclaimed Rover 75. Does my right hon. Friend agree that, if the investment in the small and medium car range goes ahead, the prospects for Rover capturing its share of that market—at home and abroad—are good?
    Mr. Byers: I agree with my hon. Friend. I have no doubt that the prospects for Rover, particularly at Longbridge, will be good, provided that we can achieve an approach based on partnership and can work together. The Government are prepared to do their part—not through a bail-out, but through targeted assistance—and, provided that BMW can recognise the benefits that it will receive from Rover Longbridge and investment in that plant, I am sure that we can work together to provide employment for the 14,000 people who currently work there. Such an approach would provide opportunities throughout the west midlands and secure the future of Longbridge, so ensuring that we can maintain that plant as a vital part of the west midlands economy.
    Mr. John Redwood: In the middle 1990s, Rover was profitable, BMW was proud to acquire the Rover name and the factories, and BMW management thought that Britain was the best place in which to invest, anywhere in Europe, to build new cars. Under the Government, Rover is a loss-making venture and BMW is threatening to take its investment elsewhere; it is even contemplating not using the Rover badge for the medium car, but substituting a new BMW model.
    I hope that the Secretary of State will accept that Conservative Members want a successful motor industry base in Britain. We were proud of the achievements by companies from all around the world which began to establish that base in the early and mid-1990s. Will he tell all those worried people who live anywhere near a Rover plant, and whose livelihoods depend on it, either directly or indirectly, the answers to some very simple questions? Do he and the Government believe that they can persuade BMW to use the new mid-range Rover saloon, the Rover 35, to replace the existing models, or does he think that we might lose out to a BMW model? Does he think that he can persuade BMW to manufacture that model in Longbridge or anywhere in the west midlands?

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    How many job losses does the Secretary of State think will result from the plans that BMW is beginning to develop? When does he expect to receive a proper application for grant from BMW? Will that grant application be for the Mini alone, or does he expect it to cover the medium-sized saloon? Will he want any conditions about such a saloon if the grant application relates only to the Mini in the first instance? What guarantees will he want about the number and location of jobs, if and when those grant negotiations get under way?
    Mr. Byers: We have just witnessed the gross irresponsibility of opposition. There is no question of debating such detailed, commercially sensitive information on the Floor of the House. The right hon. Gentleman knows that, when he was a Minister at the Department of Trade and Industry, he would not have debated these issues openly at this particularly sensitive stage.
    The reality is that yesterday Vauxhall decided to locate its research centre in the United Kingdom. Ten years ago, when the Conservative Government were in power, that company walked away from the UK. It would create great difficulties for securing the future of Longbridge if the Government were to adopt the Conservative party's policies on the single European currency. To rule out entry for 10 years would be seen by companies such as BMW as a condemnation of the future of industry in this country. The right hon. Gentleman would be aware of that if he thought about it. He should make the link, and should listen to the leaders of big business who are telling him and his party that they have got the policy wrong.
    We are committed to our policy on the single currency, because we believe that it will secure the future for our people. We shall continue the negotiations at Rover Longbridge. They are progressing well, and I hope that in weeks rather than months they will achieve a successful conclusion.

    National Minimum Wage
    Mr. John Healey: What assessment he has made of the likely impact of the national minimum wage on wage levels from 1 April. [71600]
    The Minister of State, Department of Trade and Industry (Mr. Ian McCartney): The introduction of the national minimum wage on 1 April will increase the wage levels of some 2 million low-paid workers throughout the United Kingdom.
    Mr. Healey: My hon. Friend referred to 2 million people across the United Kingdom, but is he aware that 77,700 people in South Yorkshire currently earn less than £3.60 an hour? What would he say about the potential benefits of the national minimum wage to the thousands of people in South Yorkshire who, for too long, have been working at the rough end of the labour market?
    Mr. McCartney: I thank my hon. Friend for that question. I pay tribute to him for his activities inside and outside the House in defending and promoting the business case as well as the social justice case for the national minimum wage. On 1 April, many workers in his constituency and in the surrounding areas will receive pay rises of about 50 per cent., and following the introduction of the working families tax credit in October, those with
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    families could receive in their pay packets the equivalent of a pay rate of £7 an hour. The Government, along with industry, are committed to eradicating low pay and to giving people decent pay and dignity in the workplace.
    Mr. Ian Bruce: Will the Minister tell the House what plans the Government have to increase the minimum wage? Companies will have to budget for a minimum wage of £3.60 an hour from 1 April. Should they expect a rise in the minimum wage every year in line with inflation, or is it still the Labour party's intention to increase it to a much higher level in the next few years?
    Mr. McCartney: The real issue, which the hon. Gentleman would of course dodge, is whether the Tories will fight the next election on a pledge to cut the minimum wage. The Government will implement the minimum wage on 1 April at the levels set out. I pay tribute to British business, because companies are, of their own volition, implementing the minimum wage in advance, so more than 200,000 workers are already receiving it. Those companies do not want to follow the Tory policy of low pay, no pay. The Government are implementing the minimum wage with the full support of British industry.

    Home Shopping
    Dr. Alan Whitehead: If he will assess the impact of home shopping upon the competitiveness of UK retailing. [71602]
    The Minister for Competition and Consumer Affairs (Dr. Kim Howells): The retail sector is a dynamic one. I have placed in the Library of the House, for the information of hon. Members, a copy of a recent paper prepared by my Department on the performance of the retail sector, which I hope will be useful. However, it would be very difficult to make the specific assessment requested by my hon. Friend, not least because of the difficulty of obtaining information on the value of electronic trading, which is an increasing and important element of home shopping. I have commissioned research to help to assess the impact of electronic commerce on retailing, and I intend to publish the results before the summer recess.
    Dr. Whitehead: I thank my hon. Friend for that answer. My particular concern is with home grocery and household shopping. I have spoken to a number of major retailers with stores in my constituency, and it is apparent that such developments could be either a boon to elderly people in particular or a disaster for all my constituents. Is my hon. Friend aware that various routes to home shopping have been trailed by the major retailers? Is he further aware that the mode that eventually prevails will have profound consequences for competition and customer protection? Is my hon. Friend undertaking activity to ensure that consumers and competition are protected as such developments take place?
    Dr. Howells: I welcome the question, because we will all be affected greatly by e-commerce and shopping on the internet in future. It could change social habits; I may not be able to bump into the right hon. Member for Wokingham (Mr. Redwood) in shops in the future, as we

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    have done in the past—usually in a panic just before Christmas. Currently, home shopping sales stand at about £9 billion or about 6 per cent. of total retail sales, of which e-commerce comprises only about £100 million. That is calculated to grow by 2002 to about £700 million a year. That will still account for a small percentage of total retail sales, but it is an indication of the way in which the sector will explode in the future. It is right and proper that we should talk to retailers, customers, cities and towns about the implications for the future of shopping in this country.

    Competitiveness White Paper
    Mr. Geraint Davies: What assessment he has made of the impact the competitiveness White Paper will have on encouraging an entrepreneurial culture in the UK. [71603]
    The Secretary of State for Trade and Industry (Mr. Stephen Byers): The need to foster a culture of enterprise in the United Kingdom was a central theme of the White Paper.
    I will shortly publish an implementation plan which will set out how we intend to introduce the various measures contained in that White Paper.
    Mr. Davies: Does my right hon. Friend agree that the success of the entrepreneurial renaissance in Britain depends on pupils and students being equipped to make the leap from good ideas to successful products? In this respect, will he applaud the activity of the New Addington education action zone in Croydon in fostering business links and providing mentoring to equip our pupils for the future? Will he commend to the House the provisions of the competitiveness White Paper in linking up our centres of learning to the business community?
    Mr. Byers: I am delighted to hear of the success of the New Addington education action zone. In one of my previous Government posts—as Minister for School Standards—I was involved at an early stage in discussions with my hon. Friend about the proposals from that part of his constituency. I am pleased to hear that that zone is progressing well.
    A number of proposals within the White Paper will promote a culture of enterprise. I am keen to get away from the poverty of ambition that has held far too many people back for far too long in the UK. I believe that we have positive proposals to ensure that that will no longer be the case. As Secretary of State for Trade and Industry, I look forward to their implementation in the months and years ahead
    Mr. Graham Brady: About four weeks ago, the Prime Minister was reported to have said in a speech in Bristol that European Union directives had increased social costs on business by far too much, and that that was damaging competitiveness. Will the Secretary of State list those directives that he and the Prime Minister would like to see removed?
    Mr. Byers: We should always review the burden on business, which is one of the reasons why, 10 days ago, we decided to alter the original proposals for the regulations concerning the introduction of the national
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    minimum wage. As a result, we have cut the costs of business by £200 million. That was only the beginning, and I am sure that we can take steps in future to help lift the costs from business.
    Mr. Harry Barnes: Is my right hon. Friend aware that all examples of entrepreneurial zip are not necessarily to be welcomed? In connection with the minimum wage, there is some indication that some employers are attempting to decrease hours so that they will not have to meet the increased payments to their work force. Will that matter be examined carefully and reviewed, and will such a review lead to action in future?.
    Mr. Byers: The National Minimum Wage Act 1998 has been drawn up in such a way as to limit any opportunities for the type of abuse to which my hon. Friend refers. Clearly, one of the reasons why the Low Pay Commission has been kept in being is to ensure that we can review the Act's workings and operation. If there are specific examples of such abuse, I would urge him, in the first instance anyway, to draw them to the commission's attention.
    Mr. John Redwood: How does the Secretary of State have the gall to present a competitiveness White Paper when everything that the Government do makes it dearer to make things in Britain and to do business in Britain? The Minister for Small Firms, Trade and Industry actually called for more regulation in a recent interview in The Birmingham Post.
    Will the Secretary of State accept that he is to competitiveness what Lord Sainsbury is to organic farming and Brussels is to the London art market? Does he not agree that the Brussels tax plans will kill London as an art market? I hope that he does not find that amusing. Will he guarantee that he will stop any new tax on the British art market coming from Brussels? Does he agree that such a tax would take the business out of London to New York? Will he give a guarantee—yes or no?
    Mr. Byers: The right hon. Gentleman may be slightly confused. The issue that is being debated today in Europe is not a tax, but a royalty for artists. He should be aware of that.

    National Minimum Wage
    Mr. John Heppell: If he will make a statement on the action he has taken to raise awareness of the national minimum wage among businesses and employees. [71605]
    The Minister of State, Department of Trade and Industry (Mr. Ian McCartney): We are committed to informing businesses and employees about the national minimum wage and how the rules work. It is essential for as many workers and employers as possible to know their rights and obligations. My Department is already issuing preliminary guidance and preparing detailed guidance for release once the National Minimum Wage Regulations 1999 have been debated. There is a live national minimum wage helpline for guidance on individual cases and a

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    website. We will be backing that up with other publicity measures over the coming weeks, which will be announced by my right hon. Friend the Secretary of State.
    Mr. Heppell: I thank the Minister for that response and welcome his earlier comments about how well business is receiving the national minimum wage. However, what measures does he plan to have in place to ensure that people who are employed by the small number of unscrupulous employers who try to disregard the regulations on the national minimum wage have the confidence to speak out about the fact that those regulations have been broken, without fear of discrimination in the workplace?
    Mr. McCartney: First, I can give an absolute guarantee that there will be a new, day one right for employees to claim the national minimum wage and not to be sacked or disciplined. For those who want to act on behalf of another worker to claim that right, there will be another new, day one right—the right not to be sacked or disciplined for claiming the minimum wage on behalf of that individual.
    Secondly, we are changing the law on the burden of proof to ensure that the employer has to prove that he has paid the minimum wage once a complaint has been made. Employers are working with the Inland Revenue and Contributions Agency for the fair and effective implementation of the minimum wage. A significant number of employers are on side because they are sick and tired of being undercut not just on the quality of
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    goods and services, but by the downward spiral of wages. That is why the minimum wage is as popular among employers as it is among low-paid workers.
    Mr. John Bercow: Is the hon. Gentleman aware that a survey of 350 small and medium enterprises in my constituency, from Buckingham to Aston Clinton and from Long Crendon to Wing, shows that those companies are only too well aware of the imposition of the national minimum wage and are profoundly hostile to it?
    Moreover, given the importance of learning from the successful experience in other countries, will the hon. Gentleman today pledge that he will conduct a full study of the legislation that was introduced in the United States—the Regulatory Flexibility Act 1980 and the Small Businesses Regulatory Enforcement Fairness Act 1996—and send me the result of his homework before the Easter recess?
    Mr. McCartney: The hon. Gentleman is in danger of being done under the stalker legislation because he been at me about the same question for the past three months. He seeks me here, he seeks me there, he seeks me everywhere. I have already given him a commitment about that in Committee. If I can find time, I will gladly read the documents that he wishes me to read, but the most important documents that I will read and have read are the National Minimum Wage Regulations and the National Minimum Wage Act 1998. Overwhelmingly, small business supports the minimum wage. I am looking forward to its introduction on 1 April. Perhaps if I give the hon. Gentleman a commitment to read that document, he can give me a commitment that, at the next election, he will campaign for the retention of the national minimum wage.

Points of Order
12.30 pm
Mr. Roger Gale: On a point of order, Madam Speaker. On Monday afternoon, you were gracious enough to allow the Home Secretary to make a statement to the House on the leak of the Stephen Lawrence report. At the end of the statement, the Home Secretary said:
"The whole report will be published in full to Parliament on Wednesday, as planned; but it was and remains plainly contrary to the public interest for there to be selective and premature disclosure of a judicial inquiry."—[Official Report, 22 February 1999; Vol. 326, c. 23.]
I entirely endorse those sentiments—as I believe that you do, too.
The Home Secretary published the report yesterday. Again, you were gracious enough to allow him to make a statement to the House. The report and the appendices were then made available to Members of Parliament and to the press. A copy of the appendices currently resides in the Library.
About an hour ago, I went to the Vote Office to request a further copy of the report and the appendices. I was astonished to discover that, early this morning, the Home Office had given instructions that the appendices should be withdrawn.
I went to the Library to inquire whether any reasons for the withdrawal had been given. The Library, with its usual efficiency, established for me that, apparently, the appendices had been withdrawn, on the Home Secretary's instructions, because they contained confidential information that should not have been published.
It would appear that the Home Secretary may have permitted to be published, and to be placed in the public domain, material that could prejudice a re-trial of those believed to be guilty. If that is so, it is a very serious matter indeed and calls into question the Home Secretary's position.
Has the Home Secretary indicated to you that he wishes to come to the House to make a statement, to say why he withdrew that document this morning, without notice to the House?
Sir Norman Fowler: Further to that point of order, Madam Speaker. I have only just heard about the issue—which is a very important one, as the appendices and the information in them have been heavily reported in the media. To put the matter at its mildest, if the document has been withdrawn for a reason, the House and also the media will need some indication of why that has been done and which parts of the appendices have been withdrawn.
Much of the information is already in the public domain, and much of it is germane to the debate itself. Many hon. Members will speak in the continuing debate on the Lawrence report on the basis of the information
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given. We need urgent guidance from the Home Office on exactly what is happening, and on why the document has been withdrawn.
Madam Speaker: I understand that volume II of the Lawrence report, which contains the appendices, has been withdrawn from the Vote Office. My understanding—I have not made direct inquiries because, as I am sure the House will appreciate, I have not had the opportunity to do so—is that the volume was withdrawn because it contained some inaccuracies, but is to be replaced very soon.
As the right hon. Member for Sutton Coldfield (Sir N. Fowler) and the hon. Member for North Thanet (Mr. Gale) will be aware, the report is the responsibility of the Department. I trust that the Department will ensure that the replacement is made available as soon as possible. The House can be certain that, as soon as I leave the Chair, I shall use my best endeavours to ensure that that is done.
Mr. Tam Dalyell: On a point of order, Madam Speaker. The brutal gunning down and murder of the Ayatollah Muhammad al-Sadr in Najaf last week is roughly the middle eastern equivalent of the murder of Thomas à Becket, and is creating great difficulties in not only Iraq but the whole Shi'ite world. It has been widely said in the Arab press that that act was not the responsibility of the Iraqi regime, whose interests would hardly be served by such a public murder, but has to do with opposition groups financed by the west. That is what is being said, rightly or wrongly. Have you had any request from the Foreign Office to make a statement in response to what is so widely thought and believed, rightly or wrongly, in the Arab world?
Madam Speaker: I am not aware that the Foreign and Commonwealth Office is seeking to make a statement today.
Mr. James Gray: On a point of order, Madam Speaker. I had hoped to bring to the notice of the Leader of the House a serious breach of clause 79 of the ministerial code of conduct, which relates to the long-standing tradition of the House that Ministers should inform Back Benchers whose constituency they are going to visit. The right hon. Lady visited my constituency last Tuesday, but the first notice that I had was an article in the Malmesbury Standard. By coincidence, on the same day the right hon. Lady answered a parliamentary question from me listing the constituencies that she had recently visited and failing to list mine. Would it be appropriate for you to remind Ministers about that important clause?
Madam Speaker: I had hoped that we were sufficiently far into this Parliament for all hon. Members to be able to resolve such matters between themselves and not raise the issue in the House. I expect all Members of Parliament, including Ministers, to have the courtesy to inform others when they visit their constituencies.

Welsh Affairs
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Pope.]
12.36 pm
The Secretary of State for Wales (Mr. Alun Michael): Just over two months from now, the first elections to the National Assembly for Wales will mark the biggest ever change in Welsh government. That delivers one key promise made by Labour in 1997, but in looking forward to the exciting time ahead, it is important to take stock of what else the Government have achieved in the short time since May 1997. We can celebrate St. David's day on Monday safe in the knowledge that a Labour Government are delivering on the key pledges that we made to the electorate when we asked for their trust in the general election. The six pledges that we made to the electorate in Wales struck a chord because they represented the real priorities of ordinary people: proper jobs for young people and the long-term unemployed, smaller class sizes, shorter waiting lists for the national health service, swift action on youth offending, creating a sound economy and greater democratic control of Welsh institutions.
Those remain the people's priorities. Since taking office as Secretary of State for Wales, I have undertaken a programme of open and inclusive public meetings around Wales. At a meeting in Aberystwyth last Thursday, questions rained in from Plaid Cymru, Liberal Democrats, Labour party members, Cymdeithias yr laith Cymraeg, students of politics, trade unionists, councillors and ordinary members of the public. Those meetings have given me an opportunity to hear at first hand about the issues that concern people at national and local level. The issues that our key pledges addressed remain at the top of the agenda: jobs, education, health, economic stability, law and order, and, underlying them all, the need to combat poverty and social exclusion.
On 6 May—two years and five days after the general election—we will elect the National Assembly for Wales, which will face real challenges and real opportunities.
Mr. Barry Jones: I congratulate my right hon. Friend on the outcome of last Saturday's ballot and wish him well in the important work that he has to do for the people of Wales. When will we know the outcome of the review of the assisted areas in Wales? Will he take on board my constituency's urgent need to be assured that it will not lose its status? The aerospace industry in particular is looking to him for a positive outcome.
Mr. Michael: I am well aware of the needs of my hon. Friend's constituency and his passionate advocacy of the needs of its industries, some of which I have had an opportunity to visit with him. I understand that he has had a constructive meeting with the Under-Secretary of State for Wales, my hon. Friend the Member for Neath (Mr. Hain), on those important issues. He will be aware that we want an outcome to the assisted area status review as quickly as possible. Work is going on, but there is more to be done before the Government will be able to announce the way forward.
Devolution presents the chance not just to set up a new political institution, but to establish new and better ways of working. I am determined to ensure that the National
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Assembly for Wales will not mimic the traditions of Westminster and Whitehall, which have often seemed alien, aloof and distant to us, never mind to ordinary people. The Assembly must lead a partnership in Wales that draws in and mobilises all the positive forces in Welsh society—from local government, from the voluntary sector, and from the two sides of industry.
I firmly believe that the National Assembly will reinvigorate government in Wales, which atrophied under the Tory viceroys of the 1980s and 1990s. That is not only my view. When we advertised externally for new middle managers, we received more than 1,000 applicants for little more than a dozen jobs. Many of the successful applicants said that they would have been less likely to consider working for the Welsh Office had it not been for the prospect of the National Assembly.
It is crucial that everyone in Wales, wherever they live and whatever their political opinion, should be able to make their voice heard in the Assembly. I am confident that we will achieve that. In the Assembly, we will create a modern democratic institution for the people of Wales; one of which we will all be proud.
That institution, like the Welsh Office, will be judged by what it delivers. I am bending all my efforts to preparing the ground for the Assembly to succeed. It is a major challenge, given the state of Wales when the Tories were swept out in 1997. Let me focus first on our pride and joy—and our biggest challenge—the NHS in Wales.
We promised to bring down NHS waiting lists and to tackle underfunding. We have made a start, and we will fulfil our pledge, although I would be the first to admit that we underestimated the horrendous scale of the problems bequeathed to us by our predecessors.
We have already invested £20 million in bringing down waiting lists, which have fallen by almost 4,700 since August 1998, and by allocating more than £1 billion in additional funding to the NHS over the next three years—an increase of more than 6.4 per cent. per year—we have shown that we are serious about moving towards our goal. However, the problems of the NHS are not just about underfunding; they also involve structure and philosophy.
The Government have transformed the malign and destructive approach to health and the provision of health services that we inherited. Since May 1997, we have moved to replace the divisions of the internal market with a new collaborative approach to service planning and provision and devolved decisions to local communities. The Health Bill will abolish GP fundholding with its inherent discrimination, drive up the quality of health services and promote the development of integrated services by breaking down the barriers to effective partnership. We have produced proposals for improving the health of the people of Wales and the measures that we and our partners should take to deliver our plans. In December I announced my plans to create a single health service in each part of Wales and to reduce the number of trusts in Wales by nearly half. That will improve standards of clinical care and release £7 million from bureaucracy to be reinvested in patient care. We have made the recruitment and retention of nurses a priority and improved their pay and conditions.
Those changes have replaced the division and confrontation of the Tory years with policies that promote co-operation and integration. It is only a start, however, and I am determined to move quickly into the next crucial

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phase of our reforms of the NHS. Having grasped the difficult nettle of reorganising NHS trusts across Wales and creating a single health service, I will be making an announcement on the future for Cardiff and the Vale of Glamorgan in a few days time to put in place the final piece of that particular jigsaw. I am also about to announce the future role and composition of community health councils in Wales.
Let me again stress the clarity of our vision: a single model of integrated health services across Wales, with acute mental health and community services working together, service planning devolved to local communities through local health groups and the national health service working in partnership with local government and others. Our distinctive vision to improve care and raise standards of health has been widely welcomed and the progress being made in establishing local health groups is really good news.
Much remains to be done, however. It is still only a start and there are other nettles to be grasped. Let me be clear. The Tories left the NHS in a parlous state. We have to put right their neglect. One of my predecessors, the right hon. Member for Wokingham (Mr. Redwood) believed that the hidden hand of the internal market could be left to run the health service in Wales. His legacy was an NHS and a Welsh Office shorn of the expertise and experience necessary to run a £2.4 billion service. It also left health authorities in Wales with funding and service problems which have to be resolved. I am determined to tackle those problems. I am deeply unhappy with a situation in which the Welsh Office is making loans to Welsh health authorities to cover operational deficits that must be repaid from future years' resources. That situation is intolerable and it must be sorted. I promise the House that it will, indeed, be sorted.
The same Secretary of State, pursuing his bizarre policies of devolution of blame, stripped out management expertise and NHS experience from the Welsh Office. No wonder there is a mess. We are now acting on an expert report by Sir Graham Hart. Through open competition, we are recruiting staff to strengthen the professional team in NHS Wales at director level.
In parallel with that internal strengthening of capacity, I can announce today that I am commissioning a major stocktake of the NHS in Wales, which I want to be available for the Assembly when it assumes its powers on 1 July. The first dimension of the stocktake is a review of the financial health of the NHS in Wales and the quality of service delivery. Following a recent meeting with the chairman and senior officers of the Audit Commission, I will explore in detail, in the next few days, ways in which the commission can assist with the review. The commission has already expressed its enthusiasm for this approach.
The second dimension is a review of the present arrangements for long-term planning in Wales, which includes the contributions that can be made to this process by all the key stakeholders—professional, managerial and public. In the next fortnight, I shall meet the Welsh Office team and then the top team from every NHS trust and health authority in Wales to discuss the project, respond to questions and ensure that its importance is fully understood.
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I am sure that hon. Members will accept that it is right to go beyond our election promises and seek to tackle the most deep-seated problems of our public service. That is what I intend to do. The same applies to education.
In our general election campaign, we promised to cut class sizes for five to seven-year-olds. We have done so, as part of a new crusade for higher educational standards throughout Wales. We are well on our way to meeting our pledge that no five, six or seven-year-old will be in a class of over 30 pupils by the end of this Parliament. This year, we have provided earmarked funds to allow an extra 270 teachers to be employed, releasing 23,500 infants from classes of over 30. We will invest a further £34 million over the next three years in order to fulfil our pledge.
More generally, we have set about reforming our whole education system. We inherited a system buffeted by too many policies ill-suited to the needs of Wales. We have moved quickly to establish a clear strategy for the future. That includes the first ever education White Paper for Wales, "Building Excellent Schools Together", which sets out the Government's proposals for raising standards in Welsh schools.
We are investing so that our young people can receive the education that they deserve. Next year, there will be an additional £70 million for local authority education budgets, with even larger increases over the following two years. The scale of the investment will make a real difference and the fact that it is over three years will allow schools and authorities to plan for the future and to use the resources to best effect.
A further £140 million will support the professional development of teachers. I have announced a major initiative to support and restore schools and youth music—the orchestras, bands and choirs that are the doorway to opportunity for so many of our young people. The overriding purpose to all of the investment is to raise standards, which is absolutely central to our agenda for Wales. The evidence from examinations and assessment is that we are making encouraging progress, but we have a long way to go to reach the demanding targets that we have set.
We will achieve those targets only if pupils develop the key skills of literacy and numeracy. Good language skills are fundamental to all learning and to a child's success in later education and throughout life. We have already targeted work on literacy in primary schools—early results are encouraging and that work will continue—but I now want an equally sharp focus on numeracy, and we recently announced a £2 million programme aimed at ensuring that all schools reach the numeracy standards of the best.
Education is not only about schools or about building a sound basis for a modern economy, although it is true that without a dramatic improvement in our skills in Wales we will not be able to compete in the knowledge-based economy of the new millennium. Education is also about enhancing the life chances of the most dispossessed in our society. That truth was brought home to me on the individual level as a youth worker in Cardiff 20 years ago and was reinforced as I saw young people's chances of a job and a decent life destroyed by the Thatcher Government. That is what made me angry enough to stand for Parliament. I am absolutely determined to make sure that neither the Welsh Office nor

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the Welsh Assembly let down those young people and that is why I was proud to be part of the Labour team which put the new deal in place.
Mr. Paul Flynn: My right hon. Friend will recall that under the previous Government certain schools in Wales, often the most prosperous and in the most favoured areas, received extra financial help and other schools, which were sorely in need, were neglected. Will he ensure in his allocations to schools that that shortfall is made up in favour of the schools in deprived areas?
Mr. Michael: I am happy to confirm that it is our policy to combat unfairness and neglect and to be fair to all schools, especially by recognising the problems with which they seek to cope. Some schools have tackled problems with great fortitude and courage, but they have not been able to match the finances available to other schools. I mentioned the money that I have put into schools music and it is noticeable that some schools in better-off areas have been able to maintain their involvement in schools music, but schools in worse-off areas, which face the pressures that my hon. Friend mentioned, had to let it slip. It is very important that opportunities should be fully available to every child in every school and that the inequalities are tackled.
I was especially delighted to be able to announce earlier this month that—as part of the record increase of £844 million for education and training in Wales over the next three years—there will be a major boost for further education. More than £120 million of extra funding will be available for further education, bringing Welsh spending on FE to more than £200 million each year. That will allow the number of students at further education institutions to rise by at least 28,000 by the academic year 2001–02. Together with an increase of 8,000 students in higher education, that will more than meet Wales's share of the target of 500,000 extra students announced by my right hon. Friend the Prime Minister. I was pleased to announce those figures at Coleg Glan Hafren in my constituency, where changes in the way that further education opportunities and sixth-form education are offered have increased the proportion of youngsters staying in post-16 education and training from one third to almost a half in the catchment area. Those figures have been maintained in recent years.
I mentioned new opportunities for young people. Our promise was to take 250,000 young people off the dole and put them into work. On that pledge, too, we are well on the way to success. The new deal is one of the great success stories of this Government—in Wales as throughout the country. Less than eight months after the election, my hon. Friend the Member for Neath (started the new deal for 18 to 24-year-olds in the Swansea and west Wales pathfinder district. In April 1998, that was extended to the whole of Wales. By November 1998, nearly 3,700 young people in Wales had already been placed in real jobs through the new deal and more than 13,000 Welsh youngsters had started the new deal.
The new deal for young people is the cornerstone of our efforts to combat the hopelessness of life on the dole, but it is only one part of the Government's commitment to welfare to work. Since the end of June 1998, the new deal for those over 25 has offered support through subsidised employment or full-time study to those who
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have been unemployed for two years or more. That complements the existing provision available through the Employment Service, training and enterprise councils and FE colleges. In less than six months, more than 4,300 people in Wales had joined the schemes, while the new deal for lone parents had attracted 2,500 parents, with nearly 900 of them either obtaining jobs or increasing their working hours.
I recently announced the location of a second tranche of employment zones in Wales, which will start operating in April 2000. Those zones will target help at communities with some of the highest rates of long-term unemployment in Wales. The new zones will enable us to build on the work of the prototype zone in north-west Wales, which by December 1998 had provided help for more than 500 people, 65 of whom had found work.
I should like to underline the fact that, as ever, the numbers and figures that I mention refer to individual people, their families and communities. So it is important to bring these points home to the House.
Mr. Ian Bruce: Are not the employment zones an acknowledgement by the Government that there is a difficulty with the new deal? It is not that the new deal is not accomplishing a lot of good in many constituencies, but that people are not taking up the subsidised jobs. If the Secretary of State is admitting that there is a difficulty, I welcome the fact that the Government are learning from their mistakes.
Mr. Michael: The hon. Gentleman is entirely wrong, which is not unusual. The employment zone approach is entirely separate. The first such zone that I referred to was started in north Wales, and paralleled the launch by my hon. Friend the Under-Secretary of the prototype for the new deal in south Wales. We have looked at what works and are building on that. We are serious about this matter and, unlike the hon. Gentleman, are not interested in trying to score cheap political points.
The new zones, selected on the basis of unitary authorities with a high share of unemployed people aged 25 and over, will provide support for up to 3,000 people over a two-year period.
Mr. Bruce: It was a serious question.
Mr. Michael: I get a bit sharp when members of the Conservative party start talking about unemployment. Given the unemployment that the previous Government caused in Wales and the hopelessness that they created in our young people, I think that we are entitled to be angry. We are doing something about those problems, and I hope that the hon. Gentleman will start to take a constructive interest.
The next of our key pledges was to cut by half the time from arrest to sentencing for persistent young offenders—another area in which the previous Government failed. We have kept that pledge through the Crime and Disorder Act 1998. I am proud to have been associated with that key piece of legislation in my previous role at the Home Office. It is a key piece of legislation for every community in Wales.
The 1998 Act has introduced far-reaching changes to the youth justice system and goes far beyond the knee-jerk reactions to offending that characterised the last

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Administration. It will help build safer communities, reform youth justice to nip things in the bud, and reduce offending by young people. It will speed up the criminal justice system and lead to a long-term improvement in the performance of the criminal justice system and public confidence in it.
The 1998 Act states explicitly that the principal aim of the youth justice system is to prevent youth offending. One of its key provisions is the setting up of crime and disorder reduction partnerships in every local authority area, which will bring together local authorities, the police, the probation service, health authorities and others. The partnerships will develop local crime reduction strategies, to be in place by April 1999.
I am pleased that two Welsh partnerships, at Swansea and Gwynedd, have been selected as pathfinder sites to be visited by the Home Office task force.
Mr. Nigel Evans: The Secretary of State is talking about law and order, a matter that is important in Wales and throughout the United Kingdom. Will he say whether, since the general election, there are more bobbies on the beat in Wales now, or less?
Mr. Alan W. Williams: Fewer.
Mr. Michael: Fewer: the hon. Gentleman should get his grammar right. I know that we have moved on from education, but I wish that Opposition Members would improve the standard of their contributions.
The Government are backing the legislation with a crime reduction programme for England and Wales costing £250 million. The programme will give grant aid to evidence-based research projects capable of being replicated elsewhere. I assure the House that I will be tireless in my efforts to make sure Welsh communities lead the way in developing such new approaches.
Moreover, I am determined that partnerships will develop across Wales. Schools such as Dwr y Felin in Neath and Holyhead comprehensive in Ynys Môn have shown how young people can be part of the solution, not just part of the problem. In Merthyr Tydfil, the Safe Merthyr project has had stunning results. In Wrexham, neighbourhood watch has teamed up with young people in an award-winning partnership. And at the accident and emergency unit in Cardiff, Professor Jon Sheppherd and the whole medical team are helping to cut violence by working with the police, with the organisation Victim Support, and with the City council. I have asked every health authority and health trust in Wales to pick up on those lessons and put them into practice. Under the Assembly, I believe that these innovative approaches will become the norm.
Mr. Elfyn Llwyd: The right hon. Gentleman and I have had many debates on home affairs over the years, and we have often been on the same side. What application does he envisage of the weird and dangerous principle being propounded by his right hon. Friend the Home Secretary of interning people who may at some future point be dangerous?
Mr. Michael: The hon. Gentleman raises an interesting point that cuts across issues affecting the health service as
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well as community safety. The Home Secretary will take the lead on the issue, but the dilemma we face is quite simple. Some individuals are identified as having severe personality disorders. I have seen the prognosis on some of those individuals, and the documents state that they cannot be treated under mental health legislation, but are very dangerous. That occurs with some of the most serious sex offenders as well as people who commit violent offences.
The difficulty is that the prognosis that people cannot be treated ends one part of the story for the health service, but the other part is that the criminal justice system cannot lock up someone to protect the public from him or her until that person has committed an offence. There is a gap between the two systems, into which falls the identification of a serious risk to both the public and the individual concerned.
That is the problem that my right hon. Friend the Home Secretary is seeking to tackle. It is difficult to balance the protection of the public with the liberty of the individual, and the problem has been left untackled for many years. My right hon. Friend, our colleagues at the Department of Health, and I, when it comes to health matters in Wales, will seek to tackle the problem, and the House will have to grapple with the balance between the principles of public protection and individual freedom. The problem will not go away, and I am grateful to the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) for raising it. I look forward to debating it with him further in future. I am sure that he will agree that it is a serious problem and that we need to tackle it.
The Government are determined to break once and for all the vicious cycle of drugs and crime, which wrecks lives and threatens communities. Police forces estimate that around half of recorded crime has some drug element to it, and there are serious issues to be tackled in Wales. The Welsh drug and alcohol misuse strategy "Forward Together" has been reviewed in the light of the new UK strategy, and a report on the implications for Wales has been provided to Keith Hellawell, the UK anti-drugs co-ordinator, whom I met recently to discuss the Welsh dimension.
Following the review, I can announce my intention to relaunch the Welsh drug and alcohol strategy to reflect many key elements of the UK strategy, in particular its emphasis on tackling the social causes of substance misuse. It will promote the adoption of the partnership approach and build on the good work already done.
In our key pledges, we promised to provide sound economic management for our country, and that we would not, in doing so, raise income tax rates. As a Government, we have fulfilled that pledge. Inflation is low. Government borrowing has been cut by £20 billion. Long-term interest rates are at their lowest for 40 years. Yet, for the next three years, we will be able to provide massive new resources for health and education in Wales, as in England, Scotland and Northern Ireland.
Mr. John Smith: Before my right hon. Friend moves on from management of the economy, will he join me in welcoming the Prime Minister's statement earlier this week on preparations for a single currency? That statement went down extremely well with Welsh business and commerce. The devastation caused to our primary industries by the Conservative party over two

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decades has made Wales the region of the United Kingdom most dependent on trade with the European Union. The people of Wales will view the Opposition's policy of ruling out the single currency for 10 years with absolute disbelief in the run-up to the Welsh Assembly elections.
Mr. Michael: I agree with my hon. Friend. Despite the Opposition's attempts to spread confusion, the Prime Minister's statement was widely welcomed, particularly in Wales, by both business and farmers, on whom the policy will have a considerable impact.
Mr. Dafydd Wigley: The Secretary of State mentions the substantial additional resources that the Treasury has put at the Welsh Office's disposal as a result of the economic management of the past two years. Will he give an assurance that the Treasury will be forthcoming with the matching funds that are needed to ensure that Wales can get the full benefit of objective 1 money, if we succeed in obtaining objective 1 status when the decision is taken next month? Is he prepared to put his own neck on the block in delivering that, given that, during the recent election campaign, he said that he could have such an influence on Government Departments in London?
Mr. Michael: I am delighted that the right hon. Gentleman is at last willing to lead with his chin in the House, as he does in the newspapers. Such an election ploy is obvious when it comes from his quarter, and it appears to be the only ploy that Plaid Cymru currently has, other than generally rubbishing the achievements of the Labour Government.
Mr. Wigley: Answer the question.
Mr. Michael: The right hon. Gentleman knows the answer—it is straightforward. When we have a decision from Europe, there will be discussions involving Treasury colleagues, in which we shall consider the way in which the UK Government will fulfil their obligations and enable Wales to draw down the finances available under objective 1 status, which we are satisfied that we shall be able to achieve.
Mr. Wigley: Will the right hon. Gentleman give way?
Mr. Michael: The right hon. Gentleman must be patient. He is not usually patient, as was shown when he rubbished the Government's attempts to get objective 1 status for Wales. He said that a Labour Government would not succeed in obtaining objective 1 status, but we did succeed. The right hon. Gentleman has not yet apologised for his misrepresentation but, in the fullness of time, he will have to do so.
Mr. Wigley rose—
Mr. Michael: Does the right hon. Gentleman want me to give way again?
Mr. Wigley: Yes, I do want the Secretary of State to give way. Does he accept that, months after Cornwall had made its application for NUTS 2 area designation and after the application was in from South Yorkshire, the Welsh Office were miles behind and nearly missed
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the boat? Had it not been that in March last year, at the last minute, the Welsh Office woke up to that fact, Wales would have totally missed objective 1 status. The danger now is that we shall miss the ability to make use of that status unless the Secretary of State wakes up and gets the Treasury on side. We in Wales are looking for an absolute commitment, not "ifs" and "buts" or "we shall see in two months time when the election is over". We want a categoric assurance and we want it now.
Mr. Michael: Listening to that artificial rant, I thought that Rod Richards had rejoined the House of Commons, for the right hon. Gentleman is singing a Tory tune. He knows that the content of his remarks is as artificial as the tone in which he made them.
Mr. Wigley rose—
Mr. Michael: The right hon. Gentleman should listen for a moment. He knows that questions about how the money will be delivered and how the UK Government will deliver on their responsibilities cannot be asked until the details have been received from Brussels.
Mr. Wigley: Of course they can.
Mr. Michael: Perhaps the right hon. Gentleman should read the comments of Professor Kevin Morgan. In contradiction of the press release that was wandering around yesterday suggesting that there was a problem—no doubt it was inspired by someone close to the right hon. Gentleman—Professor Morgan confirms that the Welsh Office is playing the process absolutely right. The Welsh Office played the provision of evidence for objective 1 status absolutely right, which is why we are on the verge of winning it. While we are on the subject, what happened to the case of champagne that the right hon. Gentleman promised Welsh Office Ministers? It does not appear to have arrived yet—although, in the interests of objectivity, perhaps it should be delivered to you, Madam Speaker, rather than to Welsh Office Ministers.
I say in all seriousness to the right hon. Gentleman that he must not talk Wales down or try to undermine the position of the Welsh Office in negotiations with Ministers in other Departments and with Europe. We shall do the job for Wales, I promise, and no rant of his will improve our position. I ask him to think seriously about the comments he makes and to contribute to debates a little more responsibly than he contributed to this morning's Western Mail.
Mr. Wigley: Will the right hon. Gentleman give way?
Mr. Michael: Of course I will give way.
Mr. Wigley: I am grateful. Of course, I keep my promises—and I will provide a crate of champagne that the right hon. Gentleman and his predecessor can share when Wales gets objective 1 money. I ask only for an equal promise and commitment that the Treasury will provide matching funds.
Mr. Michae:: As I said at the outset, I recognise the right hon. Gentleman's election ploy of asking a question that he knows will be answered in the fullness of time

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as a result of the discussions that we will have with our colleagues in Government. I promise the right hon. Gentleman that we will fight Wales's corner as strongly within the United Kingdom Government as we will fight it in Europe. I give that pledge to the right hon. Gentleman and the House in all seriousness. I accepted this job and chose to stand for the position of First Secretary to the Assembly in order to fight Wales's corner, and I promise the right hon. Gentleman that I will deliver.
Mr. Alan W. Williams: I congratulate my right hon. Friend and his predecessor on winning objective 1 status for Wales. He has presented a patient, long-term argument, and I admire my right hon. Friend for now pressing for matching funds. Having listened to the ranting and raving of the right hon. Member for Caernarfon (Mr. Wigley), it comes as no surprise to learn that Caernarfon has the highest unemployment in Wales. That is what ranting and raving does: it destroys jobs. We want the quiet, tactful diplomacy and the hard work that my right hon. Friend will bring to his task.
Mr. Michael: I am grateful to my hon. Friend for his comments. I do not wish to get involved in a personal debate with the right hon. Member for Caernarfon (Mr. Wigley), but he is correct in saying that serious work must be done in Government. I pay tribute to my predecessor, my right hon. Friend the Member for Caerphilly (Mr. Davies), and to the junior Ministers, for playing their role in completing the day-to-day work so that we may now hope to receive objective 1 status shortly. We then face the serious task of transforming the Welsh economy. We have created a national strategy for Wales in which we are engaging every sector of the economy. That is a serious job, and I look to Opposition Members, as well as to my right hon. and hon. Friends, to show unity in fighting the cause for Wales rather than creating divisions within Wales.
Mr. Richard Livsey: We have heard some rather ranting rhetoric in the past 10 minutes. Does the Secretary of State agree that it is most important to work now on projects for objectives 1 and 2 status? Communities in Wales must work very hard to ensure that they attract objective 1 funding and so create more employment in Wales.
Mr. Michael: I agree with the hon. Member for Brecon and Radnorshire (Mr. Livsey), who makes a positive contribution to the discussion. Much work is being done at present to develop the strategy, which will be open for consultation as soon as it is completed. It has been an open and participative process. I agree entirely with the hon. Gentleman that organisations and bodies throughout Wales should consider submitting applications, not just for objective 1 status, but in all areas where we are offering support—whether it is sustainable development through the strand of funding that I launched when I visited the hon. Gentleman's constituency, or through the strand of social inclusion.
On that point, I refer the House to two themes that are drawn from all that I have put before it today: partnership and social inclusion. They underpin a great deal of what the Government are seeking to achieve in Wales. We are
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working in partnership with local government, the voluntary sector, business and trade unions. The Welsh Office is no longer a fortress ruled by an out-of-touch and alien Tory high command, but a team that looks outward for inspiration, ideas and assistance in creating a new and more prosperous Wales. The National Assembly will be in a strong position to build on those achievements.
Promoting social inclusion is at the heart of my policies for Wales and informs all of the specific strategies that we have developed for Wales. Our economic strategy, "Pathway to Prosperity", is about tackling low incomes and spreading prosperity to the valleys and west Wales. The "Building Excellent Schools Together" and the "Learning is for Everyone" strategies for education are about tackling the skills and qualifications deficits that keep people out of mainstream opportunities. The "Better Health, Better Wales" strategy is about finding radical new ways of tackling the appalling health problems that afflict those who live in our poorest communities.
As well as that crucial mainstream work, we are investing in targeted strategies for the most vulnerable groups and the most excluded communities. I particularly want to highlight the social inclusion fund to which I have allocated £48 million over the next three years. We shall use that money to stimulate new approaches to fill gaps in service provision and make more effective use of mainstream resources to push forward our onslaught on social exclusion.
Soon, I shall consult the Welsh Local Government Association about how best to use those resources to tackle the most pressing issues, with a specific commitment and priority to reduce the risks of social exclusion among young people in Wales.
Our aim is to make a difference to the prospects of everyone in Wales, including those at the bottom of the heap, and I have absolutely no doubt that it will be at the top of the Assembly's agenda. Success means finding new approaches and doing what we are doing, but in better and smarter ways, so that we can invest in what works, in partnership with agencies. That will be central to the work of all public agencies in Wales.
I am grateful for this opportunity to report on some of the Government's major achievements in Wales and the work ahead. There have been achievements and progress on many fronts. In future, we must build on the work towards winning European Union objective 1 funding for a major part of Wales. Our policies also include support for enterprise and small businesses; assistance to farmers at a time of crisis and efforts to add value to our agriculture; and measures for the environment, sustainable development and equal opportunities.
There is also a range of wider issues on which we are delivering more than we ever dared hope, such as incorporation of the European convention on human rights into UK law, the minimum wage, reform of the House of Lords and much more. Such matters affect the quality of life and future hope for people in Wales.
I should also mention transport, which we debated at length in the Welsh Grand Committee at Aberaeron this week. Returning from that meeting, I had to stand on a Sprinter train for the 50 miles between Neath and Newport because of the cancellation of the InterCity service. I suspect that if that had occurred before the debate, the points made by hon. Members of all parties

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about rail services would have been a great deal stronger and more heated. That was a salutary reminder of how much work is still needed to make good the damage done to our transport system by 18 years of Tory Government.
At least I was in good company with the Under-Secretary of State, my hon. Friend the Member for Neath and officials as well as members of the public, who made it clear that their patience and good humour should not be taken for granted—they want the problems sorted out. That is why I am delighted that the Deputy Prime Minister, backed by the Prime Minister, is leading the transport summit, to demonstrate how important it is to drive forward change and improve transport services.
We have made great progress but we have much to do. I am pleased to say that the National Assembly for Wales will inherit a live and active agenda with many challenges, but also with the foundations, the flexibility and great opportunities to deal with the issues of greatest concern to the people of Wales.
1.18 pm
Dr. Liam Fox: Any hon. Members who had entered the Chamber halfway through the Secretary of State's speech might have thought that they were entering a domestic dispute, given the language used by the right hon. Gentleman and the right hon. Member for Caernarfon (Mr. Wigley). However, I have some sympathy with the Secretary of State when he is accused of being almost late in making an application. In English, we have a phrase for "almost late"—it is "on time". Some parties with no experience of government would do well to take on board the fact that Ministers tend to work closely to set timetables.
I congratulate the Secretary of State on his spectacular and commanding win at the weekend, which I am sure will boost his authority in his own party no end. Interestingly, he began by saying that he hoped that the new, all-inclusive, cuddly and winceyette politics of devolved government in Wales would not mimic the traditions of Westminster. He is, of course, in a unique position: I doubt whether other Members could appear on television saying that they believed that they had less support than their opponent in an election but that none the less they would win, and subsequently be proved right. That is certainly a departure from the democratic traditions of this place.
I hope that the Secretary of State will depart from tradition and give some straight answers. I was disappointed that when he was asked a perfectly straightforward question by my hon. Friend the Member for Ribble Valley (Mr. Evans), he chose to concentrate on a grammatical point rather than answering. However, I am not sure whether "fewer" was his answer or his correction, since he would have been correct in either case. Perhaps he would clarify that later.
I hope that this will not be the last debate of its kind in the House, and that, as we move towards the establishment of the Welsh Assembly, we will remember in this place that our responsibilities extend well beyond the borders of England, to the whole of the United Kingdom. All hon. Members will continue to take an active interest in issues in Scotland and in Wales, even in issues that relate to devolved powers, because as a Union Parliament we have a duty and a responsibility to all our countrymen, irrespective of where they live and under what form of government.
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We have a second duty, which is to Parliament. All of us in the House will be asked to raise the taxes that will be spent through the Welsh Assembly and the Scottish Parliament. Surely we have a right to scrutinise how that money is spent. In debates such as this in future, as those who are responsible for raising revenue, it will be our duty to ask the questions that should be asked about how that revenue is spent. We must remember that that is an absolute democratic principle.
The Secretary of State made great play of the economy and the wonderful transformation brought about not only in Wales, but in the rest of the United Kingdom by the Labour Government. He seems to have a rather short memory. Only a week ago, the Governor of the Bank of England predicted that growth would be downgraded yet again to between 0 and 0.5 per cent. in the next quarter. That has serious implications for the future of prosperity and jobs, especially in Wales.
The latest CBI survey confirmed that Wales had been hurt more than other parts of the UK in recent times. It stated:
"General business optimism has declined more rapidly in Wales than anywhere else in the UK, although export optimism has fallen much less sharply. Output has fallen markedly, with similar falls expected in the next four months, in addition to 1,000 further job cuts forecast between the final quarter of last year and the first quarter of 1999."
Mr. John Smith: Do not talk us down.
Dr. Fox: We must consider what is actually happening in the economy, not fantasy economics or how we wish the economy was functioning.
As the survey by British Chambers of Commerce reported:
"Welsh manufacturers have suffered their worse declines in sales and orders compared to all other regions. Service sector firms are not that far behind their manufacturing counterparts, particularly in export market sales. Confidence in the manufacturing sector is, not surprisingly, lower than elsewhere."
Why should that be? Why should confidence be falling more quickly in Wales than elsewhere? Those are questions that Ministers should tackle seriously. Cheap sedentary interventions such as that from the hon. Member for Vale of Glamorgan (Mr. Smith) will not help to provide jobs and prosperity.
Mr. Smith: Does the hon. Gentleman consider it appropriate for a non-Welsh Member of Parliament to open for the Opposition in the debate by talking our country down? I ask him to think carefully about what he is doing, before he does any more damage.
Dr. Fox: I come to the House as a Member of a Union Parliament and as a spokesman for the official Opposition in a constitutional arrangement that is accepted by both sides of the House. I will not be lectured by a Government Back Bencher about my right to speak on any issue affecting any part of the United Kingdom. That is the constitutional settlement that we have. If the hon. Gentleman does not believe in it, he should go and sit beside the nationalists, because that is their view, not the view of his own party.
The figures for Welsh manufacturers in the last part of 1998 were the lowest in the UK. One third of firms said that UK sales were down; two thirds of firms said that

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UK orders were down; one half of firms said that exports were down; and two thirds of firms said that export orders were down.
We cannot deal with problems unless we accept that they exist. Again I ask why Wales should be in that position, compared with other parts of the UK. The problems in Wales also exist in other parts of the country, but they seem to be exacerbated in Wales for some reason about which Ministers do not yet seem clear.
Mr. Ian Bruce: Does my hon. Friend agree that Wales is particularly susceptible to problems with exports to Europe because last year the Government had interest rates too high, which made Welsh exports uncompetitive? Now, the Government seem content that the euro has been undergoing a competitive devaluation, with interest rates foolishly kept too low—we are talking about 1 per cent. a week since the euro was introduced. Surely the Secretary of State should be making vigorous representations to his colleagues in the rest of Europe to ensure that they do not devalue the euro and stop Welsh exports from going into their markets.
Dr. Fox: I do not think that any political party in the House would be particularly well served if we involved ourselves in a debate about the worth or otherwise of competitive devaluations of currencies. Let me, however, make the point that I do not intend to be competitive in comparing one part of the United Kingdom with another, or one specific region with another. If things are worse in Wales than elsewhere, perhaps we should ask why that is. Is it—this is a genuine question—because the Welsh economy depends more on the manufacturing sector than on the service sector, and, if so, what measures can be taken to alleviate the burden? A declining economy in any part of the United Kingdom is bad for the United Kingdom as a whole; and, if a sector is performing badly in one part of the UK, sooner or later that sector will be affected in another part of the UK.
Prosperity and long-term jobs can be created only if a country's share of world trade—gross domestic product—is increasing; and that can happen if products are of desirable quality, and are sold at a price that people are willing to pay. That means that we must not involve ourselves in excessive regulation. Part of the problem that is affecting manufacturing industry in this country is caused by excessive regulation—the red tape and restriction that are being created partly by the Government's agenda, and partly by European initiatives.
In signing up to the social chapter, the Government are importing back-door European interventionism. They have made major supply-side reforms, and I welcome their conversion to that idea, because their action has made our economy far more competitive. Britain has increased its share of world GDP since 1990, and is one of only two European countries to have done so. We must not throw those reforms out of the window.
Mr. Flynn: We are all trying to cope with the hon. Gentleman's dazzlingly original ideas. He says that he wants fewer regulations. After the Tory pension mis-selling scandal, which resulted from a relaxation of regulations, how will he cope with the new style of mortgage mis-selling by a new breed of mortgage brokers
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and other operators who have created serious problems, and will create more serious problems in the future, by introducing disreputable ways of selling, in particular, personal equity plan mortgages and mortgages based on investment trusts and endowments?
Dr. Fox: A discussion of that issue seems about as attractive as a debate on the competitive devaluation of currencies, and it would take us some distance away from the issues that we are debating. The hon. Gentleman has, however, made the general point that all regulation is bad and total deregulation is good. Some regulations are worth while and sensible; what is bad is over-regulation and restriction, and that is what we want to avoid in the economy.
The Secretary of State was careful to mention only income tax, but increasing the tax burden on individuals reduces demand, and increasing the tax burden on businesses is a disincentive to investment. In the long term, such action will reduce the economic prospects of Wales. Wales has already experienced a number of tax increases since the Government came to office. One example, which those in many parts of Wales will appreciate, is the introduction of the £90 tax on corner shops to pay for the new Food Standards Agency. Dangerously, a wide range of taxes are now reducing output. Manufacturing is flat in some sectors, and agriculture is in recession. The Government do not seem to want to accept the reality of what they have done.
I would welcome further clarification of the points that the Secretary of State made in response to the right hon. Member for Caernarfon (Mr. Wigley) on objective 1 status. The letter from the Economic Secretary to the Treasury, which has been quoted this week, states:
"For Scotland, Wales and Northern Ireland, cover from Structural Fund spending must be found within the respective blocks, determined on the basis of the Barnett formula."
I accept that that position has long been accepted by both main parties, but it would be helpful if the Secretary of State—rather than maintaining an entirely neutral position, which he seemed to do in his speech—said that the Government would look favourably on such extra spending.
Mr. Michael: I am happy to comment on that letter, which was written some considerable time ago and describes the situation as it exists. The situation has never arisen where a proportion of a unit—in this case, of Wales—has received objective 1 status. For example, the highlands and islands form a minuscule part of the overall population, GDP and income covered by the Scottish Office. Therefore the issues that we have to discuss have never arisen before. That is all that the letter said. Indeed, I was able to confirm that point with my hon. Friend the Economic Secretary, who is the author of the letter. She entirely agrees with me that it has been quoted out of context, unhelpfully and, incidentally, without checking its relevance to today's discussions.
Dr. Fox: I am grateful for the Secretary of State's intervention on that point. To paraphrase him, the letter merely restates the position that has existed for some time, and in no way suggests that the Government would not look favourably, at a suitable point, on matching funding. I hope that that is a reasonable interpretation. Under the Conservative Government, that was always the position

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of the Treasury in relation to Welsh spending, and I am grateful to the right hon. Gentleman for clarifying that. It is extremely useful in dismissing the fear and smear tactics from nationalists, who are trying to drive a wedge between the Welsh Assembly and the Treasury at Westminster.
Mr. Wigley: I note with considerable interest the closeness of the two Front Benchers on that issue, and no doubt the people of Wales will note it as well. Will the hon. Gentleman therefore give a categoric assurance that his party's policy is that—if Wales gets objective 1 status, as we all hope, following the announcement that is expected shortly—the money coming to Wales should include an element over and above what is generated by the Barnett formula? The proportion of the population in Wales that would receive the increase for the United Kingdom through objective 1 funds would be greater than the one seventeenth used in the Barnett formula. Indeed, the Barnett formula is irrelevant to this matter, because additionality has to be shown in respect of these projects.
Dr. Fox: The right hon. Gentleman will not be surprised that, at this point in the Parliament, I am not willing to commit my party to detailed spending plans, but I will say that we stand on our record and we were willing to match funding. It is unhelpful for businesses and for individuals planning economic activity in Wales if scare stories are begun for party political reasons, which may increase economic instability. It is not in anyone's interests to get a few extra votes at the price of reducing prosperity or increasing unemployment in any part of the United Kingdom. I am on record as saying how much I dislike the tactics of nationalists, in Scotland and in Wales. At least I am never disappointed at their consistency.
The Secretary of State spent some time talking about the Government's plans for health. He was extremely clever and selective with the figures that he chose and started with the end of 1998 rather than May 1997, when the Government came to office. Since the election, another 5,000 people have been added to waiting lists in Wales—an increase from about 68,000 to more than 73,000. Furthermore, the Government themselves have admitted that the number of people waiting to get on the waiting list has risen even more quickly.
Instead of tackling the real issues, the Government have fiddled the figures. Patients are being transferred from the main waiting list to subsidiary waiting lists, which do not appear on official returns to the Welsh Office and are therefore missed off the waiting list statistics. Patients are now made to wait longer before they get on the waiting list, thereby cutting the figures, but not cutting the problem. It makes life easier for the bureaucrats, but no less difficult for the patients. That is where the real debate lies.
Some hospitals have even been forced to introduce waiting lists for the waiting lists, which is nonsense. We cannot deal with the problem unless we are willing to admit that the problem exists. Changing the basis on which the figures are calculated does not help those who are waiting for treatment in our hospitals. It is a dishonest way of doing business, and we should put an end to it.
The Government talked about changing the culture in the NHS. My working life as a general practitioner was spent in the national health service. There has long been
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a need for a change in culture in the NHS across the whole of the United Kingdom. The present culture is biased too heavily towards hospital consultants and not enough towards primary care.
Our ability to fund increases in health provision is linear at whatever gradient we can manage, whereas medical science's ability to provide treatments increases exponentially, so the gap between the two will increase. We must deal with that problem honestly, and the best way to do that is to ensure that resources are directed at the closest level to general practitioners. As we change the health culture back from fundholding to a new model, we will move towards a culture in which power will be exercised by hospital consultants and decisions will be taken away from GPs, who are closer to the patient.
Mr. Win Griffiths: I have listened carefully to the hon. Gentleman—or is he right honourable? [HON. MEMBERS: "Right honourable."] He is just an hon. Gentleman at the moment, but he is no doubt looking forward to advancement. What he said is completely untrue. Purchasing in Wales will be done by local health groups, which will be made up of GPs, local authority social services, voluntary groups and other medical practitioners. The hospital trusts will be the servants of the local health groups. That is the model for the future.
Dr. Fox: I am perfectly aware of the collective model that is being established, but it none the less moves influence away from individual general practitioners. The hon. Gentleman put the issue in a wider context. It moves power from GPs, and therefore from the patients. We shall see over time how well the model works, but I fear that the culture being established will not allow us to use any finance available in the health service to best advantage.
This will be the last debate on Welsh affairs before devolution. It is useful to work out where we are in that process. We must consider the position of concordats, the structure of government to be established and the political culture in which it is developing.
Concordats raise important questions. Throughout the devolutionary process we were told about dispute resolution mechanisms. We were told that concordats will be the way in which we do business and that it will be a new, inclusive way of going about the process of government. I should like to ask the Secretary of State a hypothetical but extremely important question. If a Minister establishes a concordat, would it be legally possible on the ground of reasonableness for someone to seek a judicial review of that concordat?
Mr. Michael: That issue was discussed yesterday in the Standing Committee considering the transfer of powers. The problem is whether we deal with matters as possibilities or as likelihoods and realities. The nature of concordats is such that neither we, the Scottish Office nor others in government believe that they would be open to judicial review. It is possible that something outrageous could admit the possibility of judicial review, but I mean that only in the sense that one cannot rule anything out totally. This is not a fruitful avenue for the hon. Gentleman to pursue, as it is not a real likelihood or option.
Dr. Fox: I was not asking the Secretary of State whether he thought that there could be a successful

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judicial review of any concordat—I was asking if it was possible to seek judicial review of a concordat. I take what the Secretary of State has said to mean that that is possible, so we may see constitutional positions adopted not by this House, but by judge-made law. It is important to take that into account in terms of devolution.
The Secretary of State for Scotland has said that he does not think that judicial review is legally possible, but we have long maintained that it is. Were we to have nationalists who wanted to seek division, it would be entirely possible for them to try to get a judicial review of concordats, and to try to get judge-made positions that they could not get through a democratically elected House in Westminster.
Mr. Michael: The hon. Gentleman must accept that this is an academic point, in the worst sense of the word. It would be difficult to rule anything out in terms of seeking judicial review; one can seek judicial review of almost anything. The issue, surely, is succeeding in obtaining judicial review. If the likelihood was that judicial review would be sought successfully, that would be a significant point in debate. However, if the likelihood is so remote that it is merely an academic possibility, the matter should not take up too much of our time. It is in that sense that I have answered the question. In practice, the matter is not open to judicial review—although it is a theoretical possibility. However, it is not one on which it is worth spending much time.
Dr. Fox: As part of our constitutional debate, we have uncovered the fact that we are not sure how a new instrument will operate, and what checks it will be subject to. We will find out in due course. The Secretary of State is basing his grounds for reasonableness on the fact that he believes that the Welsh Assembly and the Government in Westminster will be of the same political colour. That may not always be the case, in which case the concordat would become an entirely different instrument. A question mark has been put down about the operation of this new part of our constitutional architecture. We will see whether it proves to be a benefit or a hazard to constitutional stability.
We must consider also whether the structure of devolution will always guarantee a properly devolved system. The relationship between any devolved body and local government—and how we ring-fence the powers of local government to make sure that those powers are not taken upwards from local government to the Assembly—has been mentioned. The proposal that the Assembly should take control of sixth-form education suggests that there is every possibility of the Assembly seeking to increase its role at the expense of local government—an anti-devolutionary mechanism. That seems to be entirely the opposite of what the Government have said, and it is entirely the opposite of what I would like. The Secretary of State must consider the matter in terms of his order-making powers. We must consider how we protect the power of local government and ensure that these are not taken upwards to the Assembly, thereby moving local government further away from the people.
The Secretary of State omitted to mention a vital part of the debate to which we hope the Minister will refer
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when he winds up. How do the Government see the role of the Secretary of State for Wales? How do they see the job being delineated in future? How do they see the relationship between the Assembly or the First Secretary and the Secretary of State for Wales? What do they believe the relative balance of powers should be?
Those are important issues for the Union Parliament to discuss. As the Government of Wales Bill has been passed, it would be interesting to know what the Government's wider thinking is on those issues. We need to look at the political culture within which devolution is developing. That was best illustrated by the Secretary of State's election last week. Having told us that we have to have a new inclusive, non-Westminster, more democratic culture, the Labour party opted for an electoral college with union block votes—unions that were not obliged to consult their members. That was in sharp distinction to the Prime Minister's election to the leadership of his party.
The Transport and General Workers Union and the Amalgamated Engineering and Electrical Union backed the Secretary of State without a ballot, and Unison, using one member, one vote, backed his opponent. It is legitimate to ask why one member, one vote was not used. Although that is an internal matter for the Labour party, it is interesting for what it tells us about the political culture of the new Labour Government. The answer is rather simple: the Prime Minister does not love the trade unions, but he would rather have them than trust his members to come up with the solution that he wants.
Lord Hattersley has said that Nicolae Ceauçescu did not live in vain because his legacy is being carried on by a Prime Minister who decides what he wants the outcome of an election to be, and then decides what the structure should be that can deliver him that result. That says much about the culture of new Labour.
Mr. Michael Fabricant: Does not my hon. Friend find it ironic that a party that has claimed that it is in favour of proportional representation seems to believe in first past the post when it comes to the trade union block decision?
Dr. Fox: Nothing that the Labour party does would surprise me when it comes to rigging any form of electoral system. It seems that it has abandoned OMOV—one member, one vote—for OLOV: one leader, one veto. That seems to be the deciding system in the party.
That is a sad development because I am sure that many of the small proportion in Wales who voted for devolution believed that they would get a more democratic system and, as the Secretary of State said, a break from the old political taboos. The Labour party quickly returned to them when it thought that it was in its short-term interest to do so.
We leave the debate with a Secretary of State leading a party whose members did not want him. He leads his party into Welsh elections that his London headquarters are trying to manipulate. They are condescending, manipulative and cynical. They fail to understand the consequences of either their political or their constitutional actions. Economically, medically, educationally and in so many other ways, they have failed Wales.

ROYAL ASSENT
Mr. Deputy Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Act:
Social Security Contributions (Transfer of Functions, etc.) Act 1999.

Welsh Affairs
Question again proposed, That this House do now adjourn.
1.48 pm
Mr. Ted Rowlands: The hon. Member for Woodspring (Dr. Fox) began his speech by referring to the hope and aspiration that the Welsh day debate would continue. I also hope that that will happen. Let us briefly remember the origins of the Welsh day debate. It was a substitution for a Welsh Office and Secretary of State for Wales in the 1944 to 1948 period. It was offered as an alternative to the appointment of a Secretary of State and a Welsh Office.
If my memory serves me rightly, the first debate was replied to for the Government by the then President of the Board of Trade, Mr. Hugh Dalton. I was looking forward to the Secretary of State for Trade and Industry replying to the debate. I was particularly looking forward to the previous Secretary of State for Trade and Industry, my right hon. Friend the Member for Hartlepool (Mr. Mandelson), answering a Welsh day debate. Nevertheless, I hope that we will continue to have one. I hope that the business managers realise that it is wanted. It is only in the past 30-odd years that the Secretary of State for Wales has been present for such debates. Before that, they took place without one.
As we look forward to the future of the National Assembly and to a United Kingdom devolved, we should do so without carrying too many myths about the past, particularly the past performance of the British state. In many Welsh circles these days—not only in nationalist circles, but in wider ones—the British state is talked of pejoratively. I should like to make a case in defence of the British state's past performance, at various times, in serving the Welsh nation and the Welsh economy.
I am sorry that the hon. Member for Ceredigion (Mr. Dafis) is not in the Chamber. In the most recent Welsh local government finance debate, he made the case against the British state. He said that the parlous condition of the Welsh economy
"has something to do with the construction of the British state … The problem can be traced back to Wales's ridiculous over-dependence on heavy industry, the failure to introduce a more varied industrial base".
If it had not been for that ridiculous over-dependence on heavy industry, the communities whom I represent—and whom my predecessors for the past 100 years or so represented—would barely have existed. They certainly would not have been able to develop their rich character, or to make the rich contribution that they have made to the whole idea of a Welsh identity. More important, however, was the hon. Gentleman's reference to
"the failure to introduce a more varied industrial base".—[Official Report, 11 February 1999; Vol. 325, c. 502.]
As we embark on the new and exciting constitutional changes that the House has approved, let us remind ourselves that it was a British state and a British central Government who, in legislation from this place, created something that did not exist previously in Wales: a Welsh manufacturing and industrial society.
There was no Welsh manufacturing or Welsh industrial society until the late 1930s. Such a society barely existed until after the second world war. We were not a factory

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or manufacturing society. A complete absence of the skills necessary for that type of society was one of our major problems and one of the major causes of the depression and the problems of the inter-war years.
Welsh manufacturing society was initially created by a British state and a British Government, legislating from this place. Their redistribution of industry to Wales—not from other parts of the world, but from Birmingham, Coventry, Oxford and the Greater London area—created the Welsh manufacturing base. If nothing else, let us dispel some of the silly myths about the failure of the British state.
Of course, at various moments in history individual Governments have failed Wales. However, the British state created in Wales a fundamentally varied industrial base—as the hon. Member for Ceredigion used the term—that did not exist previously. Moreover, it achieved it by using the centralised powers of central Government, of the British state and of the House.
Mr. Wigley: Surely the hon. Gentleman is being incredibly complacent in his attitude. As a result of the cumulative policy of successive Governments since the post-war period, Wales has the lowest income per head of any country or region in Britain. An immense amount needs to be done. Surely that is not something of which we can boast.
Mr. Rowlands: The right hon. Gentleman takes a selective view of Welsh history. He should recall the state of the Welsh economy after the collapse of our basic industries—coal and iron—in the 1920s and 1930s, and how the economy was reconstructed. I am saying only that the British state made a major contribution to that reconstruction.
I accept that at various times the British state has not been able to match that achievement, and I shall deal with the current situation later in my speech. At times, Governments have of course failed us and failed Wales. However, if the right hon. Gentleman asks where Welsh manufacturing industrial society began, the answer is that it began in a deliberate policy established by British Governments and passed in legislation by the House.
There would not have been a Welsh manufacturing base were it not for central Government exercising power in redistributing industry and in using the other redistributive instrument available to them—public expenditure. Those two elements have played an important role. They were the core of the practical, centralised socialism that was an example of the joined-up government that it is now popular to talk about. As a signed-up member of the process for the past 40 years, I am not prepared to hear it rubbished, as it now is, from a variety of quarters.
Dr. Fox: Does the hon. Gentleman also think it worth pointing out to those who seek to break up the United Kingdom that it is because that Welsh heavy industrial base was allied to other manufacturing and defence capabilities in the United Kingdom, not least an allied defence force, that all parts of the United Kingdom are free today?
Mr. Rowlands: We have made a fantastic contribution to rearmament programmes at various times through the
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steel and iron industry. I hope that the hon. Gentleman will read my book when it comes out. He will find, however, that Whitehall had an enormously bilious view of the capacity of Wales to assist in the wartime effort. War, not the Government of the day, revalued our greatest resource—our people and their skills.
I have common ground with the right hon. Member for Caernarfon (Mr. Wigley) in that considerable damage has been done to the rebuilt Welsh economy in the past 20 years by deindustrialisation and the erosion and collapse not of our coal and steel industries—although that happened as well—but of the manufacturing base that had been created by post-war Governments. The charge against the Conservative party relates to the decade or more when the number of people in employment fell in Wales while it was growing elsewhere. That led to the serious problems that we now face, with the remorseless increase in the number of workless households and the serious social consequences that have flowed from that. Those consequences are reflected in the recent survey that revealed the deprivation in communities.
My worry and horror is that deindustrialisation is not yet complete and we may be in for another bout of it. The Minister, my hon. Friend the Member for Neath (Mr. Hain), has a particular concern about Ystradgynlais. Anyone who represents communities such as mine will be desperately worried about the impact of the closures that such places are facing. Anyone who knows about the problems of the European or global steel industry will be deeply concerned about the potential impact on our society.
Many interesting things are going on in our economy. In the past two years we have created more than 15,400 new manufacturing jobs, but we have lost about 17,600. The number of people in employment has stalled. That is a challenge to current policies and it will certainly be a challenge to our new National Assembly and economic powerhouse.
The challenge to our existing policies comes because we depend so heavily on the new supply side of the economy that we have devised—training and education. My hon. Friend the Minister knows how much I support our efforts, locally and beyond, on the new deal, training and education to create a better educated, more talented and more highly skilled society, because we believe that that will make people more employable. If we depend heavily on that, we must get our policies right. I am worried that we are likely to produce a large number of educated but unemployable people. I hope that my hon. Friend will take another hard look at the education and training advisory group report, which got the priorities and the balance of the training and education programme wrong. We must ensure that our training and education programmes meet the needs and demands of the Welsh economy in the near future.
My second point relates to the broader macro-economic scene. Historically, the communities that I represent have been far less worried about inflation than about deflation. Deflation has been their curse as it creates unemployment. Banks and bankers have been major contributors to deflationary policy. That is why during the past 18 months to two years I have not shared the Government's enthusiasm for creating an independent Bank of England. I was even less enthusiastic about the creation of an independent European bank that might hold our destiny in its hands.

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Welsh economic history shows that Wales is not saved from our British bank, nor does its salvation—despite the usefulness and importance of objective 1 status—rest in Europe. Wales requires a macro-economic policy based on growth and expansion. Jobs and employment need to be at the centre, not at the periphery of economic policy. That is one of the lessons of Welsh history.
At present, the great danger and threat to our economy and to jobs in Wales is not inflation or price stability. Price stability means that small manufacturers and enterprises in my community are not making surplus profits and capital to refinance and invest. We already have price stability and so has Japan, but it has been demonstrated that price stability does not create growth or jobs. The last thing that we need is deflation or deflationary policies of any kind or character. That is the bitter understanding and memory of the communities that we represent.
We welcome the new National Assembly and its economic powerhouse. We have had the slogan "education, education, education". I offer the new Assembly the slogan, "jobs, jobs, jobs".
2.2 pm
Mr. Richard Livsey: This is the closest date to St. David's day—the last St. David's day this century is on Monday. It is a time to reflect and to look forward. In the words of an old song: "What a difference a day makes". In this context, what a difference a century makes.
Our predecessors in the House of Commons would be astonished that it has taken so long to achieve their cherished dream of a measure of home rule for Wales. The 20th century has not been dominated by radical politics in the United Kingdom, and to testify that, it has taken the entire 20th century for Wales to achieve a measure of devolution. Even now we are only just putting our toes in the water. What Gladstone, Lloyd George, Tom Ellis, Keir Hardie, Mabon and many others would have made of such slow progress I shudder to think, but a Welsh Assembly—not a parliament—is at least in sight.
As the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) said, the milestones of the century in Wales have contributed to the delay. They include the emigration of our young people around the world and the loss of tens of thousands in the first world war, among them the flower of our youth—on the fields of Flanders and northern France they fell. That was followed by the 1926 general strike and unemployment; lock-outs and poverty; the second world war; the hopes born in 1906 and 1945; the creation of a more comprehensive Welsh Office and, in the 1960s, a Secretary of State for Wales; the fiasco of the 1979 referendum and the dark years of the 1980s and 1990s when for 18 years a Welsh Assembly seemed all but impossible; the triumph of the 1997 referendum and the yes vote; a Wales Bill on the statute book; and next May, our very own Welsh Assembly. All that has occurred in the space of 100 St. David's days.
Mr. Evans: The hon. Gentleman said that Wales was putting its toe in the waters of devolution. Is it still his party's policy to give the Assembly tax-raising powers, and would he like that to happen without a fresh mandate from the Welsh people via a referendum?
Mr. Livsey: I know that the hon. Gentleman will not like the word, but we are federalists and believe in
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tax-varying powers for the regions and countries of the United Kingdom, as well as primary legislative powers. That applies to Wales as much as anywhere else. That has been our policy for a long time.
Mr. Evans: What about a referendum?
Mr. Livsey: In what sense?
Mr. Evans: Would it be Liberal Democrat policy to seek tax-raising powers for the Welsh Assembly without consulting the Welsh people via a separate referendum?
Mr. Livsey: We will put these matters in our manifesto, and if we are elected to power they will be part of our reform programme for the Welsh Assembly. It is up to the electorate of Wales to decide whether they approve.
Those catastrophes and lost hopes of the past 100 years are still, in a sense, there. Sadly, Lucas-SEI decided only last month to close its manufacturing operation in Ystradgynlais in my constituency, which will cause 750 employees to be laid off. They received only four hours' notice, which is really more like something from the first quarter of the 20th century than the verge of the 21st. The work is being transferred to Poland, and the work force in Ystradgynlais trained the Polish workers. That is more or less the equivalent of digging one's own grave and falling backwards into it.
The takeover by TRW of the Lucas Varity corporation, of which the managing director, Victor Rice, will get a cool £17 million—a sum, incidentally, that could keep the Ystradgynlais plant running for another two years—is a disgrace and a scandal. I hope that the Minister will ask the Secretary of State if he will take the opportunity, when he visits the United States soon, to go to the TRW headquarters in Cleveland and ask whether some work can be transferred to Ystradgynlais.
The task force, in which Ministers, local councillors and I have been involved, is there to produce a solution to this terrible problem. Every avenue must be explored.
The Parliamentary Under-Secretary of State for Wales (Mr. Peter Hain): I was in touch with TRW in America yesterday, to discuss the future of the Ystradgynlais site. I pay tribute to the work that the hon. Gentleman has done on behalf of the work force there, and look forward to working in partnership with him to solve the problems that have been created.
Mr. Livsey: I thank the Minister very much indeed for those remarks. I am sure that the people of Ystradgynlais will also be grateful. We are all working extremely hard to ensure that the problem is solved. The plea by the hon. Member for Merthyr Tydfil and Rhymney for jobs, jobs and more jobs is absolutely correct. We can train as many people as we like, but if the right kind of employment is not there, we will not produce jobs for people in our communities. Whole families have been sadly affected by the proposed closure and we need to find solutions that involve real employment.
There is a huge slump in farming in Wales. The farm management survey shows that the net income of the disadvantaged area farms in 1998–99 is forecast to be a mere £48 for the whole year. In the severely disadvantaged areas and the lowland beef and sheep areas,

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farmers are at present earning the equivalent of £2.20 an hour. That looks pretty stupid in comparison with the proposals for the national minimum wage, which I support. Those figures are calculated on the basis of a 40-hour week. That problem has to be solved, and quickly.
Our family farms are in terminal decline and unless much more attention is paid to that, I am afraid that there will be an exodus from the land. Help could be given immediately by ensuring that payments such as hill livestock compensatory allowances are made immediately. That would assist the cashflow of farmers in a desperate situation. The Office of Fair Trading report, which will be published shortly, about the pricing policies of supermarkets is important, but there is no accountant on the body considering the issue and it appears to concentrate on groceries rather than the problems in the meat chain that directly affect the farming community.
We also face the problems of Agenda 2000 and CAP reform. Changes are now being made to the original proposals for Agenda 2000. The national envelope and co-financing are problems that I am sure that the Under-Secretary, the hon. Member for Cardiff, Central (Mr. Jones), has been studying in the past week in the Council of Ministers meeting in Brussels on CAP reform. I am alarmed to note from yesterday's Western Mail suggestions of changes to the original Agenda 2000 proposals from a maximum of direct support to farms of £70,000 to a maximum of £3,700. If that goes through, it spells disaster. What impact would it have on the Welsh Office's agriculture department budget, which has reached £300 million of support for farming in Wales? I have noted references in Welsh Office documents to sums of more than £200 million. That could mean a substantial reduction in support for the farming industry from the Welsh Office, much of it European money.
We have discussed the objective 1 situation and the question of matched funding at length, and I shall not go back over that ground, except to remind the Secretary of State that the Lucas factory is only 200 yards from an objective 1 area. That is a problem in its own right, because the people of Ystradgynlais cannot benefit directly from objective 1 money. I know that the Minister is trying to do something about that and I am sure that he will work hard to obtain additional funding for the upper Swansea valley.
Powys and parts of east Wales are in dire need of objective 2 funding and I have been promised before that those areas will get it. However, the question of matched funding arises again. I was in Brussels last week and I discussed the issue of European structural funds with some of the Eurocrats. It was stressed to me that grass roots projects were an important method of obtaining objective 1 and 2 funding. It is not top-down action that is required, but local communities coming forward with proposals. That is an important way to tackle the problem.
How will Wales look on St. David's day in 2000? St. David's day is a special day in the calendar, when the daffodils emerge from the bud on every hillside and in every garden, and in every lapel. However, St. David's day is also a genuine sign of the gathering spring. It is a time of hope, singing and poetry, as every schoolchild in Wales knows. One has only to visit a primary school in Wales on that day to be greeted by the spirit of St. David.
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By this time next year, Wales will have had its National Assembly for almost a whole year, including the first elections, a new First Minister, the first ever Cabinet for Wales and a Committee structure that I hope will be founded on true democratic principles, perhaps including one member, one vote.
I do not believe that the Government of Wales model will be as radical as some people think. There will be welcome change, but not a revolution. Will it be the personalities or the parties that will reign supreme? There is no lack of characters in Wales and I am certain that many will emerge in the new Assembly. Many are likely to be women, and that will be a change for the better. In fact, the personalities are likely to prove more influential than the political parties.
Time will put the Members of the Assembly on a steep learning curve. It will not be long before they come to realise what they cannot do, as much as what they can do. Let us hope that in a year's time they will not be too frustrated. Secondary legislative powers may sound superficially attractive, but in 12 months' time they may be seen as no big deal! Balancing the books will also be a frustrating experience and priorities will demand hard choices. I can envisage cries next March for primary legislative powers and tax-varying powers, just like Scotland.
Building up new traditions in our Assembly will be a challenge. I make a firm prediction that the deep sense of fairness in Welsh society will mean that the twin values of liberty and social conscience will be much to the fore. I hope that tolerance and inclusiveness will underwrite those values. That does not mean that the traditional fiery Welsh radicalism will not have its place, but it will be fashioned into a more egalitarian democracy suited to the 21st century.
The proportional system of top-up seats should give us political representation that is a truer reflection of people's views in Wales. Wales is nothing if not a community of communities, so the proportional system of top-up seats should therefore be welcomed. Let us hope that we see the end of machine politics. There is a danger that if the power of the Executive is misused, people will feel excluded from the Assembly process. The Assembly's Committees, both subject and regional, will be vital. I am hopeful that with an enlightened leadership the disparate views that characterise Wales will begin to be welded into a more cohesive force for good. Wales is too small a country for us to fall out among ourselves.
In particular, we desperately need vision and leadership. Every Committee in the Assembly must have its strategies worked out in 12 months' time. The Education Committee must have set its targets and the Health Committee's recipe for tackling the many problems in Wales must be in place. The Economic Development Committee must have developed its strategies for better job opportunities and wealth creation. The Rural Affairs and Agriculture Committee must have its plan to revitalise our family farms and the rural economy. We may even be considering an integrated transport policy that may provide a solution to join up north and south Wales.
We should know by next year where we want to go as a nation and how we are going to get there. The next years will be spent in engaging the participation of the people of Wales to build a new Wales, with a more caring and

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entrepreneurial society in which young people can gain skill and jobs in a quality environment, the old know that they will be cared for properly, and where music, sport, the arts and all kinds of recreation are an everyday experience. We will not reach that state in one year, but by next March the signposts will be there to a Wales where it is not always necessary to leave to gain recognition, because it can be achieved at home in our own country. Is that idealism? Yes. Is it possible? Yes. On St. David's day 2000, there will be new stars on the horizon and more than a few poets celebrating the rebirth of our nation.
2.19 pm
Mr. Don Touhig: I first spoke in this Chamber in the annual St. David's day debate on 2 March four years ago, and I speak now in the final such debate before the historic Welsh Assembly elections. However, I hope that there will be many more St. David's day debates in the years to come because, as we move forward to a historic change in the way in which our country is governed, we must not lose sight of the fact that, in Britain and Northern Ireland, there are four nations but one country. The Parliament of all the nations of Britain and Northern Ireland is, by the consent and desire of the people, here in Westminster.
This Government have delivered on their pledges to the peoples of Wales, Scotland and Northern Ireland to bring about devolution. I welcome that. We have done it in the face of stiff resistance from the Tory Opposition, but we recognise that, if we are to release the potential of all our people and give them a new vision for a new century, we must put in place a modern system of Government to demonstrate a renewed confidence in being Welsh, and in being British.
In my darkest moments, I sometimes think that the one thing that unites all of us who are Welsh is a lack of self-confidence. We lack self-belief, and feel that we cannot achieve things. Some say that that is due to the melancholy in our natures, to the dark, brooding and often romanticised element of what it is to be Welsh. That element may make for wonderful poetry and help to define us, but we must not let it blind us to the future.
Wales is a small country on the edge of a great continent. We may be at the margins of Europe geographically, but there is no reason why we should not be at the heart of Europe economically, socially and culturally. Moreover, I believe that the Welsh people recognise that all our interests can be best served by truly being part of the larger political unit that is the United Kingdom. Not for us the narrow argument of the nationalists, who want a separate and isolated Wales. The people of Wales will not be looking to the nationalism of the 19th century to find the answers to the problems of the 21st century.
I support devolution, and am certain that the Assembly will provide the basis for greater accountability and transparency in decision making. Devolution gives us a chance to put an end to the quango culture, which allows decisions affecting the lives of people throughout Wales to be made by people meeting in secret behind closed doors, who spend millions of pounds of taxpayer's money and yet remain unaccountable for what they do.
Devolution is an opportunity to put a stop to the over-centralisation of decision making which was the hallmark of 18 Tory years. It will help breathe new life
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into local government, with the Assembly forging a new partnership with councils and with Parliament in Westminster. Many of my councillor friends who were sceptical about devolution are now excited and enthusiastic about the prospect. As the main service providers, they can see many potential benefits of an effective partnership between local authorities, the Assembly and the Government in London.
Partnership right across Britain is one reason why the creation of the Assembly does not mean the break-up of the Union. The purpose of devolution is to create a better system of government for the Welsh people, not to cut us off from the rest of Britain. Indeed, the overwhelming majority of people in Wales do not regard the creation of an Assembly as an opportunity to go down the separatist path.
The referendum gave one clear message: the people of Wales are not yet convinced of the benefits of devolution, and it is no good hiding the fact that the jury is still out. The big challenge for us all is to make devolution work and to show the Welsh people that it has considerable benefits for them.
One key area in which we must make devolution work is in meeting the economic challenge. The Assembly must help provide the motivation, and be the powerhouse to transform the Welsh economy. It must, as my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) said, create jobs to bring about lasting prosperity. It is as a result of the policies pursued by this Labour Government—the Government of all Britain—that the Welsh people will gain.
Labour's vision is of a Wales where social justice is put before separatism, where investment in education and the reskilling of our labour force is at the top of our priorities. We are not going to compete in the world economy of the next century if we have low wages and a low-skilled work force, with an industry desperately lacking investment and less productive than our competitors. We need a Wales where we tackle poverty and social exclusion by creating opportunities and providing work, so that people are not left to depend on benefits; a Wales in which we recognise that decent, affordable housing is as much an investment in our people's health as money spent on hospitals.
This year of 1999 is truly a year in which Labour will deliver on its pledges—to extend democracy by means of the Assembly, and to tackle poverty root and branch. We want to begin by helping people on benefit who can and want to get work to be given that chance. However, we must recognise that it is no use moving people from poverty on benefit to poverty in work. That is why we need a national minimum wage.
When it is introduced in April, the national minimum wage will benefit tens of thousands of people across Wales, many of them women. The minimum wage, linked with the working families tax credit to be introduced in October, will guarantee low-paid families with a full-time worker at least £190 a week, with no tax to pay on earnings below £220. That, together with the reduction in employees' national insurance contributions due in April, will be of considerable benefit to families on low or middle incomes.
All those measures to help the poor in Wales have been opposed by the Tory Opposition. Is it any wonder that no Conservative Members of Parliament represent Welsh constituencies?

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There is much more that we must do to tackle the culture of poverty in Wales. Children and old people are the most vulnerable, and are often locked in a cycle of poverty from which it is almost impossible to escape. That is why, from April, child benefit is to be raised by a record amount of £2.95 for the eldest child. There will be equivalent increases for poorer families with rises in family premium, income support and jobseeker's allowance.
Building on the package of measures already announced for pensioners, from April eye test charges will be abolished, and all pensioners will have a minimum income guarantee of £75 a week for a single pensioner, and £116 for pensioner couples.
As my right hon. Friend the Secretary of State said when he opened the debate, the new deal has been a great success in Wales. Thousands of young people are now in work and being given opportunities, where before they had no hope and no chance. Supporters of the Welsh nationalist party in my constituency have labelled the new deal slavery, but we are creating opportunities. From April, those opportunities will be extended to people over 25.
On top of that, the Government have cut business taxes to an all-time low to encourage investment. At the same time, they have put a massive £1 billion extra into health in Wales and £850 million into education.
If the other parties had been told before the general election that, in two years, we would do half as much as I have described, they would have called us fantasists and claimed that we would be unable to achieve anything at all. So let me remind the House what the Government have achieved in those two years.
Class sizes have been cut. Hospital waiting lists are down. Handguns have been banned. There are new rights for people at work. The national debt has been reduced from £28 billion to £8 billion. Interest rates have been cut to their lowest long-term rate for 35 years. Value added tax on fuel has been cut to 5 per cent. Extra money has been devoted to breast cancer screening. Councils have been allowed money from the sale of council houses to build new homes and improve existing ones. The largest hospital building programme in our history has been launched. The biggest-ever child care programme is under way. There has been legislation to raise standards in schools. The Bank of England has been given independence to set interest rates. There has been a massive shake-up in the criminal justice system—I could go on.
In a couple of days, we shall be celebrating St. David's day, our saint's day. After two years of this Labour Government, there is much to celebrate, for Wales and for Labour in Wales. Working in partnership with the Assembly that will be elected on 6 May, the Government will take forward the policies that I have talked about this afternoon, for the benefit of all the people in Wales. The policies that concern them are investment in health and in education and training. They want job opportunities, safer streets, better public services—those are the priorities of the people whom I represent. They are the policies of the Labour Government in Westminster, and they will be the policies of the Labour party that will run the Assembly.
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The people of Wales will respond to Labour's vision for the 21st century—partnership within the United Kingdom—rather than the narrow nationalism of the 19th century. They do not want to operate at the margins of politics, like the increasingly desperate Tory party. They do not want the publicity without responsibility of the Liberal Democrats. The people of Wales consistently rejected the separatist agenda of the nationalists. They reject policies that benefit the few, not the many, as advocated by the Tories. They have certainly rejected the Mickey Mouse tactics of the Liberal Democrats.
We are approaching the biggest shake-up in the government of Wales. We can make that change with confidence and without fear. The people of Wales will look to Labour—the real party of Wales—to make an historic process work.
2.30 pm
Mr. Elfyn Llwyd: I wonder why the hon. Member for Islwyn (Mr. Touhig) left the Green party free of his venom.
It is often said that, when political parties unite, they do so for a serious cause. There is no doubt that all the political parties in Wales—notwithstanding the long spat between my right hon. Friend the Member for Caernarfon (Mr. Wigley) and the Secretary of State—have worked together to try to obtain objective 1 status for west Wales and the valleys. I have rarely seen such a concerted effort, and I have worked closely with members of the ruling party in north Wales to secure that all-important designation, which would be a tremendous social and cultural boost for Wales.
The underlying principle that should guide us in considering objective 1 status is the impact that it could have on economic and social cohesion. We must consider additionality: significant improvements have been made in demonstrating additionality at national, regional and local level. However, there is a need to ensure that mechanisms are in place that fully demonstrate the transparency and improved measurements of the concept.
Complementarity—the relationship between structural and domestic funds—has never been adequately addressed. A grey area remains over, for example, the differences between the European regional development fund, the European social fund and the European agricultural guarantee and guidance fund. Matters still require to be ironed out in that complicated area, and we should all consider them more often than we do, standing, as we are, on the threshold—possibly—of obtaining objective 1 status.
The Secretary of State referred to partnership—a buzz word in politics, but an important feature of structural fund policy in Wales—which will be a prerequisite of policies related to objective 1 status. I have the privilege of representing a constituency that falls into two unitary authority areas—Gwynedd and Conwy. Both would benefit substantially if objective 1 status came to Wales. Mindful of the time constraints, I shall today talk only about Conwy county borough council, which covers what was previously Aberconwy borough council and part of Colwyn Bay borough council.
The area has suffered greatly over the past 12 or 13 years. Aberconwy qualified fully for objective 2 designation 10 or 12 years ago, but lost out. I visited Brussels, and a number of members of the Commission

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confirmed that there was no shadow of a doubt that the area qualified on all basic criteria. Alas, however, it did not happen. Over the past 10 or 12 years, the area has undoubtedly suffered. I do not doubt that the luck of Merseyside—good luck to that area—in obtaining objective 1 status was an active disincentive to inward investment into Conwy.
Conwy has the lowest gross domestic product in Wales, the lowest-wage economy in Britain and a low rate of inward investment. It is incredible but true that only 18 new jobs were created between 1994 and 1997. Yet the area gains no assistance from designated status.
The economy in Conwy depends on jobs in the tourism, public and agricultural sectors. Changes in tourism and agriculture are putting significant pressure on the viability of businesses in both sectors. The economy of Conwy desperately needs to diversify to strengthen its base if it is to be socially and economically sustainable. Recognition of the county's problems, and its inclusion in the west Wales and valleys sub-region which has the prospect of obtaining objective 1 status, is a tribute to all who have striven in partnership to have Conwy and Denbighshire included in that designation.
Led by the county borough council, partners are developing a county-based development strategy based on the themes of competitive business, countering social exclusion and balanced development. That strategy will be integrated into the broader west Wales objective 1 strategy, providing a clear framework from 2000 to 2006. I hope that that will help the area to overcome its structural problems.
The strategy will seek to create a balance of indigenous and inward investment, a matter that has, of late, much concerned the Select Committee on Welsh Affairs. A report has been prepared, and the Committee, of which I am a member, took evidence from many areas on inward investment and indigenous expansion in parts of the UK and beyond.
A full range of support services will be developed for existing and potential small and medium enterprises. Perhaps simplistically, I believe that we do not pay enough attention to SMEs, which, if my figures are correct, account for 90 per cent. of employment in Wales. The stark fact is that, if every SME created one more job, there would be hardly any unemployment in Wales. We must concentrate on that sector, and—although I hope that I am wrong, and that LG will come on line—there are lessons to be learned from putting too many eggs in one basket. It takes creative thinking to expand SMEs and to create an atmosphere of expansion. However, we would do well to target that area as the benefits would be considerable.
The hon. Member for Brecon and Radnorshire (Mr. Livsey) said that the difficulties of the agricultural sector, and the knock-on effects that they have on the whole community, have extremely serious ramifications for his rural community. The same is true of Conwy. It is essential that the quality and value of agricultural produce from Conwy—and from all of rural Wales—should be maximised locally. Objective 1 status can assist us in that area.
The Welsh Office has recently confirmed that the new development authority will have a far more extended agricultural brief, and that is welcome. I hope that we may see such things as a substantial chilling plant for meat in
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mid-Wales, which could serve Wales and beyond. We lack that at present, and it is an area on which we could concentrate. We should add value locally to meat—the new prepared foods such as lasagna and other meals that are very popular nowadays. By producing such food locally, we would add value to the product. We have a good product, and we should add value as locally as we can to the point of production.
There has been an historic lack of both investment and investment opportunity in Conwy. Several barriers need to be brought down. I am very pleased that Conwy has been included in the European objective 1 designated areas; it is critical that people now concentrate fully on the way ahead and on drawing up plans in good time. If the county of Conwy is to succeed, it is important that projects are proposed as soon as possible, partners found and all potential European and other funding effectively sought.
I could repeat that message on behalf of Gwynedd, but I am mindful of the time constraints and aware that several other hon. Members want to speak. Last year, as part of a delegation from the Select Committee on Welsh Affairs, I visited Inverness and the highlands and islands of Scotland. The problems of those areas were not dissimilar to Gwynedd's problems—the feeling of remoteness and declining economic activity in a rural setting. The visit was most instructive, because it brought home starkly to me the potential benefits of objective 1 status, if properly used—opportunities for small businesses to expand, and for a hard-pressed agricultural sector to expand and diversify to meet the challenges that will inevitably flow from Agenda 2000.
I also learned of the utmost importance of matched funding. I was told that, because of the effective drying up of matched funding, little use had been made of objective 1 structural funds in the preceding 18 months. In other words, because of the absence of matched funding, the European funds could not be drawn down; the process was at a standstill. Members of Parliament from the north of Ireland have told me of their similar experience of stop-go—when matched money is not available, everything is put on hold. Because any scheme under objective 1 lasts for only a given period of time—six years—if we fail to do our level best to get as much as possible out of objective 1 status, money is wasted. We have all seen the prosperity that has been created in Ireland, largely because of objective 1 funding. Many of us trumpet Ireland's economic success: now, at long last, there is net immigration of Irish people to Ireland, as highly qualified youngsters come back to the good jobs on offer in an economy that appears to be booming.
I do not care greatly that, by raising this important subject, I risk incurring the venom of Ministers—not that venom rests comfortably in the Under-Secretary of State for Wales, the hon. Member for Neath (Mr. Hain), who is sitting on the Treasury Bench. There are, and will be, serious difficulties if matched funding is scarce: we need a greater commitment from the public sector and, more important, from central Government, especially for the long term. Consideration for matched funding should be agreed at programme level, not by project; and there should be further exploration of the global grants system and far greater co-ordination of domestic funds, with better clarification of the rules governing private sector involvement.

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I mentioned the general concordat—to use a word of the moment—between the political parties during the campaign to secure objective 1 status. When the Government submitted the plans to Brussels, opposition parties were asked not to rock the boat, lest that should in some way damage the chances of obtaining objective 1 status. I found it offensive when the Secretary of State said that my party, of all parties, was creating difficulties. Far from it—we did everything that we could to assist and we shall continue to do so. In that vein, I shall ask the Minister one or two questions; I trust that, in that vein and in this context, he will find my questions helpful. I shall find it helpful if the answers are forthcoming.
I have campaigned for objective 1 designation for a long time, as have other right hon. and hon. Members. On each and every occasion when the Secretary of State for Wales, the Prime Minister and the Chancellor of the Exchequer have been asked to give an assurance on the subject of matched funding, they have fallen silent, despite their having, rightly, trumpeted the fact that the Government have done everything that they can to secure objective 1 status. There is now grave concern because, without adherence to the principle of additionality and, of course, securing matched funding from additional Treasury money, the whole campaign could come to nothing, like a handful of sand seeping through one's fingers. I am not encouraged by the Government's predisposition to hide behind the Fontainebleau accord—for example, to deny the farmers of Wales proper agri-monetary compensation. The whole question of matched funding has a similar flavour and I am greatly concerned, as is my right hon. Friend the Member for Caernarfon.
In his opening speech, the Secretary of State referred to a recent press release. Professor Kevin Morgan and other members of the Institute of Welsh Affairs have expressed their concern sensibly, not in a headline-grabbing manner. They say that at stake is as much as £1.8 billion between 1999 and 2006, and they quote a letter that they received from the Economic Secretary to the Treasury. The hon. Lady was asked how much matched funding would be available, to which she replied:
"If Western Wales and the Valleys were to qualify for Objective 1 status after 1999 I can give no assurance that all the additional receipts (assuming that the total allocation to Wales did, in fact, increase) would be reflected in an increased public expenditure allocation".
She added:
"For Scotland, Wales and Northern Ireland, cover for Structural Fund spending must be found within their respective blocks, determined on the basis of the Barnett formula."
That is an extremely worrying response.
The Secretary of State was probably right to say that we do not yet know what decision will be made; however, if we do not yet know but such a negative response has already been forthcoming, questions must be asked. It behoves all of us across the political spectrum to ask the appropriate questions and not to leave them until some future date. Why cannot the questions be asked now? More important, why can they not be answered now?
Professor Morgan says:
"The realignment of the Wales funding map that has now been approved in Brussels is only the first stage in this crucial battle. Two more battles need to be won, the first in Brussels and the second in
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Whitehall … Brussels has since been convinced that the GDP of the new west Wales and the Valleys region is below 75 per cent. of the EU average. So there is a strong case for the Treasury in London to approve Public Expenditure Survey cover for new funds. Assurances need to be sought by our political representatives that this will be the case. Failure to secure PES cover from the Treasury will mean that up to £1 billion will come from the existing £7 billion Welsh Office block grant. The economic and political implications of this could be disastrous. The Objective 1 victory would be a cuckoo's egg."
I call on the Minister to give a full, frank and straight answer to that vital question. Failure to do so will mean that, once again, the Government can be summarised best as a Government who are always ready to raise hopes and expectations, but who are unable to deliver.
I strongly urge Welsh Office Ministers to contact the Treasury and obtain a full, clear and unequivocal answer to the question. All the hard work that has been done throughout Wales and across all the political parties might yet come to nothing unless that assurance is available. I would go so far as to say that, if the additional moneys are not available, the Welsh Office will have let down the people of Wales, because the Treasury will have denied the Welsh Office. The current devolution proposals, good as they are, will not affect that betrayal.
2.50 pm
Mr. Rhodri Morgan: I also wish to return to the subject that caused such a conflagration in the House two hours ago. I hope that my remarks about objective 1 funding and its effects on Wales do not re-ignite that tinderbox.
We all accept that it is crucial to secure objective 1 and matched funding. However, no one should be cheering about the prospect of achieving objective 1 funding because one does not get it for nothing. It is like compensation for mine workers. Someone might think, "Isn't it wonderful: I'm getting 50 per cent. compensation from the National Coal Board for having pneumoconiosis", but it is terrible because that person has pneumoconiosis. The same deduction applies to objective 1 funding: we will receive it because Wales has economic pneumoconiosis. Our gross domestic product levels are so low that we require the maximum rate of European grants to help us put the economy back on a sound footing.
I understand why objective 1 funding causes such excitement. There are two reasons: first, because the timing is so critical relative to the commencement of the Assembly; and, secondly, because objective 1 funding is the jam on the bread for the Assembly's public spending capabilities. We have the Barnett formula and the three-year comprehensive spending review programme—which will begin in a few short weeks on 1 April—and objective 1 funding is a way of going beyond the limit.
If we ultimately secure objective 1 funding and there is no real problem with the provision of matched funding, there could be lots of jam on the bread for the Welsh Assembly. Therefore, the prospect stirs a certain amount of interest. If the figures that we have heard bandied around are correct, in theory, it might mean up to £500 million a year extra in public expenditure for different kinds of infrastructure in Wales for each of the seven years from 1 January 2000. Bearing in mind the fact that the Welsh Office's comprehensive spending review budget is £7 billion, an extra £500 million—if it is as much as that—amounts to an 8 per cent. increase. That is a pretty substantial increase to have running for the next seven years.

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That £500 million is the top whack figure—it might be £450 million or £400 million if things go reasonably well but not perfectly. I understand that £300 million a year in European money would be provided for seven years, which we would expect to be matched—perhaps not pound for pound—by British Treasury sources. If that European funding were matched two thirds of a pound for a pound, it would mean that the additional £300 million would be matched by perhaps £150 million to £200 million in Treasury money, which would total £450 million or £500 million. If my calculations are not correct, the Minister will no doubt set me straight at the close of the debate. It is natural for people to want to examine the subject in considerable depth.
I mentioned that the timing of receipt of objective 1 funding is crucial. We all know why that is so. The three-year public expenditure programmes of the Welsh Office, which begin on 1 April this year—and will be inherited by the Welsh Assembly a month later—will continue for three years until 2002. Objective 1 funding should have been determined by then—perhaps at the European Union Council of Ministers meeting in March—and, if we are to receive it, will begin on 1 January. That will be some seven or eight months after the Assembly has taken charge of the bulk of Welsh Office powers. That funding will certainly stir the pot and be an integral and dominant part of the early activities of the Welsh Assembly.
The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) referred to the interesting reply given by the Economic Secretary to the Treasury. We could debate for at least all of today—and probably on several other occasions—whether that response was a bit of a downer or left the door open for the Treasury to agree to matched funding. Let us try to view the matter positively. It is a chicken and egg situation. There is no way that the Treasury will say, "Here's an extra £200 million a year for the next seven years, provided Europe gives you objective 1 funding at the March Council of Ministers meeting". Unfortunately, it also works the other way. There is no way that the European Commission will agree to confer for fun the objective 1 funding designation—as though it were referring to a map—in the March Council of Ministers meeting.
The EC will confer objective 1 status only if it receives some sort of serious signal from the British Government that matched funding is being negotiated and is on the way. The Government must demonstrate that they are agreeing the details and taking a serious approach to securing the whole package. If there is no matched funding, there will be no objective 1 status. If there is no objective 1 status, there is no point in having matched funding.
We must somehow address that chicken and egg situation. The resolution of that problem should not be left until the early weeks of the new Assembly when Assembly Members will be finding their feet. We must sort it out before 7 May and the elections to the Welsh Assembly. The more clarity that we can lend to that chicken and egg situation, the better.
I think that the Secretary of State said earlier—I repeat the point now—that the Welsh situation is unique as regards objective 1 funding. It is not a problem in Northern Ireland, Scotland or England: it is only a problem in Wales. Scotland and Northern Ireland have received objective 1 funding before, so it is programmed
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into their three-year public expenditure programmes that start on 1 April. Wales has never had objective 1 funding. Although it is true that Cornwall and south Yorkshire have never received objective 1 funding, it is possible within the big block of public expenditure in England—comprising the Department of the Environment, Transport and the Regions, the Department of Trade and Industry and several other blocks—to rob Peter to pay Paul. However, it is not possible to rob Eddie to pay George—as we now say—within the Welsh block because almost all areas of Wales that are not objective 1 designates are objective 2 or objective 5b areas and will continue to receive European assistance.
The European Commission will not allow the British Government to take funds away from areas with objective 2 entitlements—which is the next level down in European grant—and give them to objective 1 areas by switching around expenditure within the Welsh block. That will not be allowed because it will infringe the additionality rule. Europe will not allow the British Government to tell the Welsh Office now—or the Welsh Assembly in the future—"Take it from Cardiff, Newport, Powys, Wrexham, Deeside, and so on, and give it to the objective 1 areas", when the Government are also claiming that the eastern strip of Wales along the English border remains sufficiently lacking in prosperity to require a lower level of European assistance.
Wales does not have the flexibility of the English block to take money from wealthy areas—such as the home counties—in order to provide matching funding in Cornwall and south Yorkshire, for example. That is not possible in Wales because of our double poverty gap problem. In other words, the whole of Wales is 18 per cent. behind England and, within Wales, the areas that we hope will receive objective 1 funding are another 10 per cent. behind the Welsh average. Therefore, they are 28 per cent. behind the British average or standard of living evaluation in England.
We must somehow solve that problem during a critical period of constitutional change. The House of Commons was devised to debate and resolve that sort of difficulty. There will not necessarily be any answers today because we have a few months to go, but we need maximum clarification of that issue.
The Welsh economy is undergoing a serious period of change, so objective 1 funding is critical. There is nothing we can do using objective 1 funding that we cannot do under the programmes of assistance provided by the present designations of 2, 5b and 3. However, the objective 1 category offers more money and a higher maximum rate of grant and encourages long-term planning and projections because the funding is available for seven years. The maximum rate of grant is higher. However, the essence is the same as that of the programmes that have been running for the past 10 years.
We must get away from the classic methods of regional development that we have used since the days of the big pit closures in the 1960s and 1970s. The aim of objective 1 funding is not to provide additional sheds and roads or to give the building industry grants to construct large highways or extrude vast quantities of 25,000 sq ft advance factories all over Wales. We have too many factories lying empty. We must find a way to fill the factories that we have with activities, rather than build more. We live in a world of surplus in such facilities, and we must modernise our products, processes, management

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and skills, improve training and upgrade apprenticeships. We must increase research and development and seed capital and widen access to venture capital.
Objective 1 funding is oriented towards those aims rather than providing static factors such as bricks and mortar and highways. It is concerned with how to make the economy more dynamic by improving access and the part of the infrastructure that will lead to faster economic growth.
We shall need that growth, because recent closures have revealed that this winter has been a difficult period for the Welsh economy. The closure of Lucas-SEI in Ystradgynlais in the constituency of the hon. Member for Brecon and Radnorshire (Mr. Livsey) is a symptom of a widespread malaise in the Welsh economy of dependence on the middle level of technology in electronic assembly or automotive components which is coming under huge pressure from the shift towards eastern Europe. Factory facilities such as the Lucas-SEI plant in Ystradgynlais can be shipped to Poland where the workers are paid wages that are, perhaps, one sixth of the prevailing rates in Wales.
American factories have faced similar problems since the signing of the North American Free Trade Agreement, because wage rates in Mexico and north America have roughly the same relationship as wages in eastern Europe do to those in western European areas such as Wales. Low to intermediate technology assembly line skills are gained with tremendous speed, and for the past 20 to 30 years, through no fault of our own, Wales has specialised in those skills and in automotive and electronic components, without housing the headquarters of the firms that are using design skills to upgrade and plan the next generation of products.
We have been developing the assembly line skills that are now at risk because the pound is relatively high and the next wave of European Union expansion points eastward to low labour cost countries. That sector will be under huge pressure unless, for any reason, the pound comes down sharply.
New and exciting economic prospects are opening up in sectors in which it is very difficult for us to compete, such as software and the globalised market for what are known as traded services. Those arise from huge mergers between, for example, merchant banks, which suddenly want 150,000 sq ft office blocks so that they can house their whole human resources department, finance office or back-office operation in one city. At the moment, for various reasons, Welsh cities are not seen to be as exciting as Dublin, Edinburgh or Barcelona, and we cannot therefore compete in the globalised traded services office market.
We are losing out in manufacturing and we are not at present in a position to gain in other sectors because we do not have the necessary software skills. The Republic of Ireland targeted software 10 years ago. It trained people in those skills and then succeeded in attracting inward investment. I am not saying that Wales should target software—we could target something else—but Ireland demonstrated what could be done with objective 1 funding, and that is one reason why its gross domestic product has overtaken that of Wales and, on some measures, that of Great Britain. I hope that, with the Assembly, Wales will be able to do the same.
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I am looking forward to finding out how we can creatively use objective 1 funding to provide a more secure future for everyone in Ystradgynlais and other communities throughout Wales where there are job losses in intermediate technology.
3.4 pm
Sir Raymond Powell: I want to put it on record that in the election of the Secretary of State for Wales last Saturday, the Labour party conducted itself fairly, and both candidates should be congratulated on their conduct during the whole campaign. It was an historic election because the winner will be the principal person in Wales with great responsibilities.
I worked with my right hon. Friend the Secretary of State when we were in the Whips Office and when he was a shadow Welsh Minister. I know from personal experience that he has great talent and ability and that he is definitely a workaholic. When he came into the Whips Office he always had a bundle of papers under his arm. I have seen many hon. Members with such bundles and I always wondered whether they were for show or whether they actually read the documents, so I brought a bundle of papers to the Chamber today to try to impress people that I, too, read.
This week, hon. Members from all parties who represent Wales have had the gigantic task of reading documents and attending Committee sittings to consider statutory instruments dealing with the disqualification of Members. That needs to be carefully considered because Lords will be allowed to stand for election in Wales, even though they cannot stand for election to this place. Members leave this place to go to the other place and now we are affording Lords the opportunity to stand for election to the Welsh Assembly.
Mr. Evans: I find the hon. Gentleman's point inconsistent, and it is the second time that he has argued it this week. Why should Members of the House of Commons be able to stand for election to the Welsh Assembly and retain their seats here, while he would deny that chance to Members of the House of Lords?
Sir Raymond Powell: To be frank, I entirely agree with the hon. Gentleman because of the responsibilities that will be involved. Only yesterday, when we were discussing in Committee the functions that we shall hand over to the Assembly, it was pointed out that Members of Parliament will have enough work to do here without going to the Assembly.
Mr. Llwyd: One of the main criticisms of the other place is that it is undemocratic because its Members do not stand for election. Surely it is welcome that they will now be able to put their head above the parapet and stand for election somewhere else.
Sir Raymond Powell: Yes, but they will be standing for election to a Welsh Assembly, and the number of Lords left without a seat when we disqualify them within the next couple of months will mean that hundreds of Lords might go to Wales, looking for seats in the 60-seat Assembly. That is my great objection.
I have another objection. Roaming around Wales, we hear whispers from many members of all parties, and I have been given to understand that a prominent Welsh

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nationalist who is a Member of the House of Lords has already been promised a place as the president of the Assembly—the Presiding Officer. I do not know by whom because no one has been elected in Wales yet. If that is true, a Lord will not only be elected to the Assembly, but will be the Presiding Officer of an Assembly controlled, in all probability, by the Labour party. There would be something wrong if we allowed that to happen. I hope that people are listening to the party in Wales and to the debate today and have realised that we should not tolerate such a situation in Wales.
Mr. Llwyd: I am grateful to the hon. Gentleman for generously giving way a second time. He may correct me if I am wrong, but I understood from the Standing Orders for the Welsh Assembly that the Speaker or the Presiding Officer—whatever that person is called—must come from the majority opposition party. If that is the case, what is the hon. Gentleman's worry?
Sir Raymond Powell: Let us wait and see what happens. I would not want the Welsh Assembly to have a Presiding Officer who did not enjoy the support of all Members. I would not want that for the Welsh Assembly or for Parliament.
I am speaking of my concerns on Welsh day, and I suppose that you would share some of them, Mr. Deputy Speaker, if we were speaking of Scotland. When we debated the Government of Wales Bill and also the Scotland Bill, I noticed that one hon. Member sat in the Chamber on his cushion through all the debates, taking note of every word that was uttered by every hon. Member. He wrote an article recently about what will be left for Scottish and Welsh Members of Parliament to debate. That is a question that we should consider.
My hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) sat on the Committee yesterday that dealt with 506 pages of concessions, options and responsibilities that are to be given to the Welsh Assembly. Other hon. Members and I sat on another Committee on Tuesday which made representation of the people in Wales different from the election of parliamentary candidates.
That brings me to an important matter that affects my constituency and that of my hon. Friend the Member for Bridgend (Mr. Griffiths). The document that we debated on Tuesday dealt, among other things, with polling stations. We accepted the proposal that all constituency polling stations that were used during parliamentary elections should be used for the election of Welsh Assembly Members and councillors.
In the Bridgend county borough council area, a number of polling stations are to be closed to save the funding that would be necessary to keep them open. I protested on Tuesday and received an assurance from the Secretary of State that he would take up the matter. I understand that in today's press the closure of the polling stations is announced.
The existing six polling stations in the area are to be reduced to one. That will cause considerable difficulty for many of our electors in an area such as Nantymoel in the Ogmore valley, which is very hilly. The majority of people living there are elderly and cannot climb the hills. It is time that we understood that polling stations—such as the ones in which we were elected to Parliament—are
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usually sited near homes in order to get the electorate interested enough to vote. That will be even more crucial on 5 May—
Mr. Win Griffiths: On 6 May.
Sir Raymond Powell: I am glad that my hon. Friend corrected me—I would not want voters to turn up on the wrong day. In the elections on 6 May, people will be voting not only for Members of the Welsh Assembly—that will be an historic election throughout Wales—but for local councillors. However, councillors have decided to reduce the number of polling stations. Perhaps they do not want people to vote for them, but I am sure that candidates for the Welsh Assembly, who have worked hard to be selected, would expect all the polling stations to be open.
A few weeks later, some time in June—I do not remember the exact date—there will be European elections and community council elections. The Ogmore constituency has within it 22 community councils, each with a mayor and councillors, so those elections are important to the local community. That is why the council should take the decision to allow all the polling stations to remain open.
Another domestic issue that is causing concern in my constituency is the campaign that has been waged for years for the reopening of a station at Llanharan. That would serve the population of Bryna, Llanharan, Llanharry and an extensive surrounding area. The weight of public opinion and the thousands of signatures in support of the campaign that have been sent to British Rail, and which I shall pass on to the Secretary of State, should persuade him to support the moves to have the station reopened.
I do not want to take up too much time and prevent my hon. Friends from speaking in the debate. When I listened to my right hon. Friend the Secretary of State for Wales speaking today, I realised that there is compassion in him. That was evident when he became justifiably annoyed by the remarks of the right hon. Member for Caernarfon (Mr. Wigley). My right hon. Friend spoke about the suffering of the families of people—male and female members of society—who are unemployed, and the problems that they face when they lose their jobs. I recall the difficulties that we have experienced in the Ogmore constituency since 1979. For instance, all our mines were closed when the Thatcher Government started closing all the mines and demanning the steel industry. Ten thousand workers were deprived of their jobs at the Margam steel works, and 8,000 miners lost their jobs. In the Ogmore constituency alone, 20,000 people were made unemployed in four years. Such people could not secure new jobs even in 10 years; but we endured 18 years of Tory government. We have suffered ever since, and we have not yet recovered.
Is it any wonder that people such as my right hon. Friend the Secretary of State, and other Labour Members, are now eager to implement the policies that they promised the electorate that they would implement? I do not want to go into the details of what we have achieved during the time—nearly two years—during which Labour has been in government, because my hon. Friend the Member for Islwyn (Mr. Touhig) has already done so. I listened carefully to his speech, to that of my right hon.

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Friend the Secretary of State and to other speeches that have been made today, all of which referred to what we have already achieved.
Not enough has been achieved, however, and not enough will have been achieved until everyone has a job and my constituents have no problems in obtaining jobs. My right hon. Friend the Secretary of State should consider renewing schemes that were introduced years ago, before the invention of training and enterprise councils. TECs seem to restrict what we can do to encourage new employment.
In Ogmore and Bridgend we had a take-up scheme, which worked differently from TECs. It was a wide and varied scheme, creating 650 training places for adults and 250 places for young people. After two years in training, 95 per cent. of young people were given jobs. Why? Because of the diversity of jobs provided by the scheme. It was described as a community enterprise scheme, and it is time that the Government readopted it. Perhaps my hon. Friend the Minister will consider that. The scheme was well known in Wales and well known to the Government, and at the time it proved so successful that the Government decided that they must change it. As a result, Ogmore lost 650 adult places and 250 places for young people.
Even at this late stage, we should reconsider implementing the Government of Wales Act 1998. We have gone through the procedures determining whom we should disbar, and other procedures determining what functions are to be devolved. Most hon. Members will remember the local government reorganisation that took place in 1974, as a result of which representatives were elected as shadow representatives for 12 months. Five local authorities in Bridgend were merged into one, Ogwr borough council, and it was essential for their councillors to be in at least a shadow position for 12 months.
During the last few years, we have experienced a different kind of local government reorganisation, and unitary authorities have been established. The same has applied: councillors have been in a shadow position for 12 months. How on earth can we expect Assembly Members to take over all the responsibilities that the Government of Wales Act confers on them, and to implement those responsibilities overnight? The election is on 6 May and they have until June to start working legally as an Assembly. That is unfair and unjust.
Mr. Win Griffiths: I understand what my hon. Friend is saying, but I think that there is a difference between local government reorganisation and the creation of the Welsh Assembly. Local government reorganisation involves the merging of four or five administrations, but the overall administration will be the same, and, as we know from all the work that was done on the Government of Wales Act, they have done a superb job for us. Given the quality of the Labour candidates—members of my hon. Friend's family, for instance— I have every confidence in their ability to assist in the creation of the Assembly.
Sir Raymond Powell: As one who had close connections on the Front Bench, was well acquainted with the Act and made a great contribution to it, my hon.
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Friend would know far better than I whether the newly elected Members will be in a position to serve. One person who will be a great asset, and will probably not have to wait for 12 months, is Janet Gregory—my daughter. She is absolutely marvellous. Of course, I could not have said anything different. She was bound to follow her father, although she has not listened to him since the day when she was born. I hope that she will be elected; she has a very good name.
I must now conclude my speech. Another intervention and another drop of that orange squash, and I will be off. I do not know whether anyone put gin in it! In any event, I am grateful for the opportunity to speak on an historic occasion. I hope that although by this time next year we shall have a Welsh Assembly, we shall continue to have Welsh debates in the House of Commons.
3.28 pm
Mr. Denzil Davies: I am sure that my hon. Friend the Member for Ogmore (Sir R. Powell) will have many more opportunities to regale us and interest us, even after devolution. I do not know whether this will be the last Welsh day debate, but, in any event, the House of Commons will still be the final arbiter—the final fund, as it were—in regard to money for the Welsh Assembly. It will also determine the level of public expenditure for areas outside the remit of the Assembly. I believe that all parties in the House have agreed to that system of financing, which will be annual. The Treasury will negotiate, following which—in theory at least—the estimates will have to be dealt with by the House.
Presumably, that could have been arranged differently. There could have been a charge on the Consolidated Fund, along the lines of—I hate to say this—the system of contributions to the European Union, which do not have to be dealt with by the House. Similarly, judges' wages need not be dealt with by the House: their salaries are not cut, for reasons that are fairly obvious in the administration of justice.
We could have chosen a different system; but all parties agreed that there should be an annual system, so we must not complain about the fact that it must come back to the Treasury and, indeed, the House, and that the House must debate it in some form or other.
Sadly, we are again debating Welsh affairs when the Welsh economy is not in very good shape, which is a source of great concern to us all. I have been a Member of the House for a long time and I am not talking my own country down. Every year for the past 18 years—although I do not think it was the case in 1979—Wales has been the poorest country, region or area in Britain and its level of gross domestic product is fairly close to that of Northern Ireland. That is not something to be happy about, but it is the reality that we face.
I represent a constituency where almost 30 per cent. of the employed work force still works in production and manufacturing. Manufacturing industry is under pressure because of the global economic situation and global deflation. It is also under pressure, I am sorry to say, because the Bank of England put interest rates up when it did not need to do so. At that time, of course, the Bank of England thought it was living in a world of inflation, and central bankers take a long time to change their orthodoxy.
I am not sure whether the central bankers have changed that orthodoxy, but we are living in a world of deflation. My right hon. Friend the Secretary of State said that one

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of the virtues of the present Government's tenure is that long-term interest rates are at their lowest for 40 years. That is a mixed blessing. Japanese interest rates are at their lowest for 40 years as well, but that is a consequence of deflation, and that is also the case in this country. If prices are falling, which they are not yet, interest rates fall, too, but one should not necessarily welcome that. We are living in a world of deflation and, as my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) said, that is having an effect on manufacturing industry in particular, which seems to have far less ability to increase prices than service industries.
We have talked about devolution and the Welsh Assembly. One consequence of devolution is greater transparency in respect of the amount of money and public expenditure that goes to the devolved areas and the amount of taxation and public money that is produced by those areas. Years ago, the Treasury would set its face against producing budgets for various regions and countries in the United Kingdom. It would argue that the United Kingdom was a unified state—a single market, to use the language of Brussels—with a single currency, no trade barriers and complete freedom of movement of capital and labour: the ultimate in political, economic and monetary union.
Quite apart from the difficulty of doing so, the Treasury would say, "Why do we need to produce budgets for Wales, the north-west of England and Scotland, because we are living in a unified economic and monetary state?" There was also the difficulty of finding the figures. All that has changed because of the political pressures of the past 20 or 30 years and through the use of computers, which can store so much more information. We are now in a position to produce devolved budgets, or budgets for devolved areas, showing the amount of money that goes into the area and the amount produced by it. That transparency will become more and more relevant as the budget of the Welsh Assembly and of Wales has to be considered.
The figures show that the position of Wales is not good and we should not go into the Welsh Assembly with some starry-eyed idea of the prosperity of the Welsh economy. Figures for Government expenditure—not only that of the Welsh Office, but of other Departments—and for the tax base in Wales from the past few years show a massive fiscal deficit, and we might as well face that.
The fiscal deficit is probably about £5 billion or £6 billion. One could argue a little about the figure, and it is never possible to be completely precise, but let us round it down to £5 billion. About £10 billion or £11 billion is raised in taxation, and there is about £16 billion of public expenditure, including the £7 billion that will go to the Welsh Assembly. That is the order of the deficit that has to be financed.
Let us be clear about the fact that that £5 billion comes from the United Kingdom—the London Government, or the dreaded British state, as some people call it. We can call it what we may, but that money comes from the centre—the dreaded Treasury, which, apparently, will not give us any additionality money on top of the £5 billion.
The £5 billion can be broken down into regional budgets, but it does not come from Scotland, I am sorry to say. It does not come from Northern Ireland. I do not know how much of it comes from the north of England. It must come from the more prosperous areas of England.
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The English will be providing the £5 billion that is necessary to fund the Welsh economy. They are doing so now, and have been for the past few years. There is nothing wrong with that in a unified state, but we must be clear about where the money is coming from. It probably comes from the home counties.
Mr. Hain: Does my right hon. Friend agree that that is one reason why the economics of separatism, which are pursued by the nationalists, are pure fantasy?
Mr. Davies: That is what I am trying to say, in my less dramatic way. They are, indeed, pure fantasy, because Wales could not possibly sustain a borrowing requirement of £5 billion: it could not possibly borrow that kind of money. We would either have to raise taxation—which we could not do, because we do not have the tax base—or cut public expenditure. Without that £5 billion, the Welsh economy, certainly in terms of public expenditure, would lie somewhere around the level of Slovakia, or one of the other countries that have left the Soviet empire. That is the reality, and it is better for the Welsh Assembly to face it.
Dr. Fox: The right hon. Gentleman is arguing that the taxes that finance the block are levied across the United Kingdom as a whole and under policies set by this House. Does he therefore agree that it is logical to retain in this House a mechanism for scrutinising how that money is spent?
Mr. Davies: Logical or not, such a mechanism will be retained. That is the reality of devolution. These days, we are apparently all in favour of transparency, which is the vogue word. There will be transparency. When my right hon. Friend the Secretary of State negotiates with the dreaded Treasury, the figures will be on the table and will show quite clearly the payment of £5 billion a year, which comes from the Exchequer to the Welsh economy.
Some people in Wales—certainly among the chattering classes—believe that there is an escape from all that reality in Europe. I do not want to discuss Europe in the way that it has been discussed in some interventions, except to say that those people seem to think that Europe can provide a substitute for the £5 billion, which the English are providing for the Welsh economy.
I predict that one of the first acts of the Welsh Assembly will be to acquire expensive premises in the rue de la Loi, not too far from the Charlemagne building—although its name may have been changed since asbestos was found in it. The hon. Member for Brecon and Radnorshire (Mr. Livsey) will know it well, because he spent some time in Brussels. Expensive premises, flying the red dragon banner, will be acquired. People will get on the Brussels cocktail circuit and acquire influence, and perhaps other things as well, in the process.
We have heard about the Institute of Economic Affairs and we have heard about Professor Kevin Morgan and such people. They are also financed by the English money that comes in. No doubt there will be an attempt to escape into Europe, but there is no escape in Europe from the position of the Welsh economy.
I return to the £5 billion deficit and take my cue from the references to the single currency. If the budget deficit was related to GDP—which is about £30 billion, or

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perhaps more in the past year—Wales could never qualify for the single currency. With a £5 billion deficit and a GDP of £30 billion, Wales has a budget deficit of more than 15 per cent., so it does not meet the criteria set out in the Maastricht treaty. Even if we round the figure down to 15 per cent., we have to remember that Greece has a deficit of 8 per cent. and cannot get into the single currency. On that score alone, there is no escape in Europe from the reality of Wales being part of the United Kingdom.
We have rightly talked a lot about objective 1 status. It is not easy to find out how much money comes to Wales from the various European funds. I have excluded from my estimates any payments under the common agricultural policy, because I cannot work that figure out. I have also excluded any notional expenditure that Wales makes into Europe, because Britain is a net contributor. Perhaps they balance each other out—I hope so.
I estimate that, over the past five years, Wales has received about £300 million a year from European Union structural funds—under objectives 2 and 5b—and Community funds such as RECHAR and various other odds and ends. That is a lot of money, but set against the £5 billion a year that comes from the British Union it is a mere drop in the ocean.
If the assorted ranks of Plaid Cymru had all been present for the debate, rather than just the reasonable hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd), they would no doubt have jumped up and shouted at me about the cohesion fund. The Republic of Ireland receives payments from the cohesion fund because its GDP is lower than that of the United Kingdom. As Wales is not treated as a separate nation state in the Council of Ministers, we do not receive such funds. However, let us add the cohesion funds, which would be about the same as Ireland receives—
Mr. Rowlands: They have been abolished.
Mr. Davies: I do not know whether they have been abolished—I think the Spaniards would have something to say about that—but I am talking about the past five years. Perhaps they will be abolished. If we had qualified for cohesion funds in the past five years, we would have received £150 million—this time I have rounded the figure up. However, we would have lost the £5 billion. We do not receive the cohesion funds because we are a member of the British Union, whose GDP is too high. Leaving that aside, let us add the £150 million of cohesion funds.
We have been told that the next six years will be bonanza years, because there will be objective 1 money. I hope so. I have heard the figure of £2 billion, but I do not know whether that will survive the meetings in Berlin this weekend—let us hope that it does. If my mathematics are not too bad, that comes to £330 million a year over the next six years. What would happen to objective 2 and 5b assistance if we received objective 1 money? I have no idea, but presumably it would be slightly less. If it were halved, and we received £2 billion-worth of objective 1 assistance plus a little objective 2 money, we would get £500 million over the next six years. [Interruption.] The hon. Member for Brecon and
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Radnorshire (Mr. Livsey) seems to be nodding. He understands these matters, because he goes to Brussels and talks to people.
Mr. Livsey: Occasionally.
Mr. Davies: Not too often, I hope.
Plaid Cymru wants to trade in the British Union and get the European Union—
Mr. Llwyd: Will the right hon. Gentleman give way?
Mr. Davies: I have at last managed to provoke the hon. Gentleman to intervene.
Mr. Llwyd: I have not intervened before, because quite frankly this is fag packet economics. I can think of several amounts that the right hon. Gentleman could take into account. For example, every large company operating in Wales pays tax outside Wales. That is a huge figure, and there are many such others. I should be delighted to argue these points with him at another time, but at the moment he is, with respect, talking fag packet, unrealistic rubbish.
Mr. Davies: I am glad that I managed to provoke the hon. Gentleman. I was hoping that the right hon. Member for Caernarfon (Mr. Wigley) would be here, because he would have got on his feet much sooner. Over the years, the nationalists have tried to knock these figures down—there have been various articles in the Western Mail and other worthy publications—but they have never managed to do so. It is quite simple: if Wales has the lowest income per head in the United Kingdom, obviously expenditure must be greater than the tax raised. The nationalists used to talk about defence expenditure, but they have gone off that now.
Mr. Llwyd: That is a good point.
Mr. Davies: Indeed. I am surprised that the hon. Gentleman did not mention defence expenditure.
That is the position we are in, and £500 million against £5 billion is a small sum.
I have always thought that Welsh day debates, the Welsh Office, which was established in 1964, and now the Welsh Assembly, were introduced to preserve Welsh identity. There is also the democratic element, and the notion that the Welsh Office can runs things better than the Department of Trade and Industry or the Home Office. However, underlying all that is the need for institutions in Wales to preserve national identity—I think that is the vogue word. They are required even more now because we live in a world of global capitalism and global economics, in which the driving force of economics breaks down loyalties in communities, between individuals and between nation states.
The Welsh Assembly will exist partly to preserve Wales's national identity. I hope that it does not become a national whingeing Assembly where we are always attacking the Treasury, the London Government and the British state, and where we whinge about what more we should get, such as increased powers of taxation when there is no tax base. I hope that it does not become a place where we talk about devolution being a process and not an event, and about wanting more powers.

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If we go down that road, we shall not be able fully to utilise the Assembly as a bulwark of the Welsh national identity and to improve Welsh democracy and the Welsh economy. We will be able to do that only if we recognise the realities of Wales's parlous economic condition.
3.47 pm
Mr. Desmond Swayne: I apologised to Madam Speaker earlier, and I now apologise to the House, for not having been present at the opening of the debate. My plans were made before we adopted the extraordinary arrangements for Thursdays in this part-time Parliament. The Speaker is well aware of my views on that, and I have been ruled out of order more than once for having drawn attention to them, so I shall not go down that road again today.
Several Labour Members have referred to the parlous state of the Welsh economy—or at least to the relatively less-well-off state of its economy. I want to draw attention to the regional trends survey published by the Confederation of British Industry on 9 February, which states:
"General business optimism has declined more rapidly in Wales than anywhere else in the United Kingdom … Output has fallen markedly, with similar falls expected in the next four months, in addition to 1,000 further job cuts forecast between the final quarter of last year and the first quarter of 1999."
Mr. Win Griffiths: I appreciate that the hon. Gentleman's previous arrangements prevented him from being present for the opening speeches, but surely, at the very least, communications within his party should have enabled him to check with the shadow Minister with responsibility for constitutional affairs, because that report was mentioned at length in the opening speech from your side of the House. It is old news, and we have heard it before. It would have been much better for you to address your constituents elsewhere.
Mr. Deputy Speaker (Mr. Michael Lord): Order. They are not my constituents and it is not my side of the House.
Mr. Swayne: The hon. Member for Bridgend (Mr. Griffiths)—from the party of spin—will know that these messages bear repetition. Indeed, the more they are repeated, the more likely it is that the message will be received and recorded.
There has been a significant rise in the rate of home repossessions because of unpaid mortgage repayments—an increase of 1,000 last year. In addition to the problems in the Welsh economy, there are problems for the agricultural sector. The problems of Welsh agriculture are not new. In recent years, as a result of those problems, my family withdrew from farming at Whitland on the border between Carmarthenshire and Pembrokeshire to farm in New South Wales. Although the problems have been compounding for years, it is now true that farmers in Wales have never been poorer, and they face new problems. We know that the arrangements under discussion for reform of the common agricultural policy will pose new challenges and problems to Welsh agriculture.
I wonder whether Ministers and hon. Members recognise the potential problems facing agriculture as a consequence of the increase in charges to be levied by the
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meat hygiene service, and the potential devastation that that may do to many livestock markets. There are huge challenges for agriculture and industry in Wales.
The right hon. Member for Llanelli (Mr. Davies) referred to the fiscal deficit; the huge challenge facing the Welsh economy in the coming years will compound that fiscal deficit. The single European currency was mentioned by the right hon. Gentleman. The problem that the Welsh economy will face is that it runs counter-cyclical to the average European economy. Its peaks and troughs are at a different time from the average European cycle.
The European central bank is insulated from any lobbying by the regions of Europe that will be adversely affected by its interest rate policy. Indeed, Governments that make representations will stand to be fined under the existing treaty structure. Counter-cyclical economies, such as that of Wales, will find that their fiscal deficits will be exaggerated. In times of inflation, the rate of inflation in Wales will be exaggerated, and at times of unemployment, its unemployment rate will be exaggerated by the interest rate policy pursued on behalf of the European norm.
It was instructive that the right hon. Member for Llanelli drew attention to fiscal deficits, which are seen as a way around the differential effects on regions which suffer disadvantages, as Wales would. There would be an expectation that the fiscal deficit would grow, and be required to grow, so that Wales could be compensated for the adverse interest rate policy by receiving a much larger fiscal inflow from the rest of the EU.
The problem is that the arrangements to do that are not in place in Europe, as they are in the United States. A state in the United States suffering adversely as a consequence of the policies of the Federal Reserve—for example, running a recession when the rest of the economy was in boom—would expect to receive a considerable increase in federal funding to ameliorate the effects. That is not in place in terms of any single currency that we might enter. Therefore, the full brunt of the adverse consequences of the interest rate policy will be felt in terms of unemployment in Wales.
That is a challenge with which the leadership in Wales and Welsh Members of Parliament must come to terms, and about which they must make representations to the Government. Given the Government's ability to take representations from this House, I suspect that the best way of getting through to Alastair Campbell might be to ring The Sun poll on the issue. They can do so by dialling 0660 100 721.
Mr. Win Griffiths: All the hon. Gentleman has said so far is purely speculative—it is right out of the Brothers Grimm. By quoting The Sun, he merely strengthens the view that he is producing one long fairy tale for Wales.
Mr. Swayne: I am surprised to hear The Sun treated with contempt by Labour Members, who have placed such faith in its strictures in the past. However, that advance from them is welcome. It is wise to speculate on these matters. There is that branch of Christian ethics which takes literally the Lord's command to consider only the troubles that are sufficient for each day, but it behoves us, as politicians, to consider the consequences of the policies announced this week.

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The challenges posed by the state of the economy in Wales must be set against the expectations created by Labour during the general election campaign and the pledges that Labour made on a series of problems. On transport, it was expected that there would be a significant improvement in Wales. We must set the White Paper, "Driving Wales Forward" against the reality.
Yesterday, as I came to the House, a bus from Pontypridd was unloading lobbyists on behalf of British truckers, who were complaining about the fact that, in Wales, filling a 220-gallon heavy goods vehicle tank costs £200 more than on the continent of Europe. That disadvantage must be set against the high-sounding phrases from "Driving Wales Forward" which, in some respects, might drive Wales to a standstill.
I wish to refer to the A5; a road with which, as a former schoolmaster in north Shropshire, I am familiar. As a consequence of the White Paper, we have seen the abandonment of the Bethesda bypass, the Corwen bypass, Halfway bridge and Pont Padog.
Mr. Llwyd: I know that the hon. Gentleman is no expert on Welsh affairs, but Pont Padog is in my constituency and is being done now.
Mr. Swayne: I stand corrected. In south Wales, with respect to the A470—again, a road I know well, having contested Pontypridd in 1987—and the A479 at Talgarth, there has been a considerable scaling down of projects.
On education, there have been some modest increases in the amount of money available. However, while the headline figures sound higher, the actual amount that local education authorities will spend is more modest. That must be set against the vast increase in the bureaucratic intrusion in schools—a mistake started, and now thankfully admitted, by the Conservative party. However, that is compounded by the Government's arrangements.
I quote as an example literacy hour. Everyone approves of literacy hour. It is a good thing, but the way in which it has been imposed, and the strictures and requirements that arise from it, mean that it will inevitably affect other parts of the school day. It becomes less attractive when one learns that the visit by the parish priest or vicar to a school has been curtailed or excluded as a consequence of literacy hour.
Mr. Hain: Could the hon. Gentleman explain how he thinks the literacy hour is being applied in Wales?
Mr. Swayne: The literacy hour, imposed or required in schools, has in some cases—I am aware of one—led to the ending of the vicar's visit to a school.
Mr. Hain: If the hon. Gentleman knew anything about education in Wales, he would know that we have not imposed a literacy hour on schools in Wales.
Mr. Swayne: The effect of Government policy with respect to the literacy hour has led to those consequential changes. If that is an acceptable form of words to the
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Minister, I will be satisfied, but that must be seen against the failure, or—what is the word?—the sluggishness in delivering on class sizes.
Mr. Win Griffiths: While the hon. Gentleman was searching for the word, I thought that I might ask him to let us know whether that vicar was unable to go to a school in Wales, or in England.
Mr. Swayne: It is my son's school. He came home and told me that the vicar was excluded. I do not see that there is any difference in principle between a literacy hour in rural England and one in Wales, but, irrespective of that, what we have not seen is the reduction in class sizes that was promised.
I have always regarded the fixation with class sizes as misplaced on the ground that the relationship between class sizes and standards has always been somewhat tenuous. However, the problems will come home to roost when schools at the margin—small rural schools—find that, as a result of having to comply with the requirement to keep classes below 30, they have to acquire an extra member of staff, which will make those schools economically unviable. Pressure will then be mounted by education authorities to close the schools. I strongly suspect that parents who might have wanted class sizes below 30 and who have to make a choice between schools with classes in excess of 30 that were nevertheless local to them, and having no school at all, will choose the former rather than the latter.
Some 233 fundholding practices exist in Wales, accounting for almost 1,000 general practitioners. Those practices treat more than half the Welsh population—some 57 per cent. There is a marked lack of enthusiasm among GPs for the new collective arrangements. Of course, the governing party has made it clear that that was part of its programme and it has a mandate to do that, but it also has a mandate—it sold its policy on health with this commitment—to reduce waiting lists. There has not yet been the decline in waiting lists that we could have duly anticipated, given the hype that the governing party attached to it.
The 1.7 per cent. increase in the allocation for police forces for 1999–2000 should be set against the 2.5 per cent. increase in England. It ill behoves the Government to trumpet their success in law and order when police forces in Wales are now marginally smaller than they were when the Government came to power.
I have drawn attention to several problems or challenges, depending on the way in which one looks at it, particularly in respect of economics. Those challenges will require clear and decisive political leadership. What confidence can we have that that political leadership will be in place?
Wales is to be subjected to a new and novel form of government. I chose my words carefully—I said, "subjected". Only a majority of less than 1 per cent.—0.6 per cent.—of the electorate in Wales voted for the changes. Indeed, less than a quarter of the Welsh population voted for the arrangements that were set out in the White Paper.
As a consequence, the Government, in humility, announced that they would be sensitive in the arrangements that were put in place. That pledge was made by the Prime Minister on the day after the

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referendum and repeated in some respects by the then Secretary of State for Wales, the right hon. Member for Caerphilly (Mr. Davies). He said:
"the referendum results showed a marked difference in views between both north Wales and south Wales and between east Wales and west Wales … I am conscious that we need to do a lot more work to bring Wales together. We must address genuine concerns and I acknowledge the fact that we must listen and continue to listen".—[Official Report, Welsh Grand Committee, 18 November 1997; c. 12.]
Some of us on the Conservative Benches have wondered throughout the process precisely what the sensitivity consists of. The arrangements that have been put in place strike me as somewhat insensitive.
The pledge in paragraph 3.33 of the White Paper—that Wales would remain an integral part of the United Kingdom—did not appear in the Government of Wales Bill, despite the fact that amendments were tabled so that it would. Now it is an Act, it contains no such provision, but what it does contain is the arrangement by which more power can be granted to the Assembly on the basis of statutory orders and a 90-minute debate in the House, with no provision by which powers can be restored and moved the other way. What we have is a ratchet effect by which the Assembly's powers might grow at the expense of the House. That does not strike me as representing the sensitivity that was required in respect of the referendum result.
We understand, and have understood for some months, that the Secretary of State for Wales is also to be the First Secretary of the Assembly—the emperor is also to be the consul. The character of that Assembly is still entirely opaque. The Government of Wales Act 1998 makes it clear that the Assembly might adopt a Cabinet system of government, but there is no requirement for it to do so, so Wales faces considerably uncertain times.
Given the demand for clear political leadership and vision, the most striking deficit in respect of the Welsh government arrangements is the voting system that has been put in place to supply Members of the Assembly. Voters will have two votes. The first will be cast in a first-past-the-post ballot, in the same way as votes are cast to elect Members of the House. In addition, voters will cast a second vote. The seats allocated on the basis of the second vote will be calculated by an extraordinary method.
For each electoral region, the number of votes cast for a particular party will be added up and divided by one more than the number of seats that that party has already won under the first-past-the-post arrangements in that electoral region. Explain that to the ordinary voter and try to persuade him of the connection between casting his vote and delivering a Member of Parliament from out of the sausage machine. I defy hon. Members to try fairly to explain such a system to ordinary voters. Confidence in the democratic system rests precisely on the ability to explain the operating electoral system.
Dr. Julian Lewis: If I understood my hon. Friend correctly, he was saying that the system will result also in two rather different types of Member of Parliament. Am I right in thinking that the effect of that
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will be that whereas some Members of Parliament will be accountable and responsible to their constituents, other Members of Parliament will lack that same type of link?
Mr. Swayne: My hon. Friend makes a very good point. It is unfortunate that Wales is to become something of a social experiment in those matters. We will have to wait to see how the system works. Currently, it is unclear.
The system is worse than I have described it, because of the way in which parties have gone about selecting their candidates for the second ballot. There is a perception—in these matters, perceptions are very important indeed—that there has been a stitch-up. The perception is compounded by the arrangements that the Labour party has made for the election of its own leadership candidate. It is a tribute to "people's democracies" that that election system should have been designed to deliver the desired result. The desired result was indeed delivered.
We shall have to await the outcome of the arrangements to discover whether they will provide the leadership and vision that is capable of delivering solutions to the problems that I mentioned earlier. I have grave doubts that they are so capable. I hope that I am wrong.
4.12 pm
Mr. Gareth Thomas: The debate has focused, quite understandably, on issues of the Welsh economy. I shall take a different course, however, and deal briefly with two matters. The first is our priceless national asset in Wales—the Welsh language and its future role, particularly in the National Assembly for Wales. Secondly, I shall deal briefly with some aspects of the constitutional future, and the relationship between the National Assembly and this place.
I should like first to say a few words about the economy in Wales. I agree entirely with my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) that the Assembly's priority has to be jobs, jobs and jobs. I agree entirely also with the Secretary of State that we have to combat social exclusion in Wales and improve the performance of the Welsh economy. There is an expectation that the European Union structural funds that we hope will be coming to Wales will be of assistance to us. I also believe that the Secretary of State's position on additionality is entirely understandable and realistic. It would be wrong to put the cart before the horse, or for the Treasury to make any firm commitments on additionality.
The economy is a very real issue in my constituency. We have grave concerns also because of job losses in the adjoining constituency of Conwy. The Minister will be aware that, yesterday, job losses were announced at Hotpoint, Llandudno Junction. I hope that the Secretary of State—when I meet him next Tuesday, with a delegation from Conwy—will be prepared to discuss the issue, and how we might mitigate the effects of those job losses, which are a blow to the local economy.
Today is very near to St. David's day. It is always appropriate that we should have pride in the Welsh language. The Welsh language belongs to all the people of Wales, regardless of whether they speak Welsh. I welcome the fact that the language is not the political football that it might have been many years ago. I believe that the Welsh Language Board has in the main done good work. I believe also that, although the language should

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not be a political issue, politicians—particularly politicians elected to the Assembly—should be prepared to ask sometimes awkward questions about how money is spent on policies designed to support the Welsh language.
I should like more money to be spent on community-related activity to foster the Welsh language at the grass roots level. I represent a constituency in which the Welsh language is spoken widely, by ordinary people. There is genuine popular demand for services in the Welsh language.
I am aware of one recent case in my constituency in which a Welsh-speaking family—ordinary, working-class people—wanted to send their child to a Welsh-medium school. She is suffering from a very serious hearing impediment, which means that she has special needs and at school will require intensive speech therapy. However, she may not be able to receive speech therapy in the Welsh language. Although the matter is being pursued through the normal channels, it supports my view that, although much progress has been made in improving the status of the Welsh language, much has still to be done. I am of course aware that we have to tread sensitively and practically.
I should like to make two specific points on the language issue as it will affect the National Assembly for Wales. Given the fragmented nature of the Welsh political identity, it is a major political achievement that we stand at the threshold of huge political changes in Wales. There is an expectation that the Assembly will improve Wales's economic performance, although we do not know how realistic is that expectation. There is an expectation also that it will improve the profile of Welsh culture and of the Welsh language.
I should be grateful if the Minister could reassure me on two points. If those who are able and willing to speak Welsh publicly in Assembly sessions are to have confidence in doing so, a good quality translation facility should be available. Assembly Members also should have confidence in the accuracy of translations. It may surprise hon. Members to learn that I have recently fallen foul of that expectation.
As right hon. and hon. Members will know, at the beginning of this week, the Welsh Grand Committee met in Aberaeron. I delivered a speech in Welsh, but was much surprised and frustrated, not to say rather annoyed, to learn that the translation that was provided for Hansard—this is not a criticism of Hansard, incidentally—was very inaccurate in many respects. The matter is being pursued through the Chairman of the Welsh Grand Committee. However, we must have confidence that we shall have a good-quality translation, or the Welsh language will not be used as much as it should be.
The proceedings of the National Assembly will be reported. There is perhaps a misunderstanding that the verbatim report, at least the one in Welsh, will not be available for some days after a speech has been delivered. Hon. Members have been lobbied on the issue, and I should be grateful if the Minister could clarify the precise position. I realise that there is a difference between
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preparing the final bound text and a draft of speeches, but, if Members are to use the Welsh language publicly, they should not have to do so under such a hindrance.
Mr. Evans: Does the hon. Gentleman agree that, with the use of new technology, there is absolutely no reason why transcripts could not be put on the internet within a matter of hours, rather than Members having to wait days for printed texts?
Mr. Thomas: I agree entirely. As I said, I should like some clarification from Ministers on the issue.
It will be interesting to see how a Welsh debate, such as this one, will be conducted in 10 or 20 years. We are in a time of great constitutional change, and it is not clear where it is taking us. I am rather sceptical about the idea of a Europe of the regions. There is considerable loyalty to the idea of the British state, even among those who strongly support the need to preserve Welsh political and cultural identity through the Assembly.
As my right hon. Friend the Member for Llanelli (Mr. Davies) said, we have to accept the fact that there are big fiscal transfers from England to Wales. However, we are in a time of change. The penny has not quite dropped in this place about the procedural consequences of devolution. I am not entirely confident that the Government have got it right on the role of oral questions to the Secretary of State for Wales or the Select Committee on Welsh Affairs. I hope that the Committee will continue in more or less its present form, taking a cross-cutting brief examining all aspects of primary legislation and policy that affect Wales.
My hon. Friend the Member for West Carmarthen and South Pembrokeshire (Mr. Ainger) and I recently had the privilege of attending various meetings with colleagues from Scotland, Northern Ireland and the Federal Republic of Germany at the invitation of the German Government.
Mr. Rowlands: I have never thought that the Welsh Affairs Committee did enough on the block grant. Should not that be one of the centrepieces of its future work?
Mr. Thomas: I am grateful to my hon. Friend for that remark. I entirely agree that that would be a worthwhile area of study.
The Germans are very interested in what is going on in the United Kingdom. I was told by a member of the German Foreign Ministry that devolution to Scotland, Wales and Northern Ireland would make us a more normal country in European terms. That is a telling remark. Our regime is over-centralised. I welcome the trend towards devolution. I do not share the scepticism of those who maintain that there is no demand for devolution in the English regions. That will come. Although our system of quasi-federalism is asymmetrical and will cause problems, there is no reason why we cannot have a more rational constitution. We need some joined-up thinking on the constitution as well as on social policy.
One of the apocryphal incidents ascribed to Dewi Sant, or St. David, our patron saint, is the time when the ground rose up beneath his feet when he was delivering a sermon somewhere in mid-Wales. That is a striking symbol that makes us think of raising awareness, raising standards and raising horizons. The Assembly has a crucial role in raising standards across Wales. As a patriotic Welshman,

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I regret to say that we are too often seen as a mediocre country in many respects. We need a crusade to raise standards across the board—in education, local government and all walks of life, including industry.
4.23 pm
Mr. Alan W. Williams: It is a pleasure to follow my hon. Friend the Member for Clwyd, West (Mr. Thomas). I agree with virtually everything that he said.
I hope that this annual debate continues after the establishment of the Assembly, because it gives us a free agenda to speak on any aspect of Welsh affairs, including constituency issues. I learn a lot every year from the contributions of my hon. Friends and, occasionally, from Opposition Members.
I should like to focus most of my remarks on constituency issues. There has been a generally gloomy feeling to the debate, with everyone describing the problems across Wales and in their areas. I shall start with the gloomiest aspect, but I hope that there will be some optimism in the second part of my speech.
The most difficult aspect of the Welsh economy is the crisis in agriculture. I do not know where its origins lie but, in the past year, farmers' incomes have dropped by about 40 per cent., having already suffered a 40 per cent. drop the previous year. There is deep despondency about the future.
I keep reassuring farmers that things will get better and that next year cannot be as bad as last year. One of the problems was that prices in September and October fell catastrophically. The problems in Russia and south-east Asia and the high pound may have been contributory factors, but the catastrophic drop has not been properly explained. During the past year, interest rates have fallen from 7.5 to 5.5 per cent. I am confident that, over the next three or four years, they will drop to 5, 4 or 3 per cent., and below, as we prepare to join the European single currency. With that will come a fall in the value of the pound, which will help to restore competitiveness, putting up the price of imported goods, enhancing our exports and creating more demand for agricultural products.
The other element of despondency in agriculture relates to the negotiations in Brussels on reform of the common agricultural policy. I have felt for 20 years and more that the CAP drastically needs reform. It does not deliver what it was constructed for. It is a wasteful policy, because three quarters of the resources go to the richest 25 per cent. of farmers. Rather than supporting small, poor farmers, it gives million-pound subsidies to millionaire farmers—the barley barons and others. I hope that the discussions in Brussels result in a fairer and better-targeted CAP, moving away from production support towards the environment, thereby moving away from supporting rich farmers to supporting small farmers. There is deep anxiety throughout rural communities about the results of the negotiations, which we await over the next few days.
I am pleased with the progress being made on unemployment. I see the hon. Member for Brecon and Radnorshire (Mr. Livsey) in his place. I am aware of the severe blow in Ystradgynlais, where 700 jobs will go because of the Lucas closure. There are odd black spots, but unemployment in Britain has dropped by 40 per cent. in the past two years. In my constituency, there were
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1,855 people out of work in December 1996 and 1,224 in December 1998. That is a one third reduction. We are making excellent progress on reducing unemployment. The useful research papers produced every month by the Library on unemployment in individual constituencies show that my constituency has the sixth lowest level of unemployment in south Wales and the lowest in south-west Wales. The figure is currently 4.3 per cent. I am reassured by the fact that it is half what it was 10 years ago, so we are making outstanding progress.
As my hon. Friend the Member for Islwyn (Mr. Touhig) said, thanks to the new deal, youth unemployment has halved and long-term unemployment has fallen by 57 per cent., so we are tackling unemployment head on.
The biggest problem in my area is low pay, something that is endemic in the Welsh economy, particularly in west Wales and Gwynedd, which have very low per capita incomes. The income per capita in Wales is 83 per cent. of that in Britain, but in west Wales and the valleys it is only 71 per cent. of that in Britain. That is partly due to low pay. The Government's legislation on the minimum wage, which will take effect in April, will provide a massive boost for my constituents as 15 per cent. of employees in Carmarthen, East and Dinefwr earn less than £3.50 an hour. The minimum wage of £3.60 an hour for people over 25 will directly benefit more than 3,000 people in my constituency—the poorest people in work. It will also provide a foundation for other wages. It is a wonderful, socially progressive measure providing for the redistribution of income and it will be a great monument to our Labour Government.
The other major topic of today's debate is objective 1 funding, which has been mentioned by many hon. Members. Objective 1 funding, if it is achieved, will provide a one-off opportunity, but for only six years. As my hon. Friend the Member for Cardiff, West (Mr. Morgan) said, it is sad that Wales is in a deep depression and that our income per capita is so low that we need to apply for objective 1 status. However, it will provide a once-in-a-generation opportunity to pull out of the bottom league, stop being the poorest region in Britain and start motoring ahead.
I should like to pay tribute to my right hon. Friend the Member for Caerphilly (Mr. Davies), the previous Secretary of State, and to the Under-Secretary, my hon. Friend the Member for Neath (Mr. Hain), who is not in his place. I should also mention my hon. Friend the Member for Bridgend (Mr. Griffiths). During the past 12 to 18 months, the Front-Bench team has done a great deal of hard work putting together the statistics and presenting the case, not ranting passionately like the right hon. Member for Caernarfon (Mr. Wigley), but in a cool, rational and diplomatic fashion, using the force of argument rather than the argument of force. We are grateful to the Front-Bench team for all its good work so far and we hope that, in March, we shall finally achieve objective 1 status.
I wish that there were more reports of the work of the task force under Hywel Ceri Jones, which was an imaginative and forward-looking idea. It involves about 160 working parties in different parts of Wales. Over the next 12 months to five years, they will have the enormous

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responsibility of drawing up hundreds of schemes involving the infrastructure, businesses and skills and training to equip us for long-term economic advancement.
Mr. Evans: Is the hon. Gentleman aware of the inconsistency of his argument? He began his speech by saying how wonderful Wales was doing and how great things were, but he then said that it needed objective 1 status as things were so bad. The hon. Gentleman cannot have it both ways. Is Wales doing well or is it not?
Mr. Williams: I am not surprised by the hon. Gentleman's intervention. It is an example of the superficiality of most of his remarks from the Opposition Front Bench. Let me explain my analysis. Eighteen years of Conservative Government left Wales in a desperate plight at the bottom of the regional league. My own area has only 71 per cent. of the income per capita of Britain. After 18 months under Labour, we have moved forward. As I said, unemployment has fallen by a third in my area and the new deal has given new hope for young people and the long-term unemployed. The minimum wage will also help, as will forthcoming measures involving child benefit, education and health. The picture is changing, but we cannot repair 18 years of damage in 18 months.
We need objective 1 support to regenerate the Welsh economy. I am very hopeful that we will achieve that. I mentioned some of the projects that we need. However, there appears to be a misconception, especially in rural areas, about objective 1 funding. In some farming communities, it is said that when Ireland achieved objective 1 status there were suddenly great times and that the money was there to be enjoyed—that it was money for nothing going directly into people's pockets. That is not the purpose of objective 1 funding. It is money not for today, but for long-term investment in the infrastructure to provide roads, industrial estates, water supplies, sewerage, gas and so on. It is to help businesses finance research and development and innovation.
Let me quote one example. The Science and Technology Committee has been looking at innovation in engineering and physical sciences—a sector in which Britain does not stand comparison with Germany, Japan and the United States. Newer ideas include science parks and technology transfer in an attempt to provide a middle tier between universities and industry. Objective 1 money could be used to further that. Wales has some notable academic institutions with excellent departments. We need to expand research and development and innovation. It is important also to provide skills training for those who are out of work or between jobs and further and higher education for young people. We need a multiplicity of courses to provide the skills for tomorrow's industries.
Mention has been made of matching plans and where they should come from. My feeling is that, if 75 per cent. of the money comes from Europe under objective 1, it is nothing to find the other 25 per cent. For instance, if I wanted to spend £20,000 on my house—not that I want an extension—and I was told that I could get £15,000 free of charge from the local authority, or wherever, and that I had to spend only £5,000 of my own money, I would soon find a way of raising £5,000. It does not make much difference whether the money comes from the Treasury, the Welsh Office or local authorities as it is all taxpayers' money and we are all taxpayers.
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The Secretary of State will have to put the case to the Treasury. As my hon. Friend the Member for Clwyd, West (Mr. Thomas) said, we must not put the cart before the horse. First, we must get objective 1 status and then we must open negotiations with the Treasury on how it can help us—in addition to the Barnett formula—to raise those matching funds.
If the Treasury will not help, the Welsh Office block grant will be under pressure. We want money to improve the health service, education and other services. I am reluctant for the Welsh Office to be squeezed for the extra £100 million, or whatever the sum may be. I would rather that the funding came from local authorities. Our manifesto said that we would get rid of council tax capping and allow local government to set its own budget, restoring a freedom that exists in virtually every other part of the world.
Mr. Llwyd: I agree that an element of partnership is desirable, but let us be honest: local authorities are already under severe financial constraints and will not be in any position to contribute substantially, although they might make a nominal contribution. Even if all the council house receipts were available, that would not amount to very much.
Mr. Williams: I disagree fundamentally. It has taken 20 years to happen, but the ratio of local government expenditure that is raised locally is down to about 10 or 12 per cent. in Wales, with 90 per cent. coming from the Welsh Office in the standard spending assessment. That is unhealthy for local democracy. Rather than taxing and spending nationally, I would prefer local government to be allowed to spend what it deems appropriate on education, highways and all the other services. Certainly, the bulk should come from the Welsh Office, but there should be that freedom.
A poll carried out in Milton Keynes recently, and published in The Guardian last Tuesday, demonstrates the public acceptance of that view. We can learn certain lessons from England. The poll shows how people value their local authorities. The Government guideline was for a 5 per cent. increase in council tax, while the council in Milton Keynes wanted a 10 per cent. increase. The council balloted people on whether the increase should be 5, 10 or 15 per cent.
The results were very revealing. There was a higher turnout than in any council election: 45 per cent. as opposed to only 26 per cent. in the most recent council elections. Of those who voted, 23.6 per cent. voted for a 15 per cent. rise; 46 per cent. for 10 per cent.; and 30 per cent. for 5 per cent. That was in Tory middle England, as it were, although the council and the parliamentary seats are now Labour. Seventy per cent. wanted an increase of 10 per cent. or more, knowing that it would be spent on their local services. I think that people in Wales are very much of that frame of mind. If they see the benefit of services locally, they will vote to pay for them.
If any of the objective 1 money that we hope will be available within the next year or so were not used, we would lose a one-off opportunity and deny the advantage to our children and grandchildren. We must use it all, and if local authorities need to get involved in raising the matching funds, they should play their part.
4.44 pm
Ms Julie Morgan: This is the last St. David's day debate before devolution and the Welsh general election. I hope that this annual debate will continue to take place so that Welsh Members who are not going to the Assembly will still have the opportunity to raise the wide-ranging issues that we have discussed today.
We do not yet know what impact constitutional reform will have on the Chamber. My hon. Friend the Member for Clwyd, West (Mr. Thomas) raised the issue of the future of Welsh questions. I know that the Procedure Committee has started to consider that. I cannot see how Welsh questions can continue in the same way if we are holding the Secretary of State accountable for the powers that remain to him. That is an unknown quantity, as is the future of the Welsh Affairs Committee, which I hope may be found a role in pre-legislative scrutiny, especially of the way in which Bills affect Wales.
We are moving into the unknown. That is an essential part of change and of the process of devolution. In addition to devolution and the setting up of the Assembly, reform of the House of Lords is bound to result in a second Chamber with more legitimacy, which in turn is bound to affect the workings of this Chamber. For the Welsh Members who will remain here, it is a time of change and uncertainty, but, for those of us who have been committed to and campaigned for devolution for many years, it is a time of great excitement. This is a day to celebrate what we have achieved.
Many people have said that we have unrealistic expectations of devolution, but I unashamedly have great expectations and look forward with tremendous excitement to the first meeting of the Assembly in Cardiff, with politicians from all over Wales coming together and starting to sort out the problems that the Government have already begun to address. I hope that we will be able to start building up forward-looking, strong, healthy communities, bringing power closer to the people and giving them a greater chance to sort out their own affairs, with women and men playing equal roles, which is an important issue for the Assembly.
Mr. Huw Edwards: Is not it a great credit to our party that the twinning process that we introduced last year has produced such an outstanding range of women Labour candidates, who will be in the Assembly in a few months?
Ms Morgan: I could not agree more. The difference between the Assembly and the House of Commons is that there will be a much more representative group of people there than I see here today. I think that the style of conducting business there will be different, and more productive, because a much wider cross-section of the population will be involved. The beginning of the new democracy is an opportunity to look afresh at our constituencies, for example, and to see what we want to change and what the Assembly can do to help that change. The economic issues have been well covered today, so I shall concentrate on other issues.
The publication of the Stephen Lawrence report yesterday has made us all aware of the extent of racism in Britain. That applies equally in Wales. The objective statistics for Cardiff show that young black men are many
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more times likely to be unemployed than their white peers. South Wales police have announced sharp increases in the number of reported racial attacks, as has Cardiff and the vales race equality council, Race Equality First. When I was a councillor, I knew of Asian women who were afraid to leave their houses and walk on the streets of Cardiff because of the abuse they received from groups of youths.
I hope that the Assembly will be the inclusive body that people say it will. To me, inclusivity means including black people in decision making and in consultation. I am pleased and proud that the Labour party has a black woman candidate, Councillor Cherry Short, in the constituency of my hon. Friend the Member for Monmouth (Mr. Edwards), and we will win that seat on 6 May. It is a great credit that we have a black candidate for the National Assembly who will win her seat.
The Stephen Lawrence report recommended an immediate review of racism awareness training in the police force and other agencies. The setting up of the National Assembly is an opportunity to ensure that anti-racist strategies are in place from the beginning and that a programme is introduced so that all its employees have such training. I also believe that the members elected to the Assembly should have anti-racist training. I hope that those hon. Members who leave here for the Assembly will help to ensure that that happens.
Dr. Julian Lewis: I am a member of a religious minority, the Jewish community, which experienced before the war persecution and prejudice similar to what the coloured community experiences now. I have some slight reservations about going as far as the hon. Lady in her proposals for anti-racist training for all sorts of groups before it is established that there is a problem in those groups. Otherwise, there is a danger that one might create resentment and a problem, where no problem exists.
Ms Morgan: The evidence put before the House yesterday undoubtedly shows that there is a problem. Members of Parliament, as the law makers, should also have anti-racist training. When we first come to the House, we have no opportunity to access the type of training that is provided automatically in many jobs, including training in equal opportunities and disability awareness. We lose out because of that, and I hope that Members elected to the Welsh Assembly—a fresh start and a new opportunity—have the chance to experience such training.
The Equal Opportunities Commission and the Commission for Racial Equality will still be the responsibility of the Department for Education and Employment, although both have regional offices in Wales. It is essential that a strong link is made between those bodies and the Welsh Assembly, so that they can all promote equal opportunities.
I am a member of the Welsh Refugee Council and we have recently seen an unprecedented increase in the number of cases with which it deals. The numbers have increased from a handful in 1994 to almost 200. That is due partly to the Asylum and Immigration Act 1996 and also because south Wales contains established communities from countries such as Somalia, Sudan and Iraq. The new proposals in the Immigration and Asylum Bill are likely to increase the number of asylum seekers

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coming to Wales and it is essential that we have a cohesive and practical response. I hope that, in the Special Standing Committee, the Government will reconsider the cashless system that they propose for all asylum seekers. That system is already in place for asylum seekers who apply in-country; the experience of the Welsh Refugee Council is that it is stigmatising and creates major problems for daily living. The council is also concerned that asylum seekers should have a say in where they are placed in the country so that they have access to community support, health facilities, translation facilities and education in English as a second language. We need a comprehensive, on-going programme so that refugees who settle in Wales can become full and equal citizens.
The National Assembly should give everyone living in Wales the opportunity to become full and equal citizens. The essential test will be the difference that it makes to people living in difficult circumstances. The Assembly must make a difference to people such as the lone parents with small children struggling along on a council estate in one of the valleys or on the outskirts of Cardiff, where the local shop has closed because of competition from out-of-town supermarkets. We must try to make a difference to people such as that, and success or failure will be a test of the value of the Assembly.
An inclusive Assembly will also include the voluntary organisations that make such a tremendous contribution to the life of Wales. Countless people spend their time enriching their communities, for no payment. I want to mention organisations such as Mewn Cymru, which speaks for black women, and BAWSO, which has set up a refuge for black women.
As long as I have been involved in politics, organisations such as that have always been knocking on the door, trying to get in. The Assembly should start off with a place already available for such bodies. Any concordat or consultative process must take advantage of such groups, and the Assembly should include people from all the different minority groups and voluntary bodies. I have mentioned only a few of them, but there are many in Wales.
Mr. Lembit Öpik: Does the hon. Lady agree that the Assembly should not rely on those organisations to do its work? They are not a cheap alternative, and the Assembly cannot use them to escape its social responsibilities. Sometimes I feel that that is what the Government do.
Ms Morgan: There is no question of the organisations being used to do work that should be done by the Government, the Assembly or local authorities. The point of establishing strong links with the voluntary organisations is to take advantage of their knowledge and expertise. They are eager for that to happen, and their knowledge will enrich the Assembly's programmes and policies. As a result, we will have a rich and inclusive Assembly.
When we have this debate this time next year, the Assembly will be up and running, and I hope that it will have started to deal with all the matters that have been raised today. I believe that the Assembly represents a tremendous step forward, and I look forward to hearing, this time next year, about some of the things that are happening there.
4.58 pm
Mr. Martin Caton: I want to concentrate on a particular matter that has arisen in my constituency, although it may have ramifications beyond the borders of Gower.
Earlier this week, Barclays bank got some positive publicity for funding research by the Groundwork Trust into the relationship between communities and their environment. That research was all good green stuff, and scored lots of brownie points for the bank's environmental credentials. However, a very different picture has emerged of the bank's attitude to a community determined to live in harmony with its natural environment, rather than to impose itself upon that environment.
About 10 days ago, a representative of the High Court's sheriff office visited the community, a settlement called Holtsfield, and told the residents that he wanted to check six of the wood-built chalets, in preparation for evictions any time in the next few months. The sheriff office was acting on warrants taken out by a property development company called Elitestone, which is bankrolled by the bank that likes to appear to care about communities and the environment.
This story is not even the traditional tale of capitalism putting profits before people. It started out as that, but there is no way that the 14-acre site can give Elitestone enough of a return to enable it to repay the £750,000 that it owes Barclays. As far as I can see, the evictions of six families will be driven by the malice and vindictiveness of the director of Elitestone. Barclays knows that—I have told the bank so myself—but it refuses to pull the rug from under him.
I should explain briefly the recent history of Holtsfield. It is a unique part of the heritage of Gower, a group of 27 chalets at the upper end of the Caswell valley on the edge of Bishop's Wood nature reserve. The chalets are situated in woodland around a central field. They are highly individual and picturesque, and they complement wonderfully their beautiful natural setting. One has a turf roof, and its electricity is supplied by a wind generator.
Originally built between the wars for holiday purposes, the chalets became homes for blitz refugees during the second world war. In subsequent years, they were increasingly occupied permanently. In 1990, in recognition of the quality of the settlement and its historic importance, Swansea city council designated it a conservation area. At present, 60 people live there, 24 of them children. Some of the adults have lived there for more than 40 years, and they include pensioners, the warden of the nature reserve, an architect, a merchant navy sailor, a nurse, a teacher, the manager of a care home, a photographer, a wood turner, an artist, a sculptor, a potter and a geologist.
Almost all the children have spent their whole lives there. They attend the local school, and the teachers say that they make a special and valuable contribution. This is no transient, hippy community, as the property company has tried to paint it. It is a group of people who have found a way of living that impacts as little as possible on an environment that they treasure and that they are determined to sustain.
Holtsfield is a real community. People there do not lock their doors when they go out—indeed, some of the chalets have no lock. People there look after one another. The community is not isolated from the wider community, and it makes a valuable contribution to the village in which

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it is set—Murton, which adjoins Bishopston. That contribution has been repaid by the support that the community has received from the residents of those and other surrounding villages since Holtsfield came under threat.
The threat began nearly 10 years ago when the freehold ownership of the field changed hands. Until then, the chalet dwellers owned their chalets, but were granted individual licences by the freeholders. In September 1989, the freehold was bought by Elitestone Ltd. with money borrowed from Barclays. Within months, the director of Elitestone had made clear his intentions to force the residents out of their homes, and to build a housing estate on the site.
For almost 10 years, some of the people of Holtsfield have lived under threat of losing their homes and the special way of life that they love. It was Elitestone's applications to build, first, 39 houses, and then 15, that led to Swansea—I was a member of the council at the time—designating Holtsfield a conservation area, thus refusing to allow any major new development.
Elitestone sought to challenge that decision by appealing to the Welsh Office, but when conservation status was supported by the Welsh Office, the company challenged the decision further by seeking judicial review right up to the Court of Appeal in London. Elitestone lost every time. The Welsh Office got it exactly right when it dismissed the appeal, stating:
"Holtsfield, in its distinctly Arcadian setting, forms an integral part of the countryside in contrast to the suburban character indicated on the illustrative drawing of the proposed development."
As well as trying to change the site's planning status, Elitestone was also acting directly against the residents. The company claimed that chalet dwellers had no legal rights, and that their right to occupy their homes was granted by the renewal of licences at the freehold owner's complete discretion. A series of letters followed, demanding that residents move and surrender their chalets to Elitestone. Other letters demanded large sums of money. Residents, through their excellent solicitor, held that they had tenants' rights, and that the licences were, in fact, tenancies.
In April 1991, the residents received the first summonses for possession of the land and, for the next four years, legal wrangling, court cases and appeals overshadowed the lives of all the families at Holtsfield, ending with the devastating and absurd decision of the Court of Appeal, in July 1995, that their homes were temporary mobile structures. Many of those temporary mobile structures had been there for more than 50 years, and some people had lived in them for 40 years.
As a last resort, the residents applied, in desperation, for leave to appeal to the House of Lords and, at the same time, tried to meet and negotiate with the director of Elitestone. However, he was having none of it and, instead, applied for possession warrants for four of the chalets. On 19 October 1995, the county court bailiff arrived to serve the notices. He was met by the residents and more than 300 local supporters who came to show their solidarity—I was there that day. The bailiff was not, however, prevented from serving the notices.
At 7.30 am on 22 November 1995, the sheriff, his men and a private security firm appointed by Elitestone arrived on Holtsfield and, with excessive aggression and damage to property, proceeded with the evictions. The residents
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attached themselves to their homes with chains—indeed the local vicar did the same thing to show his outrage—but they offered no other resistance. I arrived just after the evictions were completed, but saw the damage and, what was worse, the distress, especially that caused to the children. That 7.30 am raid took place despite the High Court sheriffs promise that there would be no evictions until after the children had gone to school at 9 am.
The six families, waiting now for their evictions, know only too well what they have to expect and they dread it. However, they are not prepared to walk away from their homes and their way of living. Thankfully, in January 1996, the residents were granted leave to appeal to the House of Lords and the county court recorder refused to hear any further applications for eviction until the House of Lords decision was known. For a time, there was some respite. To highlight their plight, some of the residents marched all the 250 miles to London to arrive on 20 March 1997—the date of the House of Lords hearing.
On 1 May, they received their judgment and it was good news: full Rent Acts protection to the test-case residents, and acceptance that their chalets were proper homes and proper fixtures. That ruling was extended to cover most of the other chalets by a subsequent court ruling. However, not all the residents were protected because some had not lived on Holtsfield long enough; about eight chalets were not protected and Elitestone is now gunning for six of them.
Why is that, and why does Barclays bank still back the company? Any hope of development has gone out of the window; it is prevented by the conservation area status and the security of tenure of the majority of the chalets. Have the residents behaved badly or unreasonably? Far from it, they have offered to pay Elitestone a reasonable rent and have tried to negotiate with the company through their solicitor. It is Elitestone that refuses to talk. I can identify only revenge and mean-mindedness as the reasons for the attempt to make those families homeless.
Barclays should have pulled the plug on Elitestone a long time ago, on the basis of the bank's own environmental and ethical policies; it should pull the plug now on the basis of sound financial management. There is no profit to be made at Holtsfield, only the potential for a lot of heartache. Barclays holds a legal charge against Holtsfield. If the bank stops propping up Elitestone, it will become the landlord of that community, with the chance to put its fine words about communities and the environment into practice. Failing that, we must consider a solution that includes compulsory purchase, and I know that the local authority and a housing association are exploring that possibility with the residents. I hope that the Welsh Office and, subsequently, the Welsh Assembly will be as helpful as possible in terms of finance for that approach if that should be the outcome. I hope that everyone will recognise that what we have in Holtsfield is special and sensitive; it must not be replaced with some off-the-shelf social housing alternative.
The Government need to consider the issue of speculative land purchase where people's homes are involved. The people of Holtsfield have had the sword of Damocles hanging over their heads for almost 10 years; that should not be happening to them and it should never be allowed to happen to anybody else.
5.10 pm
Mr. Huw Edwards: I apologise for not being present for the early part of the debate as I had a dental appointment. It is a privilege to contribute to the debate: the last to be held this century and the last under the present constitutional arrangements. There was no equivalent debate last year as we were considering the Government of Wales Bill, which will change fundamentally the context in which we debate many issues.
Yesterday and the day before, we passed the orders that transfer responsibilities from the Secretary of State to the National Assembly for Wales. It is significant to note not only what was transferred, but what was not. Main policy areas that will not be transferred to the National Assembly include macro-economic policy, social security, the justice system, prisons, the police and the fire services, the national lottery, labour market policy and defence. I think that there will always be a role for this debate, for the Welsh Grand Committee and for the Welsh Affairs Select Committee, in examining those policy areas that impact upon Wales but are not the responsibility of the National Assembly.
I mentioned defence, which has some significance in Wales and in my constituency. There is considerable concern at present about the future provision and development of ammunition in this country. The royal ordnance factory at Glascoed in my constituency manufactures ammunition and employs about 400 people. However, the factory and the future of those 400 workers are under threat due to the recent decision by the Ministry of Defence to purchase propellant from South Africa rather than from a royal ordnance factory in Scotland. I have a duty to represent those employees in this place and express my concerns about the actions of the Ministry of Defence in passing responsibility for producing propellant to another country. Although South Africa is a friendly country, there is a strong case, under a sustainable defence policy, for producing our own armaments in Britain rather than being overly dependent on imports.
The factory employees in Glascoed have worked extremely hard during recent conflicts. They produced the ammunition needed in the Iraq and the Falklands wars, and it would be a great tragedy if their jobs were jeopardised. I know that the Defence Select Committee is considering the matter, so I shall say no more at this stage. However, I think it is important to raise the subject.
Another issue of particular importance, not only to Wales but to my constituency, is farming. I am grateful that my right hon. Friend the Secretary of State recently visited my constituency and a local farm at LLanbadoc near Usk. The farmer, Nigel Bowyer, is a young man with a family. He says that he has been losing money on his farm for the past two years, partly because he is a lowland farmer.
To their credit, the Government have produced an emergency aid package for farming. However, it does not apply to lowland farmers to a great extent. We can be truly proud of recent developments in agriculture: the success in lifting the beef ban in Europe, the emergency aid package, the review of hill livestock compensatory allowance payments and the brutal honesty with which the Minister for Agriculture has recognised the problems in the industry and given a commitment to farmers to do all in his power to work on their behalf.
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However, some problems remain. Recent Welsh Office figures show that there has been a 41 per cent. drop in farm incomes this year. There is concern about the Agenda 2000 programme and the need to protect the small family farms that are so characteristic of Wales. The beef ban in Europe has been lifted, but we have not resumed beef exports. Milk prices have fallen, and there is concern about the funding of the Food Standards Agency, which the Government are reviewing at present.
When my right hon. Friend came to my constituency with a senior officer from the Welsh Office agricultural division, we drew their attention to the complicated forms that many farmers must fill in these days. We also pointed out that, if farmers make inadvertent mistakes in completing those forms, they can be heavily penalised. Payments that should be made to them are often delayed for an unreasonably long time because they have made unintentional mistakes. Of course we accept the importance of achieving accuracy and avoiding fraud, but when those forms were compared to equivalent forms from Ireland, my right hon. Friend the Secretary of State and his officials acknowledged that the forms from Ireland had a more customer-friendly approach, so I ask Welsh Ministers to consider that issue.
Environmental payments have been a concern to hon. Members. We applaud the developments in tir gofal but significant additional resources could be invested in agri-environmental schemes.
The local authorities can play a greater role in agriculture. My authority in Monmouth is a major landowner and owns the local livestock markets, but it would be the first to admit that it has not regarded agriculture as part of its economic development strategy in the past. The emphasis has been on manufacturing. It is to the authority's credit that it is now considering the future of agriculture in Monmouth and examining economic development strategies that will work in the interests of what is the major industry in my constituency.
To its credit, Monmouthshire county council recently organised a seminar on organic farming. We were all surprised by the tremendous number of farmers who expressed an interest in attending and seeking advice on possible conversion to organic farming.
We shall have objective 1 status in Wales. Hopefully, objective 2 will also apply to eastern Wales, the area that I represent. I am grateful that the Welsh Development Agency, in incorporating the work of the Development Board for Rural Wales, will be considering infrastructure projects for agriculture.
Following the report of the Select Committee on Welsh Affairs, I have advocated the need for a large-scale freezing facility for Wales. There is not such a facility in the whole of the United Kingdom. Although that would be a commercial project, objective 1 or 2 funding could be used to develop that facility, which would be of use to farming communities, not only in Wales, but in the south-west of England.
One of the Government's most significant announcements in the past 18 months is the national strategy for carers, which was announced in the House two weeks ago by the Secretary of State for Health. My right hon. Friend the Secretary of State for Wales has assured me that his Department is currently consulting local authorities, voluntary organisations and the health service to develop the Welsh version of the national

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strategy for carers. I acknowledge that that will be the responsibility of the National Assembly for Wales when it is established in a few months.
Last year, I introduced a ten-minute Bill to give carers and the people for whom they care a statutory right to be assessed for respite care. Although my Bill does not appear to have been fully incorporated into the national carers strategy, I am grateful for the strategy's recognition of respite care.
I have been in contact with carers in my constituency who will be greatly heartened by the Prime Minister's foreword to the national carers strategy. He referred to the work that carers do as extraordinary
"not in ways which make headlines, but in ways which really matter".
He said:
"Carers devote large parts of their own lives to the lives of others—not as part of a job, but voluntarily. And often in addition to working themselves. For the sick, the frail, the vulnerable and the elderly, carers provide help and support in ways which might otherwise not be available."
Carers in my constituency will acknowledge the concern and support that my right hon. Friend has expressed for them.
I pay particular tribute to the Crossroads scheme in my constituency, in Chepstow and Caldicot and in Monmouth. I recently spoke at its annual general meeting and outlined the significance of dementia, which will be a growing problem in Wales. According to the Alzheimer's Disease Society,
"dementia is perhaps the major health and social care challenge of the next century".
It will affect one in 20 people over the age of 65, and one person in five over the age of 80. Half the people in residential care who are over 80 have dementia. By 2040, when some of us, hopefully, will be in our 80s, if we survive that long, there will be 1.2 million people aged over 65 with dementia. Dementia currently affects more than 700,000 people in the United Kingdom, including 40,600 in Wales. According to the Office for National Statistics, it is estimated that in 1996 there were almost 7,000 people with dementia in the Gwent health authority area.
Many people with dementia are cared for in their own homes by their relatives. Two thirds of people with dementia continue to live in their own homes, including a substantial number who live alone. Many are cared for by family members, who in many cases are elderly themselves. That imposes a tremendous burden on those people.
It is to the Government's credit that the national carers strategy has been established. As a society, we must determine our social priorities. The needs of those suffering from dementia and other chronic conditions pose an immense challenge because our response is dependent on so much voluntary provision, especially the contribution of the vast army of informal carers, most of whom are women.
The challenge that faces us with dementia is not insurmountable. It can be met with the right commitment of statutory and voluntary services in the context of a Government policy that is creative and compassionate. Much of our approach to the care of the elderly has been constrained by negative stereotypes of elderly people being
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dependent. Professor Richard Titmuss, the outstanding professor of social policy in Britain, argued that far from being a burden, an aging population represents the triumph of a successful welfare state in reducing premature mortality and improving standards of health and social care.
Our aging population is a celebration, not a burden. I pay tribute to the Chepstow and Caldicot Crossroads, Crossroads schemes throughout Wales, the Carers National Association and all the voluntary organisations that work so hard on behalf of carers and the people whom they care for.
This is the last Welsh day debate before the tremendous constitutional change that we will witness in the next few months. I send my best wishes to all those who will be standing for election to the National Assembly. Opposition Members have spoken of two different types of Assembly Members. It is to the Government's credit that we have established a fair electoral system that will ensure fair representation.
I look forward to working with the Assembly Members. I know that in my constituency they will probably represent different parties, including the Opposition. I look forward to working with those people to ensure that the people of Wales will be better served by having a democratically established Welsh Assembly.
5.22 pm
Mr. John Smith: I apologise to the House for the fact that I was not able to be present for the whole debate. Unlike my hon. Friend the Member for Monmouth (Mr. Edwards), I have not been to the dentist, but, as a dutiful Welsh Member of Parliament, I have been serving on the Committee considering the Greater London Authority Bill. There are parallels between carrying out my duties and going to the dentist.
This is the first full Welsh affairs debate that we have been able to hold since the general election in 1997. We are approaching the second anniversary of the new Labour Government. I shall outline briefly the way in which the new Government have affected my constituency, the Vale of Glamorgan.
In many respects, the Vale of Glamorgan is a microcosm of Wales and of the United Kingdom.
Mr. Win Griffiths: There are no mountains.
Mr. Smith: There are hillocks, but not too many mountains. The Vale of Glamorgan is a beautiful constituency and an interesting one, made up of the traditional urban port town of Barry, which was built on coal at the turn of the century, at the core of the constituency; the agricultural area to the west, in Cowbridge and the seven villages, which is heavily dependent on the agricultural industry; and the suburbs of the east, Sully, Dinas Powys and Wenvoe, many parts of which are travel-to-work areas of Cardiff. Each of those areas is experiencing different problems.
Before the Government were elected, Mr. Lord, the biggest blight—
Mr. Griffiths: We are not in Committee.
Mr. Smith: I do apologise, Mr. Deputy Speaker. I have been in Committee all afternoon.

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Before the general election, the Vale of Glamorgan experienced some of the worst problems in the country, and the worst of all was poverty. My constituency is generally considered to be one of the more affluent parts of Wales, but nothing could be further from the truth. It contains, or has contained, some of the poorest communities in Wales. In north-east Barry, for example, net disposable income per household, including all non-housing benefits, is less than £60 a week. That is less than the amount that some hon. Members would think nothing of spending on a meal, but it must pay for clothing, shelter, warmth and food for entire families. That is the legacy of nearly 20 years of Tory Government and misguided policy. It has ruptured our community, and has delivered poverty to our doorsteps—poverty that rests side by side with some of the most affluent villages in Wales.
In a radius of five miles, some people are living in poverty, while others have some of the highest incomes in Wales. The final judgment on whether our Government succeed or fail rests on whether we deal with that. I was delighted to hear my right hon. Friend the Secretary of State describe what we have already achieved in less than two years in regard to health and education, and, most important, the eradication of poverty. Our strategy is to help those who are able to work to escape their circumstances—to use work as a mechanism to empower those who can work, and to release resources for the support of those who cannot, including the carers to whom my hon. Friend the Member for Monmouth referred.
We must be able to redirect scarce resources, and I believe that, in the society in which we now live, we must do that in the way in which the Government have decided to do it: through work. I am delighted that, on 1 April, nearly 110,000 people in Wales will benefit directly from our minimum wage proposals—a higher proportion than in any other part of mainland Britain. The reason for that is sad. Under 18 years of Conservative rule, Wales, which had been one of the highest-wage economies in the United Kingdom, became one of the lowest-wage economies. That is why so many of our people will benefit from the minimum wage, which, combined with the working families tax credit, will enable many members of the community to which I referred at the outset to escape from poverty by means of work.
The task will be easier for my constituency, because, by and large, the work exists as long as it pays people to work. In far too many Welsh communities, the work does not exist. We need economic strategies to ensure that everyone in the country has an opportunity to seek employment. Even if the employment is badly paid and unskilled, at least people will have the dignity of being in work and receiving a minimum wage and tax credits allowing them a decent standard of living as we approach the millennium. That is the main issue on which this Government of ours will be judged, and I am delighted that we are moving in that direction.
We have delivered on our promises, especially our promise to establish a Welsh Assembly, which is one of the most important. There is not long to go before the Assembly starts its work and it could make a huge
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difference by providing the other side of the coin—economic success, which is what we need to eradicate poverty in Wales.
The record over the past 20 years has not been good and our primary industries, which were based on mineral extraction and metal manufacture, have been decimated. Whole tracts of those industries disappeared and their production, which was primarily for domestic consumption, has declined. However, there has been diversification in manufacturing industry—because of our efforts as a people, against the odds and despite the Conservative Government. We still do not have enough skills, and we are not at a high enough standard, but we are in a good position to able to build a prosperous future based on a diverse manufacturing industry. That bodes well for the Welsh Assembly, as long as we adopt a strategic approach to the exploitation of our country's assets to the benefit of all, not one sub-region as opposed to another.
We need to build on that, which is why I was disappointed that the Opposition spokesman, the hon. Member for Woodspring (Dr. Fox), condemned and talked down Welsh industry and Welsh manufacturing performance. That was particularly galling because he is not a Welsh Member, but represents a constituency that is in direct competition with Wales for jobs and investment.
Mr. Evans: The hon. Gentleman has told the House that he is a member of the Greater London Authority Bill Committee. Was he born in London?
Mr. Smith: Absolutely not, but I have not been talking down London or the Bill. I have been talking them up, at every opportunity. That is what I would expect from a responsible spokesperson for Her Majesty's Opposition speaking on Welsh affairs. Although the Opposition do not have a single seat in Wales, they have a right to speak in the debate, but, for goodness' sake, talk our country up, not down.
I refer to several local points. We have had tremendous success in education, transport and other matters, but we must ensure that the mechanisms are in place to make sure that the extra expenditure that we invest in those areas goes where it should. I say to my hon. Friend the Minister that the additional transport grant for rural bus services is superb, but there is evidence that bus companies receiving those grants are not providing the essential extra rural services for which they are being paid. That needs to be addressed. Shamrock Coaches, which provides services in the rural part of my constituency, has let passengers down and is being paid for it.
There has been tremendous investment in "education, education, education", but there is a backlog of repairs and maintenance because of the scandalous neglect of school buildings. We have extra money and I know that it is going into schools, but I ask my hon. Friend the Minister to consider the fact that some schools, such as Cowbridge comprehensive, are falling down. They present a physical danger to students. Are there contingency resources to deal with specific problems, when there is danger to children because of neglect over two decades?
The best way to empower people is through work, skills and knowledge. There have been reports that the number of mature students applying for places in higher education

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may be decreasing. Will the Minister tell us whether there has been a decline in the number of such students in Wales, and whether he is addressing that issue?
Thank you, Mr. Deputy Speaker, for bearing with me on this important occasion.
5.35 pm
Mr. Nigel Evans: It is a wonder that the Standing Committee considering the Greater London Authority Bill felt able to do without the skills and expertise of the hon. Member for Vale of Glamorgan (Mr. Smith) for a short while so that he could come to the Chamber to make that wonderful contribution. I had better be careful, because irony does not come across in Hansard.
The next few months will be an exciting time in Wales. We will have the new Cardiff Arms Park in the millennium stadium—I am sure that it will be called the new Cardiff Arms Park in the tradition of new Labour. We look forward to the rugby world cup being held in Wales. We want the opportunity to show Wales off at its very best. I hope that the stadium will be ready in time—the Minister may tell us about that—because it would be dreadful if it was not.
I understand that one of the duties of the new Welsh Assembly will be to promote sport whenever and however it can. After the first two home internationals, one of its greatest challenges will be to do something to help the Welsh team to achieve the victories that they should be gaining. If it can do that, that would be one of its greatest successes.
Mr. Win Griffiths: What does the hon. Gentleman expect after 18 years of Tory Government?
Mr. Evans: We had more victories when the Conservatives were in power than we have had in the past couple of years. We do not take credit for those victories, and I am sure that the Labour Government will not take credit for the recent defeats.
The hon. Member for Vale of Glamorgan said that my hon. Friend the Member for Woodspring (Dr. Fox) should not have led for the Opposition in the debate because he was not born in Wales and is not a Welsh Member of Parliament.
Mr. John Smith: To put the record straight, that is not the point I was making. I did not question the right of the hon. Member for Woodspring (Dr. Fox) to make that contribution: I questioned the nature of his speech because he talked down Wales, which I felt was wrong.
Mr. Evans: I am sorry that my hon. Friend did not ask the hon. Gentleman to write his speech for him, so that his contribution would have been more positive. What he said was ridiculous. My hon. Friend is a Member of the United Kingdom Parliament and has the right to speak about Welsh affairs or about anything else to do with the United Kingdom as he feels appropriate, just as the hon. Gentleman has the right to speak on the Greater London Authority Bill to which he is making useful contributions based on his knowledge of London.
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The Conservatives speak as the second party in Wales: at the last election, as we gained 100,000 more votes than the Liberal Democrats and twice as many as Plaid Cymru.
Mr. Llwyd: How many seats did the Tories gain?
Mr. Evans: Irrespective of that, we had more votes. It is a great shame that the hon. Gentleman is the only member of Plaid Cymru present. The nationalist party has four Members of Parliament. This is the only St. David's day debate we have had in two years, yet only one Plaid Cymru Member is present for the winding-up speeches, and only two have been present during the debate.
The leader of the Conservative party in Wales, Rod Richards, is relishing the opportunity to promote the cause of common-sense policies in the Welsh Assembly. At least we know that Rod Richards will be elected to the Welsh Assembly, whereas there is enormous doubt about whether the Secretary of State will win a seat. Many Labour Members secretly hope that the Secretary of State is not elected to the Welsh Assembly.
Mr. Llwyd: Two of my colleagues were busy elsewhere today, and it was unfair of the hon. Gentleman to make such cheap points. Secondly, Rod Richards would not understand a policy of principle if he fell over it.
Mr. Evans: That was a devastating intervention: I shall have to be careful in future, although I am sure that all the hon. Gentleman's colleagues were not at the dentist. This is the St. David's day debate and I should have thought that members of the so-called national party of Wales would make the effort to come here to contribute on behalf of Wales and their constituents.
We look forward to the Welsh Assembly elections on 6 May, but I am not sure that the Secretary of State is looking forward to them. He still has some fences to be fixed, and last Saturday's result was a denial of democracy for Wales. The Secretary of State has no credibility in Wales as a result of the rigged electoral college and the fixed trade union block votes. That was old Labour fixing at its worst—and a denial of one member, one vote in many of the unions—to deliver in Wales the Prime Minister's man, not the people's man.
Mr. Edwards: How is the leader of the Conservative party elected? How many Conservative party members voted in that election?
Mr. Evans: The leader of the Conservative party was endorsed by the entire membership of the party on one member, one vote. Is the hon. Gentleman saying that the Secretary of State will put himself before the entire membership in Wales for similar endorsement? He will not do that because he knows that the membership in Wales was 2:1 in favour of the hon. Member for Cardiff, West (Mr. Morgan). The members did not want the Secretary of State—they wanted the hon. Member for Cardiff, West, and the rigged voting denied them their choice.
Dr. Julian Lewis: Some time ago, the Labour party abandoned the block trade union vote for use at Labour conferences, and yet it has allowed it to continue for the

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choice of Labour leader in Wales. Why does Labour have a higher regard for democracy at the Labour party conference than in choosing the Labour leader in Wales?
Mr. Evans: It is not a matter of right or wrong—it is what system will deliver what the leadership wants. At party conferences, the Labour leadership takes away union power. When it chooses the leader of the Labour party in Wales, it uses the block vote to deny the membership of certain unions an opportunity to vote individually. They were consulted—sort of—but, in many cases, the result was ignored. In one union, the vote was split 60:40 in favour of the Secretary of State, but 100 per cent. of the union's vote went to the Secretary of State. That was a complete denial of democracy.
In today's edition of the Western Mail, an editorial—entitled "Way out of touch"—talks about the "arrogance and insensitivity" of the London Labour machine "reaching new heights". The report states that the hon. Member for Cardiff, West, having had the audacity to complain about some irregularities during the election, has been told to "stop whingeing".
When anybody talks about what is wrong, they are told that they are talking Britain, Wales or the Assembly down. When the hon. Member for Cardiff, West complains about irregularities, he is "talking the election down" or "talking the Labour party down". That is ridiculous. The report states that Labour has labelled the hon. Gentleman a "ballot whinger". He has every right to feel dismayed, not only about the result, but about the way in which the election was held.
I am delighted to see the hon. Member for Islwyn (Mr. Touhig) in his place. On the subject of democracy, he spoke about the Welsh referendum result and said that the jury was still out on the Welsh Assembly. He is right. With a turnout of 50.1 per cent.—49.7 per cent. voting no and 50.3 per cent. voting yes, so that only one in four of the Welsh electorate supported the proposals—of course the jury is still out. People will look carefully at how the Welsh Assembly develops over the next few years in deciding whether to give it their support. We will have the first test on 6 May—the turnout of the electorate.
Mr. Touhig: I note what the hon. Gentleman says. Yes, the jury is still out, but will he commit his party, as we commit ours, to making the Welsh Assembly a success, so that we will be able to say to the Welsh people, "It has been good and has been proved to be valuable for Wales"?
Mr. Evans: We are fielding candidates throughout Wales. We want to get as many candidates elected as possible. They will go to the Welsh Assembly not to grind it to a halt, but to ensure that the Assembly works in the best interests of the people of Wales. I guarantee that that is exactly what we here in Westminster want: we want the Assembly to be a success for the people of Wales, now that we know that it is going to be a reality.
Mr. Swayne: How does my hon. Friend react to the contrast between Labour Members, particularly the hon. Member for Cardiff, North (Ms Morgan), putting such great faith in, and setting such store by, the Assembly and building expectations—at one stage I thought it was
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expected to become the Assembly for the new Jerusalem—and the squalid fix in relation to the leadership election?
Mr. Evans: That is absolutely correct. Expectations of the Welsh Assembly have been raised to such great heights that it cannot hope to fulfil even 10 per cent. of what the Labour party has said it will be able to achieve. Contrast that with the way in which the elections were held, or the squalid way in which the referendum in Wales was held a week after the referendum in Scotland. [HON. MEMBERS: "Squalid?"] I will tell hon. Members why it was squalid.
We were told that the people of Wales would not be able to cope if the referendum were held on the same day as that in Scotland because they would get confused as to what was being offered, with a Parliament in Scotland and an Assembly in Wales. There could be no other reason why they were held on different days—other than to bounce the people of Wales into a yes vote following a victory in Scotland, which we always knew would be delivered.
The absurdity is that, on 6 May, people will vote in local elections in Scotland and Wales. In Wales, they will also vote for the Welsh Assembly—not only for constituency candidates, but for those on the regional list. If people in Wales can get their minds around the d'Hondt system and how the closed-list system will work, they could certainly have got their minds around having their referendum on the same day as the people of Scotland. Of course it was a gross insult to the people of Wales to pretend that they could not cope with that.
Mr. Öpik: The hon. Gentleman said that he felt that the Welsh Assembly would not deliver even 10 per cent. of the expectations that have been raised by the Government. Is it therefore fair to assume that he expects the Welsh Assembly to fail?
Mr. Evans: No. There is no expectation that the Welsh Assembly will fail because we will work to ensure that it is a success, but the jury is still out. The hearts and minds of the three out of four people in Wales who did not vote for the Welsh Assembly need to be won over. Had the hon. Gentleman been here for the four hours of the debate. he would have heard my hon. Friend the Member for Woodspring say that we would work to ensure that the Welsh Assembly, now that it is established, would be a success.
The problem is that we are not allowed to question devolution as a principle because that would be a great heresy. We hear the hon. Member for Vale of Glamorgan say that we are talking Wales, devolution and the Assembly down, but if, in the Chamber of the House of Commons at Westminster, we cannot talk about the problems that the Assembly might face where can we discuss them?
The hon. Member for Ogmore (Sir R. Powell) spoke about the one and a half hour debates we had yesterday and the day before in Committee, in which we debated very complex issues. It is a great shame that those debates, on essential issues, could not have been held on the Floor of the House. Indeed, it is a great shame that the St. David's day debate is being held—I cannot understand why—on 25 February, not on 1 March. The debate is being held not

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on a Monday, when all hon. Members would be at Westminster, but on a Thursday, at the tail end of what has become, these days, our part-time week.
Mr. Alan W. Williams: Speak for yourself.
Mr. Evans: Let us not go into that.
Democracy is denied when statutory instruments are scrutinised only in Committee, and only for an hour and a half.
In the past two days in Committee, we dealt with a number of anomalies. I asked the Secretary of State whether it was possible, for example, to lift the ban on beef on the bone in Wales, but not in England. The Secretary of State told me that, yes, that could happen. It is amazingly anomalous when people can cross the border—
Mr. Nick Ainger: This is the same speech.
Mr. Evans: It is the same speech, but the important fact is that an anomaly is not being dealt with. It is amazing that people could buy beef on the bone in Wales and ship it back to England. That anomaly has to be dealt with, as the same one could arise in relation to genetically modified foods or prescription charges.
Yesterday, we were told that prescription charges could be lower on one side of the Severn bridge than the other. Differentials in taxation are important. My hon. Friend the Member for New Forest, West (Mr. Swayne) spoke about the lobby at Westminster, only yesterday, by hauliers from Pembrokeshire and other parts of the United Kingdom.
Mr. Ainger: They were from Pontypridd.
Mr. Evans: Yes, they were from Pontypridd. However, the more important point is that, because of taxation differentials, hauliers are filling up with cheaper fuel in Calais or in Belgium and coming to England for a couple of days. We will have to sort out any anomalies that could be caused by the establishment of the Welsh Assembly, but there is currently no structure in the Assembly for doing so.
Sir Raymond Powell: The hon. Gentleman mentioned my speech and statutory instruments. We should make it clear that any hon. Member serving on a Committee considering a statutory instrument who feels that, after an hour and a half, that scrutiny should continue, should ask for the sitting to be adjourned. We should have done that on Tuesday, after a full debate. I agree with the hon. Gentleman's comments—we should have had a fuller debate. However, hon. Members themselves should have asked for an adjournment. Perhaps it would have been wise also for the Chairman to advise hon. Members that they could do so.
Mr. Evans: The hon. Gentleman has been an hon. Member long enough to know exactly what would have happened. It is pointless trying now to address that specific issue. The point is that an hour and a half was allotted, and that is all that we would have got. It is a denial of democracy for there not to be proper scrutiny of
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statutory instruments—ever more of which are being passed by the House, and ever fewer of which are being debated on the Floor of the House. Nevertheless, I am glad that the hon. Gentleman accepts the principle of the matter. Perhaps it is a matter on which we can make progress, on a cross-party basis, so that we might make Parliament more effective.
My hon. Friend the Member for Woodspring dealt in his speech also with concordats and judicial review. Today, it was enlightening—perhaps the first chink in the blind—to learn that there might be judicial reviews of concordats. Yesterday, the Secretary of State told me—as the Secretary of State for Scotland told my hon. Friend the Member for West Dorset (Mr. Letwin)—that there would not be judicial reviews. Today, we heard that such a judicial inquiry might be successful. The problem is that the matter generally has not been properly thought through or tested.
During the passage of the Government of Wales Act 1998, the Opposition raised the issue of concordats. Time after time, the issue was dismissed or brushed aside. Ministers said, "Don't worry; things will be all right." Every aspect of the Government of Wales Bill was considered under the best case scenario. The worst case scenario was never taken up. When the Assembly becomes a reality later this year, there may be many worst case scenarios that we have not allowed for.
Mr. Win Griffiths: Maybe, maybe not.
Mr. Evans: The former Minister says, "Maybe not." Why were no precautions put into the legislation from the start to ensure that the system would be able to cope in the event of the worst case scenario coming about? Part of the problem is that everything was viewed through rose-tinted spectacles.
Reference has also been made to the fate of the Members of Parliament at Westminster after devolution becomes a reality. They cannot all sit on the Greater London Authority Bill Standing Committee. They will have to look for other things to do around the House. There has been much speculation about whether the St. David's day debate will continue and whether the Welsh Grand Committee or the Select Committee on Welsh Affairs will be wound up. I hope that they all continue. This is a United Kingdom Parliament. We must have the opportunity to discuss Welsh affairs as often as possible. I hope that there will be a consensus throughout the House on ensuring the continuance of those functions and on trying to make them more effective. The Assembly will look for advice, guidance and support from the Westminster Parliament from time to time. We should be able and available to give such advice.
Dr. Julian Lewis: In the Select Committee on Welsh Affairs, I asked the outgoing permanent secretary of the Welsh Office whether she believed that there would be a Secretary of State for Wales in the Cabinet in 10 years' time. She refused to answer in the affirmative.
Mr. Evans: That is one of the great unknowns. If the permanent secretary was not able to give such a guarantee, perhaps there is a secret agenda that goes beyond the Secretary of State's hope of becoming the First Secretary, to the winding up of the role of Secretary of State

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for Wales. I suspect that that would mean that there was no Welsh Office Question Time, no Welsh Grand Committee and no Select Committee on Welsh Affairs. I wonder what would happen to all the Welsh Members of Parliament here at Westminster. We have to address that.
Several hon. Members have mentioned rural affairs, which is a vital subject for Wales. Farming is one of the most important industries in Wales. The hon. Member for East Carmarthen and Dinefwr (Mr. Williams) said that the incomes of farmers had declined 40 per cent. this year, on top of a 40 per cent. decline last year. I was with him in Carmarthen when the farmers turned up for their rally. I remember the hot reception that he got. After another 40 per cent. decrease in their incomes this year, they have every right to shout. The Farmers Union of Wales is talking about the dire consequences of the current perilous state of farming and of some of the proposed changes to the common agricultural policy. If those changes hit farming in Wales yet again, the situation will be even worse than it already is, if that is possible.
I have had several representations since this debate was announced. One was from David Jones, the prospective candidate for Conwy, who asked for the decision to give the administration of Llandudno hospital to Gwynedd health trust to be reversed, leaving it instead under Conwy and Denbighshire trust. He has already handed in a petition with more than 300 signatures. Is the Minister prepared to make an announcement on that? Will he take heed of the 300 people who signed the petition?
The hon. Member for East Carmarthen and Dinefwr also spoke about local government capping. I found his remarks incredible. He said that the people of Wales were prepared to pay extra council tax. Of course, we are talking about a stealth tax. We have heard much about the fact that the Government have not increased direct taxes but, goodness me, they have certainly increased every other tax.
Council tax has suffered severe increases in the past two years. Last year's increases varied between 9.5 per cent. and 14 per cent. when inflation was running at between 2.5 per cent. and 3 per cent. People's wages were not increasing at the same rate, so where were they supposed to find the extra money? We have already heard that this year's increases will be between 8 per cent. and 12 per cent. It is an enormous hit—a stealth tax on people who were told that there would be no tax increases.
In addition, there is a problem with council fraud throughout Wales. In one Labour-controlled local council, more than half the local councillors are currently under investigation. What does the Minister propose to do to clean up local government in Wales?
The Government talk about education, education, education, but they introduced tuition fees of £1,000 and abolished student grants. I do not see how that will advance education. The director of the education department in Powys wrote to chairs of governors and head teachers in Powys. He said that the settlement appeared generous, but continued:
"You will note however, from my report that this is certainly not the case and it is clear that inflationary pressures, the need to fund additional pupils and the additional costs of the recently announced teachers' pay increase will, in reality, mean that the budget settlement is one of virtual standstill."
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I would much welcome the Minister's response to that statement as it was made not by a politician, but by the director of the education department at Powys.
Mr. Livsey: Will the hon. Gentleman give way?
Mr. Evans: I am sorry, but I am sure that the hon. Gentleman appreciates that we are approaching the end of the debate and I have to make progress.
I am sure that the Minister is as alarmed as I am to hear reports of another four cases of meningitis in Wales. What positive action is being taken with the Bro Taff health authority and the two charities in south Wales that are involved in disseminating information to provide extra resources and to ensure that parents are aware of the risks of meningitis? No one would wish panic to spread throughout Wales, but suitable action must be taken. I am sure that the Minister is aware that a new blood test can identify meningitis within 30 minutes. Is the Department monitoring that to see whether it could be utilised in Wales?
My conclusion from today's debate and what has been going on in Wales in the past 12 months is that agriculture is in crisis; people are waiting longer for health treatment; and there are fewer bobbies on the beat. When I asked the Secretary of States for Wales about that, he simply made a grammatical correction to my question. He could not care less that there were fewer policemen on the beat; he was only interested in making a debating point. Manufacturing jobs are in deep decline and confidence in orders from the United Kingdom and from abroad is depressed. The proposals for devolution have not been thought out. I believe that they could be a recipe for conflict and paralysis and that the anomalies that I have identified could make Wales a laughing stock.
Wales was promised that things could only get better. They have not; they have got worse for many people. Wales deserves better than the present Government, who are besotted by spin and style but have no substance whatever. The people are the victims. They are paying higher stealth taxes, higher council taxes and fees for students' education. They are suffering lost grants, worse pension fund rates and poorer services. We want fair play—chwarae teg—for Wales, and that is what the Conservative party will deliver to the Welsh people in the Welsh Assembly.
6.4 pm
The Parliamentary Under-Secretary of State for Wales (Mr. Peter Hain): We take no lectures from the Conservatives about democracy. They trampled over the democratic wishes of the people of Wales for 18 long and bitter years. I know what the hon. Member for Ribble Valley (Mr. Evans) means about speaking with irony in the House when he says that Rod Richards talks common-sense policies: a contradiction in terms if ever there was one.
My right hon. Friend the Secretary of State offers his apologies, as he has had to leave the debate early for a long-standing speaking commitment at the coastal forum in Cardiff: an important conference to be addressed by the European Commissioner for Transport, Mr. Neil Kinnock.
I agree with my hon. Friend the Member for Cardiff, North (Ms Morgan) that this is a Welsh day debate in which we can celebrate the Labour Government's historic

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achievement of devolution for Wales. I assure my hon. Friends the Members for Merthyr Tydfil and Rhymney (Mr. Rowlands), for Islwyn (Mr. Touhig), for Ogmore (Sir R. Powell) and for Cardiff, North, and my right hon. Friend the Member for Llanelli (Mr. Davies), that there is absolutely no reason not to continue to have annual Welsh day debates.
I think that we will need these debates more than ever; but if the hon. Member for New Forest, West (Mr. Swayne) insists on speaking at them, there will be a problem, as he attacked us for imposing a literacy hour in Wales, which we have not done, and for dropping from our roads programme a road that is being built at this very time in north-west Wales, as the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) informed him.
In less than two years, there have been dramatic changes to the political landscape in Wales. By the summer, we will have a devolved National Assembly for Wales, speaking for Wales for the first time and giving the people of Wales a real voice. We will create a new democracy that is participatory, open and inclusive of all the groups in Wales that were denied a voice under 18 years of Tory rule. We will empower women's groups, voluntary groups, trade unions, business and many others.
I strongly agree with my hon. Friend the Member for Cardiff, North, who said that one of the most exciting things about the National Assembly for Wales is that, because of the lead that Labour has given, we will have for the first time equality for women in the government of Wales. That will be an historic achievement. The Labour Government, and not any other party, delivered that. I acknowledge a little bit of help from the Liberals and from Plaid Cymru in the referendum, and I defer to the hon. Member for Meirionnydd Nant Conwy, who has exhibited in this debate the non-ranting face of nationalism.
Our Labour Government is leading Wales to a confident future. I agree with my right hon. Friend the Member for Llanelli that we do not want to have a whingeing Assembly. With decisions being made in Wales, the option of blaming London for everything will disappear and we will resolve our own priorities.
The hon. Member for Woodspring (Dr. Fox) made a cogent and interesting speech, apart from his rather limp series of points about the economy. Let me remind him that there has been a 27 per cent. fall in unemployment in his constituency since the general election. The contrast between his speech and that of my hon. Friend the Member for Merthyr Tydfil and Rhymney was striking, because the latter made a powerful case for exactly the opposite economic strategy to that pursued under the Thatcherite Tories: one of active government. He included a timely plug for his forthcoming book. I can testify, having chaired a packed lecture by him in Neath, where he spoke for an hour and a half on the industrial history of Wales—the theme of his book—that it will be a riveting read.
In "Pathways to Prosperity", we set out a serious economic agenda for Wales. I strongly agree with my right hon. Friend the Member for Llanelli that there remain serious weaknesses in the Welsh economy that we have inherited, largely as a result of decades of Tory neglect. Manufacturing accounts for 28 per cent. of output in the Welsh economy and the Labour Government recognise its importance. We are working closely with
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manufacturers to tackle the problems created by a worldwide decline in output and the high pound, which again we inherited from the Conservative Government. I remind the Opposition that the pound is now roughly at the level that we inherited, having gone up to cure the consumption boom that the Tories created in the run up to the general election.
Mr. Oliver Letwin rose—
Mr. Hain: I am sorry, but I do not have time to take interventions. One of the central messages of "Pathways to Prosperity"—and it was graphically illustrated in the devastating and savage closure of Lucas in Ystradgynlais, in the constituency of the hon. Member for Brecon and Radnorshire (Mr. Livsey), although three quarters of the plant's workers came from my constituency—is that any notion that we could continue to flirt with the strategy of the previous Conservative Government, and seek to attract manufacturing jobs into Wales on the basis of low labour and other costs, has been swept aside. If anybody ever believed that we could attract jobs to Wales through low costs, that has been swept aside by Lucas's decision, at short notice, to switch production to Poland and Slovakia, where wages are a quarter of what they are even in the upper Swansea valley, where people were being paid £170 a week—a low wage by anybody's standards.
Wage costs are much lower in east European countries and we cannot compete on low cost alone. We have to turn the Welsh economy into a high-quality, high-skill, value-added economy that is at the leading edge of technological development and scientific innovation. I agree with the point made by my hon. Friend the Member for East Carmarthen and Dinefwr (Mr. Williams) about the application of objective 1 funds to his constituency and other valley and west Wales constituencies. If we can use that enormous investment to drive up the standards of infrastructure, skills, scientific development and engineering—the latter has been neglected for far too long—we will turn the Welsh economy into a world-class economy. The links that my hon. Friend mentioned between higher and further education and business are crucial to that task.
Over the past 20 months, we have developed a strategy of partnership with business in Wales. It is striking that when I talk to people from the business community, as I do in my capacity as industry Minister, they tell me how much they enjoy working with this Labour Government, because we listen and are approachable, in contrast with the Conservative Government whom the business community had to suffer, along with everyone else in Wales, for so long. That partnership extends beyond business to the trade unions, voluntary groups and, indeed, to everyone in Wales.
We have also had much success in bringing down unemployment, which has fallen by 15,000 since the general election. My hon. Friend the Member for Ogmore is right to say that we need to do more, and I assure him that we will look at the training scheme in his constituency which he said is so successful. Our new deal to bring thousands of young and long-term unemployed people off welfare and into work with high-class training or full-time study is an enormous success. I agree with my hon. Friend the Member for Vale of Glamorgan (Mr. Smith) that this Government should empower people who have been trapped in despair on the dole for

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so long. The success of the new deal is there to be seen. Some 13,000 people have come off the dole. We have created nearly 4,000 real jobs and some 3,000 employers have been involved. I wish to pay especial tribute to my parliamentary colleagues in Wales for the way in which they have supported the new deal, and I single out my hon. Friend the Member for Merthyr Tydfil and Rhymney, who has attended every event that I have been to on the new deal in his constituency.
We have put in place a new strategy for the valleys, and next week we will announce a new initiative to promote extra investment and to encourage companies to locate and expand in the excellent locations that exist in the valleys. In addition, I can tell the hon. Member for Meirionnydd Nant Conwy that we have a food strategy that adds value to Welsh agriculture: by merging the agency responsible for promoting Welsh food with the economic powerhouse that is the Welsh Development Agency, we have given it a central place in the WDA's economic strategy.
We are also tackling poverty by means of the national minimum wage. The Conservatives fought the legislation for that throughout its passage through Parliament, and sought to deny some of the lowest-paid and poorest citizens and workers in Wales their elementary rights and opportunities. I can tell Conservative Members that £3.60 an hour is a fantastic boost for many workers in my constituency, who have earned wages as derisory as £1.80 or £2 an hour.
Mr. Evans: The Deputy Prime Minister said that "any fool" knew that the minimum wage would involve a "shake-out" in labour. How many jobs does the Minister think that the introduction of the minimum wage will cause to be lost in Wales?
Mr. Hain: None.
Mr. Evans: Does the Minister disagree with the Deputy Prime Minister?
Mr. Hain: My right hon. Friend the Deputy Prime Minister did not say that. The fears that Conservative Members spread for week after week in the years running up to the general election—and subsequently during the passage through the House of the National Minimum Wage Act 1998—have been shown to be unfounded. The minimum wage will be introduced with the support of business, both large and small. It will also enjoy the support of the 100,000 workers in Wales who will benefit from it. Moreover, the introduction of the working families tax credit will benefit more than 70,000 working families. Some of the lowest paid and poorest people in Wales are benefiting from the activities of the Labour Government.
We are delivering objective 1 funding for Wales, including west Wales and the valleys. Plaid Cymru has constantly taunted and criticised Welsh Office Ministers for not being up to speed or ahead of the game in that regard. I realise that it is very tough to be in opposition when the Government are so popular and successful, but Plaid Cymru should acknowledge our success in respect of securing that funding.
Mr. Llwyd: I certainly did not taunt the Minister: I asked a few questions that I thought were reasonable.
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After the decision to award objective 1 funding is made public, we in turn will make public some documents that will prove what my right hon. Friend the Member for Caernarfon (Mr. Wigley) said earlier.
Mr. Hain: I do not accept that. The rant from the party's leader earlier showed that Plaid Cymru is still at it.
The hon. Member for Brecon and Radnorshire said that the Government should press very hard to obtain objective 2 funding also. We are working hard to that end. The Lucas plant in the hon. Gentleman's area is situated 200 yards from the objective 1 boundary, and there is no prospect of changing that boundary. However, there is a prospect that we can get investment up the Swansea valley, which will benefit the communities hit so hard and savagely by that plant's closure.
Mr. Rhodri Morgan: Can my hon. Friend cast any further light on the timing of a decision on matching funds for objective 1, which will solve the chicken-and-egg problem that I and many other hon. Members identified earlier?
Mr. Hain: My hon. Friend made some important and valid arguments about objective 1 funding and its matching equivalent. However, the problem is more complicated, and also involves the question of public expenditure survey funding. When we have secured a decision from the European Union about the exact amount that Wales will be able to draw down, the problem that my hon. Friend described will have to be addressed, and the important points that he has made will be borne in mind.
During the past 20 months, we have pursued policies that are distinctive, but not separatist. I agree with my hon. Friend the Member for Islwyn that we can be Welsh, but British too. Devolution is not about separatism, but about giving Wales a democratic voice for the first time, and about decentralising power.
Mr. Letwin: I had some difficulty in following the Minister's reply to the hon. Member for Cardiff, West (Mr. Morgan). Would I be correct to summarise him as having said, "We have no money, and we are not sure that we will be able to do what the hon. Gentleman asked?"
Mr. Hain: No, that intervention was too clever by half. The hon. Gentleman should have listened to what I said. He may study it in Hansard tomorrow, when, I am sure, it will make sense even to him.
We have pursued a distinctive policy on education, promoting partnership between further education and sixth forms to give pupils and others more choice. We have invested £50 million in school budgets this year, 95 per cent. of which has gone straight into school budgets. We shall invest another £70 million in school budgets in the next year.
I am disturbed by emerging reports that some local authorities plan not to put their full share of that £70 million into the education budget, or that they plan to retain a proportion centrally, which will leave schools with insufficient funds to meet pay and price increases, let alone the development of provision. At least five local authorities are apparently considering those options, and I am prepared to name them if we find that the funds do

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not go into school budgets. I have made clear our expectation that their share of the £70 million should go to education, with the vast bulk of it included in delegated schools budgets. We shall monitor budgets closely to ensure that that happens, and a report will be made to the National Assembly, which I should expect to take a close interest in any authority that does not give a high priority to schools and education in its budget decisions.
Mr. Livsey: Powys has no intention of not supporting fully the additional money, but the number of schools in rural constituencies means that there are a lot of head teachers. The settlement is understandably skewed, but that is not taken account of in the budget, which is why some authorities are finding it difficult to balance the books on their education budgets. That is not to say that they will not pay the money due to their education budgets.
Mr. Hain: The formula for the money's distribution has been agreed with the Welsh Local Government Association, of which Powys county council is a member. Consequences flow from that.
Another distinctive policy is our decision to put an extra £3 million into rural bus subsidies this year, with an extra £2 million for the coming year, either for urban services or for extra services in rural areas. That is having a major effect on provision for those who have no access to a car.
Mr. Edwards: The additional money for rural bus services has been very welcome in Monmouthshire, but may I refer my hon. Friend to Monday's debate about the problems of school transport and the way in which many local authorities have had to reduce free transport provision for certain children because of financial constraints? Can he assure me that he will review that policy?
Mr. Hain: My hon. Friend pinpoints an important problem that affects virtually all of us. The cuts imposed by the previous Conservative Government on local authority budgets hit school transport. Our provision of £70 million should allow local authorities at least to start reversing those cuts, if not restoring them.
My hon. Friend the Member for Gower (Mr. Caton) spoke movingly, and with socialist passion, about the predicament of his constituents in Holtsfield. If he makes a representation to the Welsh Office on their behalf, we shall consider it very carefully.
My hon. Friend the Member for Monmouth (Mr. Edwards) commented on the delay in payments to farmers. The Welsh Office recognises the problem, and we shall invest £16 million in computer systems over the next three years to ensure that payments are made speedily and on time. I agree that the forms that farmers must fill in are incredibly complicated, perhaps too much so. To the hon. Member for Ribble Valley I say, yes, the new national stadium or millennium stadium, the new Cardiff Arms Park, will be open on time and I am sure that Wales will win the rugby world cup in it.
I accept the remarks about good-quality translation made by my hon. Friend the Member for Clwyd, West (Mr. Thomas), and I recognise that it is of concern that the translation of his speech in the Welsh Grand Committee in
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Aberaeron was not of sufficient quality. The matter needs to be addressed by the House authorities, but no doubt one of the reasons for the problem is that we are in the early stages of the Welsh language being spoken in the Welsh Grand Committee. The delay originally envisaged in the translation and reproduction of speeches made in Welsh in the Assembly is far too long; my right hon. Friend the Secretary of State recognises that and he will make an announcement soon.
My hon. Friend the Member for Cardiff, North asked about the role of Welsh questions, the Select Committee on Welsh Affairs and Members of Parliament representing Wales in the House of Commons. Procedure in the House is a matter for the House and its authorities, but we accept the need for further debate in Parliament as devolution becomes reality, so that hon. Members can understand its implications and any limitations on the issues they can raise. We are discussing with my right hon. Friend the Leader of the House how best to approach such a debate, which would also have an impact on Scotland and Northern Ireland.
The Select Committee on Procedure is examining the consequences of devolution, and substantive changes are a matter for the House to decide. The Government's memorandum to the Committee suggests that any changes at Westminster should be allowed to evolve as experience of devolution develops. That includes the role of the Welsh Grand Committee, the Select Committee on Welsh Affairs and probably Question Time as well.
I agree strongly with the passionate points my hon. Friend made about the evil of racism, which was highlighted by the Lawrence report. That report dealt mainly with London, but it applies in Wales as well. Perhaps because we have only a small ethnic minority community, we in Wales are extremely complacent about the problem of racism. However, four years ago there was a racial killing in my constituency: Mohan Singh Kullar was killed in the middle of the caring cohesive community of Cimla. That just shows that the strategies about which my hon. Friend spoke and which the Government support must be implemented as a matter of urgency.
Dr. Julian Lewis: Will the Minister give way?
Mr. Hain: No—time is marching on and I want to conclude my remarks. In 70 days, we shall have the general election for Wales, and we in the Labour party will be working for victory. We have a radical manifesto; we have already delivered on a long list of promises and we shall make further pledges to the people of Wales. We shall guarantee free bus travel for pensioners—a promise that we shall keep. That will liberate some of our poorest pensioners, who do not have access to a car, from the misery of being trapped at home, unable to travel freely. They will be able to travel right across Wales, this year on half fares and, in the next two to three years, free.
We pledge that no one in Wales will wait more than six months for out-patient treatment, or for more than 18 months for in-patient treatment. We are creating thousands of extra education and training opportunities for young people in Wales, and we have pledged to create 36,000 additional places in further and higher education for students in Wales. We are providing more than £1 billion extra for the national health service in Wales, and an extra £850 million for education and training over the next three years under a Labour-controlled Assembly.

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On 6 May, voting Labour will give Wales a real voice for the first time—a voice for jobs, a voice for education, a voice for health, a strong voice in Europe and an effective voice in London. For far too long under the Tories, Wales was forgotten, ignored and neglected. Now, under Labour, we can shape our own future and make our own history by standing up for Wales, for our families and for ourselves and voting for Labour to run our National Assembly, because Labour is the real party of Wales.
6.29 pm
Mr. David Jamieson (Lord Commissioner to the Treasury): I beg to ask leave to withdraw the motion.
Motion, by leave, withdrawn.

BUSINESS OF THE HOUSE
Ordered,
That, at the sitting on 1st March, the Speaker shall put the Question on the Motion in the name of Mr. William Hague relating to the Corporation Tax (Instalment Payments) Regulations 1998 not later than half-past Eleven o'clock or one and a half hours after the commencement of proceedings thereon, whichever is earlier, and the said Motion may be entered upon and proceeded with, though opposed, after Ten o'clock.—[Mr. Jamieson.]

STATUTORY INSTRUMENTS (JOINT COMMITTEE)
Ordered,
That Mr. Colin Burgon, Rosemary McKenna and Mrs. Diana Organ be discharged from the Select Committee appointed to join with a Committee of the Lords as the Joint Committee on Statutory Instruments and Mr. Brian White, Mr. Ivan Henderson and Mr. Harold Best be added to the Committee.—[Mr. Jamieson.]

Au Pairs
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Jamieson.]
6.30 pm
Mr. Nick St. Aubyn: I thank the Speaker's Office for helping me to secure this debate tonight on the employment of au pairs.
The date 16 February should go down as a day when the House showed its effectiveness and the Government demonstrated their disorder. Those who write off the power and influence of this place should listen to this debate.
I have correspondence regarding a written question inquiring about the Home Office's intentions vis-a-vis au pairs. In answer to a question from my hon. Friend the Member for Christchurch (Mr. Chope), the Under-Secretary of State for the Home Department, the hon. Member for North Warwickshire (Mr. O'Brien), said:
"With effect from 1 April, overseas nationals living in the United Kingdom as au pairs will be subject to the National Minimum Wage provisions."—[Official Report, 16 February 1999; Vol. 325, c. 654.]
As that announcement hit the presses, the Secretary of State for Trade and Industry made a different statement. He told the world:
"people working and living as part of a family (for example au pairs) will be exempt"
from the minimum wage legislation. The Secretary of State showed in a previous existence in the Education Department that he had something of a mental block when it came to arithmetic, but even someone who cannot remember his seven times table must surely realise that an inter-departmental responsibility requires communication between Departments. The problem for au pairs—which spurred this debate in the first place—was created by the complete shambles of Government policy in this area. The Government showed how little they understood the problem when they suggested that it could be solved by application of the minimum wage and the working time directive.
We can have no confidence in the DTI announcement. Although the Government have given an assurance that the minimum wage legislation will not apply in the related case of paper girls and boys, that has been flatly contradicted by senior European Union officials. The Minister who will respond to this debate does not have responsibility for those matters, but I ask her to secure from the Government a clear statement that they are confident that their exemption of au pairs from the minimum wage and the working time directive will not be overturned in future by the European Commission. It is clearly determined to overturn the ruling in respect of paper girls and boys.
There are about 25,000 au pairs in this country who came to Britain under a scheme that has been running for 50 years. In recent years, there has been a marked change in the nature of the au pair. One is far more likely to find a male au pair than a Swedish au pair in Britain today. The original scheme brought many au pairs from Scandinavian countries. However, as employment opportunities have opened up in the European Union, au pairs have increasingly come to Britain from eastern Europe.

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The previous Government recognised the change in society and allowed men as well as young women to come to this country as au pairs. Far from being the luxury of an affluent family, the au pair is often a necessity for a working family. If the minimum wage regulations had been passed—as the Government tried to achieve until the last moment—many working mums would have had to leave their jobs. That outcome would have defeated one of the objectives of the Department for Education and Employment: to enable more of those with young children to find at least part-time work and afford child care in the home.
We must not forget the large number of au pairs who attend adult literacy courses, certainly in areas such as Guildford. They pay the full cost of those courses, which enables local councils, despite recent savage Government cuts, to continue to provide adult literacy education at lower cost to those who live in the local community.
This debate is about much more than the role of paid employees. It concerns a cultural exchange in which young people come here to learn English, which gives them a passport to jobs around the world, and to learn about our country and, hopefully, go home and spread the good word. It is a personal exchange in which the ties between a family and an au pair can last for many years after the terms of engagement have expired.
That is why the previous Government were particularly anxious to support and build on the au pair scheme at a time of great change. That is why they cut red tape, enabled the countries operating under the scheme to switch from Scandinavia to eastern Europe and allowed men to become involved in the scheme. This Government have so far signally failed to come up with any answers to the problems facing the au pair scheme today, and we must be in no doubt that those problems are the wider reason for this debate.
There must be a problem with the au pair scheme when I hear of an au pair who was made to work from seven o'clock in the morning until nine o'clock at night, five days a week. It is a requirement of the scheme that au pairs should not be put in sole charge of children, and such cases completely contradict the scheme's purpose and intentions. There must be a problem with the scheme when an au pair arrives back on Christmas eve at the home where she has been staying to find her suitcases on the pavement and nowhere for her to go. There must be a problem when, in her first employment, an au pair receives a scalding mark from an iron on the back of her hand and, in her next job, she is sent up ladders to wash windows. There must be a problem when a case comes to my attention of an au pair who was sent out on cleaning contracts, earning £5 an hour for the person with whom she was living, when the typical au pair earns £50 a week.
This is, above all, an issue of child care, and that is why I welcome the Minister's interest. If those au pairs are not being properly treated by the families with whom they live and whom they assist, it is ultimately the children who will suffer in those families, with much greater and wider consequences. I emphasise that those are isolated cases. There are many thousands of examples of the au pair scheme working effectively and building links between this country and other parts of Europe.
I shall make a number of practical suggestions as to how the scheme could be improved. I have in my hand a guidance information note published by the Home Office.
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It was revised by the Government shortly after they came to power. It says that, if au pairs stay in this country for more than six months, they will
"normally be required to register with the Police."
That is the system that the Government inherited but, last August, they did away with that requirement. I am told by responsible people who work in that area that the Government's action has led to a significant increase in the scale of problems that they are encountering. I urge the Government to reconsider the relaxation of that rule.
There should be a registration system to protect au pairs and to ensure that they abide by the terms of the scheme. There should be no incentive for anyone to distort the au pair scheme into a system whereby people can illegally gain entry to this country.
In 1996, the previous Government set up a complaints helpline for those who find employment through employment agencies. That scheme was intended to cover au pair agencies as well. It is noticeable that, in the revised leaflet produced under the present Government, there is no mention of that complaints hotline. I suggest to the Minister that the Government would do well to publicise both to families and to potential au pairs the availability of that helpline, so that au pairs who find themselves in trouble will have somewhere to turn to, and families who might otherwise contemplate taking advantage of the situation know that the girl or boy in their care has a means of making a protest about the conditions.
The source of au pairs has switched from a part of the world where people are typically as affluent as in Britain to a part of the world—eastern Europe—where there is a great deal of poverty and deprivation. Many of those who come to this country do not have the standing, nor does the scheme have the history, that would tell them that advantage is being taken of them. Rules and regulations developed under the previous Government need to be adjusted to take account of the new circumstances.
Without wishing to impose regulations and bureaucracy on the au pair scheme, I suggest that some simple form of check-up on the whereabouts of au pairs might involve them giving information about the hours per week that they have been asked to work during their employment. Such a form could be handed in at the end of the period of employment, thereby removing any pressure that might jeopardise their position.
Those who come to Britain as au pairs have no formal training. They may have experience in their own families, but they have had no training that would raise them, for example, to the status of a nanny. In severe cases, where it has been found that families have persistently infringed the terms of the scheme and taken advantage of someone who has come to help the family, I suggest that some follow-up should be considered. That might be by local social services under the terms of the Children Acts or by some other means.
It is unacceptable that young people who come to Britain on a cultural exchange should be exploited and used as household skivvies. That must stop. It may be possible to draw up a register of such cases, limited as they are.
Above all, we should build on the good standard developed by responsible agencies and responsible families. There is far too much regulation of business,

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which is extremely burdensome, as I am sure my hon. Friends would agree. However, there is a case for self-regulation of child care, which is the subject of the debate.
I should like to draw a parallel with the year-out organisations. My last Adjournment debate last summer was on the topic of gap-year students and the development of guidelines that would ensure that they got a fair deal from the organisations with which they set up their gap-year programme. It is fortuitous that, this morning, I held a meeting with the senior gap-year organisations, in which we formally constituted a new association of gap-year organisations, among whose aims is to develop quality standards and clear guidelines to assure school leavers and others seeking a gap year that they will get the best possible deal. I pay tribute to the Minister and her officials for their help in developing that initiative. I have no doubt that, with additional help from the Department and through their own efforts, the year-out organisations will succeed in issuing guidelines and developing standards.
In the course of that meeting, we debated whether au pair agencies should be included as year-out organisations. Many of those coming to Britain as au pairs want a year out before they go on to university, or between university and the real world of work. There must be a distinction between organisations that are primarily in the voluntary sector, and send people from this country overseas, and au pair agencies. There is, however, a role model that au pair agencies could follow. With, I hope, the help of the Department, I shall be inviting the senior agencies to a meeting to establish whether a self-regulating body can be set up. In the past, agencies could be affiliated to the national organisation for all employment agencies, but I am told by experts that that system is far too expensive.
What could a self-regulating body achieve? It could certainly ensure the existence of a test of suitability. It could be said that there are not enough tests to establish that those who come to this country to look after children have the right attributes. We can all think of recent tragic examples in which people have been misplaced, with very sad consequences. A self-regulating body could provide for feedback to ensure that best practice is followed, and that those who work with families have not just a helpline to Government but another route by which they can improve their circumstances. It would enable the agencies to develop standards, and, in time, to establish a "kite mark" to distinguish the best and most responsible agencies from the one or two fly-by-night organisations.
I have heard of organisations that are placing advertisements in eastern Europe, offering what appear, in terms of the local currency, to be lucrative opportunities in this country. Only when the young people concerned come here and discover the costs of living in this country, and the terms and conditions under which they are expected to work, do they realise that they are being taken for a ride—and by then it is far too late.
The cost of a typical au pair placement is about £150, barely £1 a day for the term of the placement. I do not think that is enough for parents to pay in order to ensure the welfare of their children. A small increase could be secured if some cheap organisations were excluded as a result of higher standards. There is still considerable
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competition among the agencies, which, until a few years ago, were governed by a licensing scheme. It would be in the interests of child care, as well as those of families, if the best organisations felt able to charge a little more for giving a great deal more in terms of service and safety.
The United Nations convention on the rights of the child demands that children be protected from abuse and neglect. That is why I am so pleased that a Department that is already taking responsibility in regard to nannies is also taking an interest in au pairs, with the aim of ensuring that children eventually receive what they expect. Let us not forget, however, that this is a cultural exchange. If, after the shambles of the last fortnight, the Government finally get their act together, we can be sure that, as a result of that cultural exchange, the country's reputation will also be safeguarded. We can be sure that many more thousands will go home speaking well of Britain and their experiences here, and will continue to do so throughout their working lives.
6.50 pm
The Parliamentary Under-Secretary of State for Education and Employment (Ms Margaret Hodge): I am replying to the debate on behalf of three Departments, which have responsibilities for and an interest in the important issues that have been raised. The Home Office has responsibility for the immigration rules, which govern au pairs. The Department of Trade and Industry regulates the employment agencies, and therefore the au pair agencies, and has responsibility for the national minimum wage and employment rights. My own Department is responsible for the regulation of child care and for the national child care strategy.
Those Departments have an equal interest in the issues that have been raised by the hon. Member for Guildford (Mr. St. Aubyn), so he may want to know why there are not three Ministers in the Chamber to listen to the debate. The reason is efficiency and effectiveness of resources. I am a London Member and, on a Thursday at the end of parliamentary business, it is logical for me to reply to the debate.
I am grateful to the hon. Gentleman for bringing these matters to the attention of the House. They are important for children, for the young people who are au pairs and for the families who employ them. Some issues transcend the traditional party political divides, so I am happy to deal with the serious points that he raised. However, it is one of the ironies of life that I, and many Labour Members, have spent years arguing that there is a proper role for the Government and for the state, at central and local levels, to provide a proper framework of support for parents.
The Conservative party, of which the hon. Gentleman is a member, has argued for a long time that the interests of children and families are a private concern for parents and families with the state intervening only at times of crisis, when the child is at risk of abuse. I am delighted that he has performed a U-turn, which he accuses us of doing and which I hope I can persuade him we did not do.
However, I am pleased that we have found political agreement on this important issue in respect of the role of the state in supporting families. The hon. Gentleman will agree that we have to ensure that, in providing a framework of support to families and children, we do not create a nanny state that interferes too much in the concerns of families.

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Part of the shambles to which the hon. Gentleman referred stems directly from the problems that we have inherited because of actions specifically taken by the previous Government. Under the Conservative Government, we experienced the extensive deregulation of employment agencies, including au pair agencies. Until 1995, those agencies had to be licensed. Applicants had to publish a notice of their intention to establish an agency and the former Department of Employment, which had responsibility for these matters, would consider whether they were fit persons to trade. Matters considered included previous convictions for theft or dishonesty, and that was appropriate in respect of the au pair agency trade.
Three Members of Parliament took responsibility for deregulating employment agencies. Two—the previous Members for Tatton and for Enfield, Southgate—are no longer Members of the House and the other, who is not in the Chamber, is the right hon. Member for Henley (Mr. Heseltine). One could argue that those disappearances from the House are associated with the deregulation of au pair agencies. It is hard to envisage a more motley crew of Conservatives, and they are colourful in their diversity and division rather than because they represent a broad church within the Conservative party.
In 1995, licensing was swept away and, instead, a power of prohibition was established. That gave the Secretary of State for Trade and Industry the power to apply for an order to prevent individuals from trading as employment agencies for up to 10 years. Since we came to office, we have not hesitated to act where appropriate. Recently, the DTI secured a 10-year maximum ban against the proprietor of a schoolteacher agency. He was acting improperly, and not in the interests of children, in the employment of supply teachers.
I am delighted to inform the hon. Gentleman that the Employment Relations Bill will ensure a better framework of support through the re-regulation of some aspects of employment agencies, and hence au pair agencies. We want to improve the standard of protection for the clients of agencies, whether they are the workers or the parents who employ them.
The legislation that we inherited is inappropriate. In the Employment Relations Bill, we have made the first steps towards modernising the framework that governs the industry. My right hon. Friend the Secretary of State for Trade and Industry has made clear our intention to consult in the near future on a comprehensive overhaul of standards. Existing standards provide only for au pairs to be told who is responsible for meeting their return fares. The Minister of State, Department of Trade and Industry, my hon. Friend the Member for Makerfield (Mr. McCartney), is giving careful consideration to ensuring that agencies do not arrange placements for au pairs if they are required to pay their fare to or from home out of money payable by the family with whom they live.
The hon. Gentleman suggested that the Government had made a massive U-turn a couple of weeks back on the national minimum wage in relation to au pairs. I contend that our approach was sensible and practical. During the consultation process on the implementation of the national minimum wage, we considered the likely impact of our proposals on people such as au pairs, and what the best answer would be for that group. Our decision on whether au pairs fell under the definition of workers as defined in the National Minimum Wage Act
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1998 was a logical and proper interpretation of the Act in relation to that group of young people. It was not a U-turn—just good, practical common sense.
Mr. St. Aubyn: That is the point. It was such common sense not to include those young people in the minimum wage legislation that the Government should never have proposed to do so in the first place.
Ms Hodge: We could argue about that all night, but I suggest that it was during the implementation of the national minimum wage legislation that we considered this group of people and took the appropriate steps. It was not a U-turn, because we did not implement the legislation and then withdraw that provision.
This group of young people are not workers as defined by the 1998 Act because they work as if they were members of the employer's family. Foreign nationals in the United Kingdom under the au pair scheme who undertake light household duties or child care and are treated as members of the host family clearly fall within this category.
We have provided in regulation 2(2) of the national minimum wage regulations a limited exemption from the provisions of the 1998 Act for such work, provided that the worker is treated as a member of the employer's family, particularly for the provision of accommodation and meals, and the sharing of tasks and leisure activities.
Our approach will enable au pairs living as a member of the family to continue to undertake work for their host family, and it will also prevent exploitation through low pay for those workers who do not enjoy the benefits of family life. The hon. Member for Guildford asked whether the measure could be challenged in the European courts. That is not my direct departmental responsibility, but I undertake to ensure that he receives a full answer.
It being Seven o'clock, the motion for the Adjournment of the House lapsed, without Question put.
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Jamieson.]
Ms Hodge: I will deal now with how we see the role of au pairs developing. It is amusing that the word "au" could be an abbreviation of the Latin word "aurum", and is the chemical symbol for gold. Gold is one of the four oldest words in English, so it may that au pairs have been with us for some time.
Certain rules regulate the way in which au pairs can be treated. They must be unmarried, young—between 1727—and without dependants. As the hon. Gentleman suggested, they come to the UK to learn English, for cultural exchanges, to live as a member of an English-speaking family and to have opportunities to study. The scheme is open to young people from a limited and named range of countries. A maximum of five hours work can be done a day, in return for a reasonable allowance and with two days free per week. There is also a maximum period in which they are allowed to stay in country.
The fact that we now have male as well as female au pairs was not as a result of a great liberal move by the previous Government, but in response to a court case in relation to a Swedish au pair. As well as the rules, guidance is produced by the Home Office, suggesting the

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sort of work that au pairs should do, that they should have a room of their own and that they should have an allowance of up to £35 per week.
The hon. Gentleman asked whether there should be new regulation for au pairs, as they involve child care issues. My Department has recently undertaken wide-ranging consultation on the regulation of early education and day care. On 12 January, I announced a four-point plan for taking forward some of the issues that the consultation raised. We were aware of the strong lobby for a register of individual nannies and child care workers, but we felt that that was not appropriate, as it would not bring the security and benefits that families want. The benefits would not be commensurate with the bureaucratic burdens that such a move would impose.
The Department has begun work with the nanny agencies to draw up a voluntary code of practice to complement the revised regulations for the employment agency industry that are being drawn up by the Department of Trade and Industry. When the work is complete, agencies will be recognised as working to new, higher standards and parents using the agencies will be reassured that certain checks will have been carried out on nannies before they are submitted for jobs.
At this stage, there are no plans to include au pairs, who are not normally trained in child care, in the scheme. However, I am happy to assure the hon. Gentleman that we will look at the issue as we learn from our experience in running the scheme. However, some of his suggestions were incredibly bureaucratic, cumbersome and over-regulatory, would intervene enormously and would diminish the cultural exchanges and the flexibility of the current scheme. I am sceptical about some of his suggestions.
The hon. Gentleman referred to information and support for au pairs. There is a leaflet on immigration requirements for entry to the UK under the au pairs scheme. I know that my right hon. Friend the Home Secretary would be happy to include in that leaflet information on where advice on au pair rights might be sought. That might include the Department of Trade and Industry helpline, to which the hon. Gentleman referred. I undertake to ask the Home Secretary to look further both at what is incorporated in that leaflet and how it is distributed—whether there should be greater access to it at points of entry into the country and through au pair agencies.
Au pair agencies will give advice to both the au pair and the employer about their respective rights and responsibilities. We probably have to make more clear and publicise better the fact that, if people have complaints about the agencies through which they secure employment or, indeed, the services of an au pair, they should complain to the employment agency standards inspectorate at the DTI, which will not flinch from taking action.
The agency may be committing an offence in the situations that the hon. Gentleman described of au pairs working excessively long hours or being exploited. The agency must not knowingly place an au pair in a situation that is contrary to the terms of entry that govern the au pair scheme.
Mr. St. Aubyn: I am sure that the Minister is aware of the difficulties of proving that point. That is why one
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has to consider that it is ultimately the parents in those families, who have created the situation and who clearly know what is going on, who must in some way be made responsible for their actions.
Ms Hodge: A system that would require form filling by au pairs and some policing of parents would be an absolute nightmare and incredibly difficult to execute properly. It would not serve its purpose. The best thing that we can do is have a greater spread of information. Au pairs always have the right to change the family for whom they work, but they choose to come over to this country and, as with all such life choices, that involves some risk.
Like anyone else living in this country, au pairs have full access to the criminal justice system, so au pairs who believe that they have been wrongly treated, or mistreated, should report that to the police. Such a report would be fully investigated in the same way as any other offence.
The hon. Gentleman talked about reporting to police stations. The current system is that only visa nationals who come in as au pairs—those from four countries—are required to report to the police. There is no enormous benefit in the police knowing where the au pairs are. I am not clear how that would improve the opportunities for au pairs, protect them or ensure that they were not exploited.
Mr. St. Aubyn: Clearly, the scheme was more rigorous until August last year. There is no evidence that it was a huge burden on the police. It is a point of contact for au pairs. It is a point where their welfare can be checked, but it also means, as I have said, that the police know who the au pairs are and which au pairs are extending their stay within two years. That will ensure that the terms of the scheme are not abused by people who are seeking unlawful entry to this country.
Ms Hodge: I still think that the bureaucratic burden of such a scheme outweighs the benefits. What is probably better is to ensure that, in the leaflet, we publicise a range of agencies to which au pairs can go, from citizens advice bureaux to FRES—the Federation of Recruitment and Employment Services—and that there is a better distribution of the leaflet, so that au pairs have access to that information. I genuinely believe that that would be a more appropriate, less bureaucratic way forward.
The hon. Gentleman talked about the good work that he has been doing on the gap year and a voluntary code of practice. I have said that we will return to that issue when we see how our voluntary code of practice in relation to nanny agencies develops.
As part of the national child care strategy, we are setting up a national child care information line to provide printed information for parents on a range of issues. That will give a signposted service, referring callers to local contact points, other national organisations and helplines.
As part of the four-point strategy that I announced in early January, we are drawing up guidance for parents—first, on the employment of nannies in their homes—which we shall issue in April. Furthermore, by the end of next year, we should be issuing more general guidance for parents on a range of child care issues. We shall ensure that

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we incorporate in that guidance—which is being prepared for us by the Daycare Trust and the National Early Years Network—some ideas on guidance on au pairs.
The rights of children were at the heart of the hon. Gentleman's speech. I agree with him about those rights, which are behind every decision that the Government take on children being cared for by both formal and informal carers. He raised many important issues in the debate, and
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I congratulate him on having secured it. I hope that he will be satisfied that we are taking seriously some of the proposals that he made, and I look forward to working with him in the future, to ensure that we provide the best start for our children.
Question put and agreed to.
Adjourned accordingly at eleven minutes past Seven o'clock.