HC Deb 25 February 1999 vol 326 cc541-60

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 (Alyn and Deeside)

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 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 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.

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 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 (Newport, West)

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 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 (South Dorset)

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 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 (Ribble Valley)

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 (East Carmarthen and Dinefwr)


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 (Meirionnydd Nant Conwy)

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 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 (Vale of Glamorgan)

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 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 (Caernarfon)

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


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 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


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 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 (Brecon and Radnorshire)

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 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 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 (Woodspring)

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.

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 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 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 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 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 (Bridgend)

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 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 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 (Lichfield)

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.

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