HC Deb 02 March 2000 vol 345 cc597-655

Motion made, and Question proposed, That this House do now adjourn.—[Mrs. McGuire.]

2.58 pm
The Secretary of State for Wales (Mr. Paul Murphy)

At ten past 12 on 17 October 1944, when war was still raging, the first Welsh day debate, as we have come to call it, was held. It was opened by Lady Megan Lloyd George—then the Liberal Member for Anglesey but who later became the Labour Member for Carmarthen—and contributions were also made by the Member for Ebbw Vale, Aneurin Bevan, and my first predecessor as Secretary of State, Jim Griffiths. They argued that the debate was inadequate in the sense that devolution was necessary to address Welsh problems.

Indeed, that was just like 100 years ago—the Labour party is celebrating its centenary—when Keir Hardie told the people of Merthyr and Aberdare that we should have some form of home rule. Now we have it, and yesterday was the first St. David's day—and this is the first Welsh day debate—since devolution.

Nine months have passed since my predecessor's functions were handed to the National Assembly for Wales. There have been some painful moments, but it is a new, young, democratic institution, which the people of Wales voted for in their referendum.

There is undoubtedly a need, over the three or so years before the next elections are held for the National Assembly, for some stability to be recognisable in the Assembly. None of us would want to see a repeat performance of what occurred some weeks ago.

Mr. Llew Smith (Blaenau Gwent)

My right hon. Friend will be aware of the report from the National Audit Office and the Select Committee highlighting how Gwent tertiary college was just about destroyed by the previous principal and senior management. He will also be aware that a dispute is going on in the college because staff seeking a wage rise, not having received one for three years, went on strike yesterday afternoon. Would my right hon. Friend care to comment on a letter sent by the present chief executive, of which I have a copy passed to me today by the Gwent Gazette, the local newspaper, in which the chief executive encourages young kids to cross the picket line to break the strike? That has serious cost implications, and we now have a situation in which the chief executive—

Mr. Deputy Speaker (Mr. Michael Lord)

Order. I hope that the hon. Gentleman will not continue his intervention, which is already very long. We have only just started the debate, in which many hon. Members want to catch my eye. It will set a very bad precedent for the debate if there are interventions of this length. Therefore, I hope that the hon. Gentleman will come very briefly to his point.

Mr. Smith

Will my right hon. Friend dissociate himself from the sentiments in the letter, in which the chief executive is pitting students against staff to try to break a strike?

Mr. Murphy

I am intrigued as to how that intervention came on the issue of the need for stability in the National Assembly. I can understand that there is also a need for stability in Gwent tertiary college. As a Gwent Member, I am very aware of what my hon. Friend is referring to. I hope that the principal and the trade unions will get together as speedily as possible. I certainly do not think that the letter to which my hon. Friend referred has helped matters at all.

I return to the National Assembly. I believe that, in the few months since it has been up and running, it has achieved many things for Wales. At this stage it is right for me to pay tribute to my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael), who unquestionably set the Assembly going on the right lines. He established it in its first months, and we should all wish him well, as indeed we should wish the new First Secretary, my hon. Friend the Member for Cardiff, West (Mr. Morgan), well, too.

Dr. Julian Lewis (New Forest, East)

I do not wish to dissent from wishing the hon. Gentleman well, but does not the Secretary of State agree that it has not set a good precedent that after the last two incumbents as Secretary of State for Wales went to the Assembly they proceeded never to vote, in one case, or on only one occasion, in the fulfilment of their parliamentary responsibilities in this House? Does he also agree that this sort of dual mandate is proving deeply unsatisfactory?

Mr. Murphy

The hon. Gentleman knows as well as I do that when there is a general election for this House there will no longer be such mandates, so far as my party is concerned. It is clear that the holder of the responsible job of First Secretary has an extremely difficult and onerous position in establishing the National Assembly.

In the months of its existence the Assembly has done many good things. It has, for example, established special relations with business in Wales, with the voluntary sector and with local government, in a way that has never been tried or tested elsewhere in this country. It has set in train a radical reform of post-16 education and training in Wales; it has launched "A Better Wales", which sets out a radical transformation of the quality of life of Welsh people over the next decade; it has brought a new approach to dealing with social exclusion; and for the first time ever the £8,000 million Welsh budget is being decided in Wales by those elected in Wales to deal with the priorities. In such a short time it has achieved much.

Mr. Allan Rogers (Rhondda)

Is my right hon. Friend suggesting that the disbursal of moneys in Wales before the establishment of the Welsh Assembly was not done by elected Members?

Mr. Murphy

Of course not. It was done by my predecessors and the two Under-Secretaries who accompanied them. As I can be today, previous Secretaries of State could be questioned by Members of this House, by the Select Committee, the Grand Committee and so on. What I am saying is that there is now a much stronger, more transparent way of looking at the budget, because there are now 60 elected Assembly Members in Wales, and they are in a position to examine that budget. We are, too, of course, in the sense of looking at the overall budget. Not long ago I appeared before my hon. Friend the Member for Clwyd, South (Mr. Jones) and his colleagues on the Select Committee on Welsh Affairs for five and a half hours. That appearance was all about money, too, so the opportunities for examination by elected representatives of the people of Wales are now doubled. It can happen here in this House and it happens in the National Assembly.

Mr. Dafydd Wigley (Caernarfon)

The Secretary of State has referred to the way in which money is distributed. A central question is the total money available. The right hon. Gentleman will be aware of the report from Brussels—the response to the single programming document on objective 1 status for Wales—which said: The Commission needs to be satisfied that future financial resources will be available to provide public spending for the whole programme and cannot be satisfied that this will simply be reviewed in the forthcoming comprehensive spending review. A commitment to this effect needs to be included in the final SPD. That is something we need to do this month. Is the right hon. Gentleman in a position, in conjunction with his Treasury colleagues, to give an assurance now so that we can give that commitment from the National Assembly in response to the SPD?

Mr. Murphy

The document was incorrect in its references to the forthcoming comprehensive spending review. We are in the middle of it; it started at the beginning of the year and concludes in July.

As a Member of the National Assembly as well as of this House, the right hon. Gentleman knows that the document—the plan—is an agreement between the European Union and the National Assembly. My hon. Friend the Member for Cardiff, West indicated to the Assembly this week that in no way did that comment mean that the Commission would block the plan when it came up for further consideration at the end of March. I cannot give an assurance of the type that the right hon. Gentleman seeks, because we are still in the process of that spending review. We have gone over these matters many times. Obviously, it is a hugely significant issue for Wales. I am given to understand that the progress of the plan will not be hindered by the comments to which the right hon. Gentleman has just referred.

Mr. Alan W. Williams (East Carmarthen and Dinefwr)

I should like to quote to my right hon. Friend the following words of my hon. Friend the Member for Cardiff, West (Mr. Morgan): The Commission has confirmed that it does not intend to block the single programming document until the spending review is completed later in the summer. Therefore, the Commission is quite willing to wait until July.

Mr. Murphy

My hon. Friend reinforces the point that I have just made.

I return to our roles as Members of Parliament and Ministers here. I am the thirteenth Secretary of State for Wales. The job has changed. It is to protect the settlement; to symbolise the place of Wales in the United Kingdom; and to represent Wales in the Cabinet and the Cabinet in Wales. It is also, with Members of this House and the other place, to steer through primary legislation for Wales. There are at least half a dozen Bills going through the House—the Local Government Bill, the Learning and Skills Bill and others—in which there are very large Welsh sections. Some 35 per cent. of the Learning and Skills Bill relates to matters specifically affecting Wales.

Mr. Gareth R. Thomas (Harrow, West)

As my right hon. Friend knows, I represent a London seat, but it contains some 2,500 people of Welsh descent, a delightful Welsh chapel and the very active Harrow Welsh society. It is also close to the Welsh school in Willesden, which, as my right hon. Friend will also know, is experiencing financial problems.

As my right hon. Friend stalks the corridors of Whitehall and Westminster, will he be able to ensure that the educational needs of Welsh people living outside Wales will be given some consideration?

Mr. Murphy

It is difficult enough to represent Wales in the House of Commons; representing the Welsh diaspora as well is even more difficult. I accept, however, that the Welsh school plays a significant part in the lives of Welsh men and women—and, obviously, children—in London, and I will make appropriate representations to my right hon. Friend the Secretary of State for Education and Employment.

Our roles as Members of Parliament have changed. I mentioned the Select Committee on Welsh Affairs, which must now find a new role and, in my view, is dealing with that very well. The Welsh Grand Committee still meets, and provides a forum for those who represent Welsh constituencies. Welsh Question Time has changed as well. I should, however, mention something else, because it has been mentioned to me by Members on both sides of the House. Those of us who represent Welsh constituencies are not London Members; we are Welsh Members who happen to be in the United Kingdom Parliament, which happens to be in London. That should be put on record because, as we enter a new constitutional age, nomenclature is important.

As for our constituency work, I have no evidence—I am sure that the same applies to my colleagues—that our postbags have diminished. Moreover, our role here as representatives of the people of Wales has not diminished either. Nevertheless, I feel that we should, along with our colleagues in the Assembly, develop a new role enabling us to work together for the benefit of our communities.

The settlement—the contract with the Welsh people that devolution constitutes—is concerned with, above all, the place of the Assembly in the United Kingdom as well as its place in Wales. The relationship between the Assembly and the House of Commons is hugely significant. We are all in this game—this business of governance—to improve the quality of life of Welsh men, women and children, and we can do that together.

I think that the ultimate test of any politician, wherever that politician is a Member, is whether at the end of the term of office—here, or in the Assembly—the people he or she represents enjoy a better quality of life than when that term of office began. I also think that Members of Parliament and Members of the Assembly can bring that about together.

During that first Welsh day debate in 1944, Aneurin Bevan spoke of the problems confronting the people of Wales. We would do well to heed his advice today as we take stock of the progress that we have made in the past nine months towards democratic devolution—towards what I call "partnership with a difference". Bevan said: What is the problem that I, and my colleagues, were up against between the two wars? We had in Wales, in the Welsh valleys in particular, a problem arising out of unemployment in the basic industries. I spent most of my adult life in the shadow of unemployment, because the basic industries happened to be situated largely in South Wales. Our problem was to try to get enough political leverage to secure attention for our difficulties.—[Official Report, 17 October 1944; Vol. 403, c. 2313.] The words enough political leverage to secure attention are another way of saying that Wales's problems, then and now, need that "partnership with a difference" between our Assembly and our Parliament and Government.

As ever, Bevan started from where his people were—from their lives, concerns and aspirations. He put it all in a universal context, recognising that the task of the politician is to be the tribune and the advocate of the people in terms of their hopes and aspirations for a better life. That, in my view, is what politics is all about. If we fail the people, the democratic institutions that we cherish, and have only just established, will fail as well.

There are a number of contexts in which we can tackle together the problems that afflict the people of Wales. That is why the Chancellor of the Exchequer set up three task forces representing the United Kingdom Government and the Governments of Wales, Scotland and Northern Ireland, to deal with the knowledge economy that is so vital to the future of Wales, with child poverty and with pensioner poverty. The other important reason that the Assembly is joining this Parliament in considering stability in the years ahead is the importance of delivering the services that it is charged to provide, just as we are in the United Kingdom Government.

Mr. Paul Flynn (Newport, West)

My right hon. Friend mentioned pensioner poverty. As he knows, one of the Government's main promises and priorities was to help the poorest pensioners. Is he aware that no action has been taken to discover the identity of the 700,000 poorest pensioners in the United Kingdom—many of them in Wales—whose income is below the minimum income guarantee level? Action was promised in April 1999 and again last month, but, as I say, none has been taken. Will my right hon. Friend use his good offices to ensure that a scheme to alert the poorest pensioners to the availability of benefits will be initiated in the near future?

Mr. Murphy

I can give my hon. Friend that assurance. It is obviously important to identify as many people as possible who can qualify for the benefits that the Government have given.

The Government have been tackling social exclusion, poverty and worklessness, step by step. Since the last St. David's day debate, more than 100,000 low-paid workers in Wales have benefited from the first ever national minimum wage. More than 80,000 Welsh families have benefited from the working families tax credit. Families have received the biggest ever increase in child benefit. Unemployment in Wales has fallen by 9,000, to a 20-year low. Youth unemployment has been cut by 75 per cent. since 1997. Pensioners' winter fuel allowance has been guaranteed, and more than half a million pensioners in Wales benefit from that. Moreover, the new deal, which has already helped more than 10,000 young people in Wales to find jobs, will be extended to all unemployed people. Pensioners over 75, of whom a quarter of a million live in Wales, will be given free television licences.

Mr. Lembit Öpik (Montgomeryshire)

Notwithstanding the list of the Government's contributions that the right hon. Gentleman has given, does he agree that there seems to be a different cycle of economic development in different parts of Wales? Some parts, especially rural areas, are in recession. Is not one of our roles to do what we can to deal with the poverty trap in desperately poor rural areas?

Mr. Murphy

Of course I agree that poverty is not limited to urban and industrial areas. Over the past few months, we have engaged in many a debate on such issues. However, all the measures that I have outlined apply as much to rural as to urban areas, and I think they are all hugely significant in reducing the poverty of our people in Wales.

The whole business of reducing poverty and improving lives can happen only when there is a stable economy that can help to produce schools and hospitals, and there is no doubt that my right hon. Friend the Chancellor has produced just that. We have a good, strong, stable economy, and that is the basis on which we can work in Wales to secure a better life for our people. We are making work pay, and giving everyone who wants to work an opportunity to do so. We are fighting for the families of Wales by keeping inflation under control, and keeping interest rates down. The most effective support for social inclusion is work, and the Government have made getting Wales off benefit and into work their priority. We have been able to make progress because we have got the economic fundamentals right. We did not go for the soft options proposed by the Conservative party, and as a result, unemployment has continued to fall.

I shall be interested to find out, when the hon. Member for Ribble Valley (Mr. Evans) rises, what he will tell the House about the new deal and the working families tax credit, and whether he agrees with the shadow Chief Secretary, the right hon. Member for Wells (Mr. Heathcoat-Amory), who told the House that no future Conservative Government would want to make use of European structural funds.

I deal briefly with economic developments in Wales. The Government's key themes of modernisation, enterprise, fairness and partnership are having a major impact on the Welsh economy. In the past few months, I have been privileged to go around Wales, visiting universities and colleges in Bangor, Swansea and elsewhere and launching information and communication technology centres in Ogmore vale and Merthyr. People are recognising that we transform our economies by constantly raising the skills levels of all our people.

The projects that have been launched in Wales in the past two years are legion. I shall not list them, but I know that my right hon. and hon. Friends will be able to point to examples of first-class economic development in their constituencies, where highly skilled jobs have resulted from the Government's economic policy.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

My right hon. Friend kindly mentioned his visit to Merthyr, which was deeply appreciated, to see how we are trying to deal with IT skills. Is he conscious of the fact that training providers all over Wales are worried that with all the reorganisation that is going on, their work in financing and developing skills programmes might be disrupted? Will he therefore ensure that whatever else happens as a result of the Learning and Skills Bill, work will not be interrupted by the reorganisation proposals?

Mr. Murphy

The post-16 Bill's purpose is certainly to ensure that there is co-ordination between all training providers in Wales, and that Wales has a national policy for training. I am sure that the last thing that anybody wants is disruption of training opportunities. The Bill will give people greater opportunities. The details of the measure have yet to be discussed in the National Assembly because we are still passing the primary legislation. I know that my hon. Friend will be taking an active interest in those matters as the Bill progresses through the House.

The hon. Member for Montgomeryshire (Mr. Öpik) referred to the rural economy, and we could not have this debate without referring to the problems that have occurred in the countryside in Wales, as well as in England, over the past months. As I have said at Question Time, there is hardly a Welsh Member of Parliament who does not represent a farming community. Our constituencies are mixed. We are all deeply aware of the difficulties.

I am also aware that the rural development plan, which is being developed by the Assembly, our countryside Bill, which will soon be introduced, and our serious look at red tape will all have a good effect on the countryside. Farming is still a major employer, and Members of the House and of the Assembly need to work out the long-term future of farming in Wales.

In all the years that I have been in the House I have never had to perform so grave a duty as when I presented Sir Ronald Waterhouse's report on child abuse in north Wales. The report was a catalogue of the most appalling and unforgivable acts of random abuse and violence directed against some of the most vulnerable members of our society.

I made it clear then that the Government would not waste time in considering the report and taking any and all appropriate action. I am therefore able to tell the House today that the Government will bring forward an amendment to the Care Standards Bill to establish in Wales an independent children's commissioner on a statutory basis.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)

I am delighted by the right hon. Gentleman's announcement. He will remember that I spoke to an amendment of that nature in proceedings on the Local Government (Wales) Act 1994 and, as I recall, he supported that amendment.

Mr. Murphy

I am grateful to the hon. Gentleman because I know that the establishment of a children's commissioner has support from all parties in the House and the National Assembly.

The House will know that the appointment of such a commissioner is the first recommendation of Sir Ronald's report. Within the scope of the Care Standards Bill the role of such a commissioner would be confined to covering children in care. At the moment the Assembly is considering its proposals on a children's commissioner, and I am conscious of the fact that it is likely to seek to establish a commissioner with wider powers than could be accommodated in the Care Standards Bill. The Government will want to consider any Assembly proposals urgently and sympathetically when they are eventually published. Undoubtedly, we will want to discuss such proposals with the Assembly and seek speedy agreement on how they can be taken forward.

We have, in the Care Standards Bill, an opportunity to act now to protect children in care and we intend to take it. The commissioner will have statutory powers of monitoring and oversight of complaints, whistleblowing and advocacy arrangements for children in care. In addition to publishing reports, the commissioner will be able to examine the handling of individual cases of children in care.

All of us in public service have a duty to protect those in the care of the state. Sir Ronald's report showed that trust has been betrayed. By acting to establish a children's commissioner the House will be making its contribution to making such abuses and betrayals as few and far between as is humanly possible. None of us can guarantee that such abuse will never recur, any more than we can legislate to abolish evil, but we can use what powers we have to offer the maximum degree of protection from evil, and that is what the proposed amendment will do.

I repeat that I am conscious of the fact that the Assembly is still considering other roles for a children's commissioner, which was my party's manifesto commitment, and I know that other parties in the Assembly will agree to that measure. We will be in a position to meet the Assembly as soon as its Committee has considered the matter, and then we will have to consider the appropriate legislative vehicle.

Mr. Richard Livsey (Brecon and Radnorshire)

The right hon. Gentleman will know that the Assembly's Health and Social Services Committee has already given detailed consideration to the proposals for a children's commissioner. Will he ensure that he takes on board some of the forthright views expressed in the Committee and that the matter will be dealt with expeditiously?

Mr. Murphy

Yes, of course. I understand that the Committee has not yet concluded its deliberations, but when it has done so, we will discuss these matters with the appropriate Members of the Assembly. We will then have to consider how best to proceed. We do not know when the Committee will complete its deliberations, and we are well into the Session, so we will have to see how we can accommodate the proposals later. In the meantime, it is important that Wales has a children's commissioner who, by statute, will be able to deal with children in care. That will be a tremendous step forward.

Mr. Martyn Jones (Clwyd, South)

I, too, strongly welcome the idea of a children's commissioner for Wales. It will be a great step forward and is, as my right hon. Friend said, one of the many good recommendations of the Waterhouse report. However, there are question marks over the report, and I hope that my right hon. Friend will confirm that there is to be a debate on it in the House, so that we can discuss it at length.

Mr. Murphy

I am aware of my hon. Friend's interest in these matters, and I assure him that there will be an opportunity in the not-too-distant future for a full debate on them, and I am sure that he will take part.

Our vision is of a Wales at the heart of British, European and international life, where all, regardless of creed, colour, ethnicity or language, can feel themselves part of a great world community and yet also be distinctively Welsh and British. The Wales that we seek is not one where people have to choose between their Welshness and their Britishness, any more than they have to decide between social injustice and economic efficiency. We can be proud to be both British and Welsh. We want a society where business can prosper, but where everyone who wants a job can get one that pays a decent wage and where families can realistically hope for public services to be of the highest quality. That is our vision for our new Wales as we enter the 21st century.

3.29 pm
Mr. Nigel Evans (Ribble Valley)

I am being schooled in the odd phrase in Welsh, so I shall say, "Gwyl Ddewi hapus i chi." Lord Roberts of Conwy taught me that, and one could not have a better tutor in Welsh. I hope that the next lesson will allow me to say, "Happy St. David's day for yesterday," which would be more appropriate than what I have just said.

Mr. Deputy Speaker

Order. I remind the hon. Gentleman that foreign languages are allowed in the Chamber, but an immediate translation must be added.

Mr. Evans

I said "A happy St. David's day to you", but it would have been more appropriate for yesterday than today. I hope that lesson 2 by Lord Roberts will take me that stage further.

Mr. Flynn

May I have a ruling from you, Mr. Deputy Speaker, that the Welsh language is a foreign language in this Chamber? This is the only real Parliament that Wales has. Are you saying that, in this Parliament, the status of the language is the same as that of Slovenian or Ethiopian or any other language?

Mr. Deputy Speaker

It was not my intention to give such a formal ruling. I was simply saying that, if words are used in the Chamber that some hon. Members do not understand, it is helpful if, immediately afterwards, the English equivalent is given, for the benefit of those such as me, who enjoy the Welsh language very much but do not understand it.

Mr. Evans

I give you an assurance, Mr. Deputy Speaker, that the rest of my speech will be in English, as the only other Welsh phrase that I know is the one meaning "Merry Christmas and a happy new year", which is not appropriate.

The Secretary of State began by speaking about the centenary of the Labour party. I overheard a Minister say the other day that he did not understand all the talk about a 100-year celebration, as the party has been going for only six years. However, we congratulate Labour on its centenary. It is a great shame that more was not done by previous Labour Governments for the people of Wales.

It is also a shame that we debate Welsh affairs only once a year, and we did not have a debate at all two years ago. Two and a half hours has been spent on other matters today, and as I know that others wish to contribute, I shall be as brief as I can.

It is important that we have the St. David's day debate. The people of Wales and Members representing Welsh constituencies should not be sidelined. It is bad enough that we are constrained by the sort of questions that we can ask the Secretary of State and the Minister during Welsh questions when that rare opportunity arises, so it is important that the Select Committee and the Welsh Grand Committee continue to investigate Welsh affairs on behalf of the people of Wales.

The people of Wales can rightly be proud. I was proud of the way in which they conducted the rugby world cup last year in a world-class stadium in Cardiff. I will be at Twickenham on Saturday. I fail the Norman Tebbit cricket test time and again. Although I represent an English constituency, I shall be supporting Wales on Saturday, and I wish the team well.

The Prime Minister fails to recognise that there is a north-south divide. In Wales, as my hon. Friend the Member for Montgomeryshire (Mr. Öpik)—that will ruin his career—suggested a moment ago, there is a north-south-east-west divide. Certain parts of Wales are booming, and investment continues in places such as Cardiff. We cannot fail to see the cranes operating there, constructing new buildings, and the new investment that is being attracted. Further west, in parts such as Swansea, where I was born and lived for 33 years, it is much more difficult to attract investment.

The gateway to south Wales is the relatively new second Severn crossing, which has been open for four years. It is a great pity that it still does not have a proper name. Perhaps the Secretary of State and other Ministers with responsibility for the bridge would consider holding an open competition so that people in Wales and possibly other areas could suggest a name for the bridge, perhaps reflecting the links between England and Wales and the importance of the second Severn crossing.

I have not failed to notice the campaign organised by the Western Mail to make St. David's day a national holiday for Walezs. There is great merit in that. There is no reason why the people of Wales should not celebrate St. David's day. I was with some London Welsh people last night at their club, Daniels, where they were celebrating St. David's day.

There are still too many people in Wales who cannot find jobs and who therefore have 365 days of the year off. We must ensure that Wales remains competitive in the United Kingdom and Europe and globally. We have a global economy in Wales, so an additional bank holiday must be at the expense of an existing bank holiday. To make Wales less competitive would be a retrograde step for employment.

Mr. Simon Thomas (Ceredigion)

Does the hon. Gentleman accept that other European countries are fully competitive and have more bank holidays than Wales or England?

Mr. Evans

I am not sure whether other European countries are more competitive. The changes that were made and the legislation that was introduced during the 18 years of Conservative rule have helped to make Britain far more competitive than some other European countries. To impose more burdens on business in Wales at this time would not be useful.

The Secretary of State presented a review of devolution and said that the Welsh Assembly had already achieved a great deal. According to the findings of the latest ICM poll, he is one of the 4 per cent. of the British public who believe that devolution has achieved a lot; 88 per cent. believe that it has achieved a little or nothing.

Dr. Julian Lewis

Let us be fair. Does my hon. Friend agree that one thing that has been achieved is that there is much less work for officials of the Welsh Office to do in London, which probably explains why the Box is packed with them today? Evidently, their duties weigh lightly on their hands.

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

Order. The hon. Gentleman will not make reference to anyone outside the Chamber.

Mr. Evans

I thank my hon. Friend. I know that there is great interest in the debate, and particularly in my speech. I expect that that is why there are so many people listening.

Part of the problem with confidence in the Welsh Assembly was the overselling of the institution in the first place, and the way in which it started, with the rigged leadership election which finally backfired. No one now trusts the Labour Government on the holding of referendums or internal elections.

That is one of the reasons why my right hon. Friend the Leader of the Opposition is in Wales today. He is not afraid to go to the people. He is in Monmouth with his truck, selling in Wales the message of saving the pound, which is extremely popular with people in Wales and throughout the rest of the country.

We know that the jury is still out on devolution. As we were reminded earlier, three quarters of the Welsh people did not vote for it, but it is still in its first year. The nine Conservative Members of the Welsh Assembly are working hard to ensure that it works well for all the people of Wales.

Mr. Chris Ruane (Vale of Clwyd)

Will the hon. Gentleman give way?

Mr. Evans

No, I will not give way, as I know the point that the hon. Gentleman will make.

One of the priorities of the Welsh Assembly has been a new home for itself. We recall the farce about the siting of the Assembly—whether it should be in Cardiff or in other parts of Wales. The Secretary of State suddenly discovered that Cardiff was the capital of Wales and decided that the Assembly should be there. Then there was the farce about whether it should sit in the city hall or some other building, and now there is a farce about a new building. The Conservatives in the Welsh Assembly tried unsuccessfully to block the erection of a new building.

Page 30 of the White Paper on which the Welsh people voted, because there was no Act at that stage, stated that the Government estimate for acquiring and equipping a building for the Assembly would be between £12 million and £17 million. When we questioned that, we were told that £17 million was at the top end of the estimate. Less than 12 months later, the cost of that building has been estimated at £23 million, with a contingency of a further £3 million. Few people believe that it will cost less than £30 million.

Mr. Llwyd

Will the hon. Gentleman comment on the difference between £230 million for Portcullis House and the odd £20 million for a new democratic Chamber for Wales?

Mr. Evans

I shall refer Portcullis House to the Chairman of the Public Accounts Committee because I am unhappy about any waste of taxpayers' money. The cost of the Scottish Parliament building ran out of control. It was said that it would cost £40 million, but it will cost more than £200 million. The people of Wales had faith in the White Paper on which they voted at the referendum, when the margin of victory was narrow. The White Paper stated that the cost was between £12 million and £17 million. It is now estimated at £23 million and £26 million. Something is wrong and someone should be brought to book because of it.

Mr. Jon Owen Jones (Cardiff, Central)

Portcullis house was initiated by the Conservative Government. Why has no Conservative spokesperson criticised the expenditure on that building? Is it because the money is being spent in London and therefore cannot be criticised, while the expenditure that the hon. Gentleman criticises is happening in Wales?

Mr. Evans

The hon. Gentleman should listen more carefully. I said that I had criticised the runaway expenditure on Portcullis House. I criticise such runaway expenditure on any public buildings on which taxpayers' money is spent.

Mr. Ruane

Did the hon. Gentleman vote for or against the expenditure on Portcullis House?

Mr. Evans

That happened several years ago. If a vote was held, it probably took place late at night. However, we are discussing the problems of buildings that are costed, but for which the cost then spins out of control. The hon. Gentleman must bear some responsibility. The Labour Government have been in power for the past three years. What have they done to ensure that they have a tight grip on expenditure on public buildings?

The people of Wales do not want expenditure on a new Assembly building. Those who have visited the building know that it is perfectly adequate; many people would describe it as luxurious when compared to some of the rooms at Westminster. The priorities for expenditure should be the health service, education and the police rather than plush accommodation for Assembly Members.

I referred to the farce of the leadership. The Prime Minister did not understand his devolution settlement. In a rigged voting system, the right hon. Member for Cardiff, South and Penarth (Mr. Michael) defeated the hon. Member for Cardiff, West (Mr. Morgan) by getting fewer popular votes. The contest was a shambles; control freakery at its worst. I was interviewed by John Humphrys on Radio 4 on the day after the contest. He said that the result marked the worst day for devolution. The antics that preceded it were a disgrace, and the Prime Minister's dismissal of democracy in Cardiff as "fun and games" was arrogant. The removal of the Prime Minister's placeman and the choice of a new leader was a good day for devolution in Wales because at least the people of Wales had chosen him through their representatives.

Another problem surrounded the removal of the ban on beef on the bone. When the Welsh Assembly and the Scottish Parliament changed their minds and decided to consider the issue more deeply, it led to a paralysis of the Government. The Minister of Agriculture, Fisheries and Food changed his mind. He said that it was safe to remove the ban but that he would not do that without the agreement of the Scottish Parliament and the Welsh Assembly. That paralysis damaged the farming industry greatly.

Dual mandates have already been mentioned. As the Secretary of State said, when a Member of Parliament is also First Secretary of the Welsh Assembly, it is impossible for him to be here, and doing a proper job is extremely difficult. The voting figures illustrate the problem. All dual mandate hon. Members should consider which job they want to do. I suspect that they would resign their Westminster seats, as happened in Ceredigion.

Dr. Julian Lewis

Did my hon. Friend notice that, when I raised the matter in an intervention, the Secretary of State did not answer my point about the right hon. Member for Caerphilly (Mr. Davies), who does not lead his party in the Assembly and by January had not participated in a single Division in the House? Is that not an appalling abnegation of the duties of a Member of Parliament?

Mr. Evans

I agree. The right hon. Member for Caerphilly (Mr. Davies) is not alone. The record is 0 per cent. for several other dual mandate Members of Parliament. Their constituents would like a representative who worked full-time at Westminster to promote their interests.

Council tax bills will soon drop through the letter boxes of people in Wales. It will be an eye opener for many people to discover the following predictions. In Anglesey, the increase will be 16.5 per cent.; in Conwy, it will be 11.3 per cent.; in Powys, it will be 13.8 per cent.; in Swansea, it will be 14.1 per cent. and it will be a staggering 18.2 per cent. in Monmouthshire. Yet inflation is running at a little more than 2 per cent. There are four overspending local authorities in Wales. The other 18 unitary authorities have had to dip into their purses to subsidise them. However, the council tax increases, which average more than 10 per cent. in Wales, will seem pretty rich to people who were told during the general election campaign that there would be no tax increases. What is the council tax if it is not a tax? Pensioners have received a 75p a week increase, farmers' incomes have plummeted—they will find such increases unacceptable.

Mr. Llew Smith

Does the hon. Gentleman accept that council tax increases, especially in the poorest local authorities, have nothing to do with overspending or inefficiency, but everything to do with poverty? If he bothered to read research that was published this week, he would get a better understanding of how that poverty affects communities such as mine, which desperately need a lot of money to build up public services and rectify the injustices that they experience. The hon. Gentleman should never forget that the increases are due to poverty, not overspending or inefficiency.

Mr. Evans

I do not discount poverty, but it is the responsibility of Labour-run local authorities, the Labour-dominated Welsh Assembly and the Labour Government. People in poor authorities, perhaps those who have incomes that are just above benefit levels and face such increases, will be the new poor in the hon. Gentleman's constituency. They will have to scratch around for the extra money. Poverty will not affect Russell Goodway, the leader of Cardiff, whose salary has increased to £58,000. The bill will be picked up by poor people in Wales. That is a scandal.

Let us consider business rates. Today's Western Mail includes an article headed "Tourism staggers under body blow of huge rates rises". The new rate rise for businesses may be 40 per cent. Many small businesses in Wales are involved in tourism and operate at the margins. That is another problem.

The countryside has been mentioned. Rural poverty is great in Wales. The debates that we have held on post offices and the threat to rural post offices has been mentioned by the National Federation of Sub-Postmasters, which believes that half the rural post offices in Wales could face closure if the changes to automated credit transfer goes through. Some of those post offices do 40 per cent. of their business through ATC and the assurance that automated teller or hole-in-the-wall machines will be installed in rural post offices is not much comfort when consumers will face a £2.50 charge every time they use them. That is a scandal.

There are problems in the national health service in Wales. We were told time and again that it was safe in the Government's hands, but the number of patients waiting for an operation has soared by 13.9 per cent. since they came to power. The number waiting more than 12 months has gone up 60 per cent., the number waiting more than 18 months has rocketed by 167 per cent. and the number waiting to get on the waiting list has soared by more than 50 per cent., but the statistics hide the fact that we are discussing human beings who are waiting for treatment on the NHS. Last year, I raised the issue of the Newport man who was given a waiting time that was longer than he would live if he did not have his life-saving operation. We cannot have those problems in the NHS in Wales. A report says that another 42 intensive care beds are needed in the Swansea and Bridgend region and I ask the Secretary of State to consider the problems that the people of Wales face there and to talk with the First Secretary about how better to alleviate them.

Farming is in a deep crisis—the worst for 60 years. In the Ceredigion by-election campaign, I visited a farm with my right hon. Friend the Member for Devizes (Mr. Ancram), the chairman of the Conservative party, at which a calf was destroyed because the farmer simply could not afford to take it any further. He would have been lucky to get 50p for it at market. It is appalling that farmers have seen their incomes drop by 75 per cent. in three years. The farmgate milk price has completely collapsed and some farmers have to have two or three jobs to make ends meet. That is the crisis that farmers face in Wales.

The Government still fail to understand that, in the most rural parts of Wales, the car is not a luxury, but a necessity. Extra taxes have been heaped on the motorist and it costs £165 a year more to fill up a car in Wales directly because of Government tax policy. I hope that the Secretary of State is having talks with the Chancellor to ensure that motorists in Wales are not clobbered again in the next Budget.

Mr. Owen Paterson (North Shropshire)

My hon. Friend understates his case. According to the Automobile Association, if all the increases in fuel duty, value added tax and road tax are added up the average motorist pays almost £900 a year more to run a car. As he rightly says, a car is the last asset that a poor family in rural Wales can afford to lose, because with it will go the job.

Mr. Evans

The Government fail to understand that public transport is non-existent in parts of Wales and depending on it would be ridiculous. My hon. Friend is right to remind us of all the other extra taxes—stealth taxes—that have been put on the motorist in Wales.

On education, the Government said that class sizes would fall, but after an initial fall they have started to increase. That is a particular problem. The National Union of Teachers is concerned that in six local education authorities—Conwy, Caerphilly, Merthyr Tydfil, Wrexham, Ceredigion and the Vale of Glamorgan—the number of junior school classes with more than 30 pupils on the register has already increased. The people were promised that things would get better, but we are starting to see them get worse.

There is also a fear over rural schools and parents at Bwlchygroes primary school in Llanfyrnach are appealing to the National Assembly against Pembrokeshire county council's closure plans. The school is one of five that the council plans to close to save money and we have to have assurances from the Government about their commitment to rural schools. The Learning and Skills Bill, which is going through Parliament, is seen as a threat to sixth forms because of the way in which funding is being changed. Education is our investment in our future and it should not be spun out of all recognition.

Objective 1 status has been mentioned and we can see from the 21 January report from the Confederation of British Industry in Wales headlined "Major manufacturing gloom in Wales" that there is a real problem. Certain parts of Wales look to objective 1 status to ensure that they can attract extra investment, but on 17 February I received a press release from CyberCall, a west Wales company that is looking to expand with more than 400 extra jobs. It is dependent on objective 1 funding and match funding coming through and it looks to the Government to stop playing politics with the issue.

Mr. Martin Caton (Gower)

Will the hon. Gentleman give way?

Mr. Evans

Time is catching up on us, other Members want to speak and I am coming to the end of my contribution.

The Government should take cognisance of the Select Committee report, which was scathing about their treatment of that issue: The current CSR negotiations are a test of the Government's commitment to Wales, and indeed of the Devolution settlement. The Committee want the Government to get on with it, but the objective 1 report that they submitted to the European Union came back because the EU did not think it adequate. On page x, the Select Committee report says: The Prime Minister has said that the Government will not let Wales down. Welcome though these assurances are, the Government's "trust us" approach is not enough. That report was made by a Labour-dominated Select Committee.

Mr. Wigley

It is important to draw the House's attention to that valuable report, but is the hon. Gentleman aware that the Secretary of State responded by saying, it is my view that the report is incorrect in its conclusion, despite the fact that the First Secretary in Cardiff has said that it is a useful contribution to the debate on objective 1?

Mr. Evans

As far as the judgment on the report is concerned, I can tell the right hon. Gentleman whom I would believe. It is extremely important and influential and I hope that people will not close their eyes to what it says. Many in Wales are depending on objective 1 funding and they cannot wait until the end of the review.

The Government were elected under the banner "Things can only get better" and the Secretary of State said that he would be judged by what they did over their period in office, but can he say that things have got better for students in Wales, pensioners, motorists, farmers, those who are waiting for treatment on the NHS, taxpayers in Wales and the rest of the United Kingdom who will see stealth taxes go up by more than £40 billion in a Parliament, those in schools in Wales who look to a better service and those who are waiting for objective 1 match funding? There is only one conclusion: "It's worse than under the Tories" in Wales. [HON. MEMBERS: "That is what you say."] I am sorry—the words are not mine, but those of John Hopkins, Labour's Blaenau Gwent leader. In the Gwent Gazette on 10 February he said, "It's worse than under the Tories."

Mr. Llew Smith

That piece of literature was written in the English language. If the hon. Gentleman reads it again he will find that those are the words not of Councillor John Hopkins, but of the local newspaper. Councillor Hopkins did not make that statement.

Mr. Evans

I am sorry—the Gwent Gazette says that there was an "astonishing attack" on the Prime Minister and that the people of our area were better off under the Tories than they are with Labour, he says. That is a quote from Mr. Hopkins. I am sure that the spin doctors from Millbank have been on the phone—it will have been red hot because we all know how Millbank operates against discordant voices in Wales. A number of Labour MPs sitting here must feel that they were right and the Government wrong and we all know that the phones of one or two of them were red hot. I believe what John Hopkins says—it is worse than under the Tories and Wales is fed up with the Government's spin doctors. Wales is fed up with the political shenanigans and internal squabbles. Wales deserves a brighter, better future, and that is what the Conservatives will provide after the next general election.

3.59 pm
Mr. Allan Rogers (Rhondda)

It is always a pleasure to follow the hon. Member for Ribble Valley (Mr. Evans)—at least I will look good. I congratulate him on his profundity: he referred to the naming of bridges, public holidays, London parties and trucker Hague going through Wales. However, I must confess that towards the end of his speech he did apply himself to some real issues.

If the hon. Gentleman wants a campaign, will he join me on mine? I would much rather see the Welsh flag on the Cenotaph than have a public holiday on 1 March. I hope that my right hon. Friend the Secretary of State for Wales will join me in the campaign to pay tribute to all those Welsh people who died in wars in this century fighting to preserve our democracies and freedoms. Let us all join in the campaign to have the Welsh dragon on the Cenotaph. I will gladly trade it for a public holiday on 1 March.

I take the hon. Gentleman to task for castigating local authorities that have overspent. With his Government's reorganisation of local government in Wales, communities in the valleys could not afford to provide public services, except by stretching funds and sometimes overspending. The merger, for example, of Rhondda, Taff Ely and Cynon Valley councils—two of the poorest areas in Great Britain, by any socio-economic indicator—was bound to fail. It was done by his colleagues in government.

Some of my Labour colleagues are a little reluctant to give money to the poorest areas. Inclusive politics, which is the buzz phrase in Wales, goes out of the window when some of the richer parts of Wales are asked to give something to poorer parts—then we see the inclusiveness and brothers in arms. As always, the Welsh are happy to stab each other in the back on occasions and not to support themselves by running under the same flag, except perhaps on days when we play rugby against the English.

The Secretary of State is right to draw attention to Labour's achievements in Wales, but I was much amused to read the document that came around a little earlier that listed securing a yes vote in the devolution referendum as one of Labour's achievements. Many of us, and certainly the vast majority of the people of Wales, would not regard that as an achievement by any standard.

A peculiar view has developed: more government means good government. The more tiers of government there are, the better people are represented and the more democracy there is. In one sense, democracy is a finite thing; it is not extended by creating all sorts of organisations. Democracy can be destroyed, and democratic deficits or gaps can arise as a result of creating too many institutions. It will certainly eat up many already poor resources, which should be spent on education, schools, hospitals and other health facilities.

During the debate on the Welsh Assembly, all sorts of statements were made. My hon. Friend the Member for Neath (Mr. Hain) said that investors and industries abroad were queueing up, waiting for the Assembly to be set up; they saw that Wales was going to become a democratic country and they were prepared to invest. That was one of the arguments of the vote yes campaign: everyone was waiting for Wales to become democratic, as though it were not before.

I am extremely proud to be Welsh, but I am also proud to live in a British community which, from my experience—I have worked as a geologist in many countries—is probably one of the best to live in and enjoys a measure of democracy that most people in the world do not achieve. I do not think that setting up the Assembly extended democracy—it extended bureaucracy. [Interruption.] The right hon. Member for Caernarfon (Mr. Wigley), the leader of the Welsh nationalist party, scoffs at that. Is he daring to suggest that bureaucracy in Wales has not increased as a result of the setting-up of the Assembly?

Let us consider a point that the Secretary of State made: 60 Members are now making decisions that were previously made by three Ministers. Secretaries are coming out of our ears in Cardiff, all being paid very handsome salaries; it is all very expensive. Is that an extension of democracy and not simply an extension of bureaucracy? I cannot see how my constituents in the Rhondda, one of the poorest areas in Wales, have benefited from any democratic increment that was supposed to come with the National Assembly.

Like some Labour Members, Welsh nationalists talked about inclusiveness. Wales was going to enter into a great period of inclusive politics—brothers in arms, Welshmen marching forward into the new millennium. Wow. Look at what has happened over the past few months. What sheer hypocrisy was spouted during that referendum campaign.

What has happened since the Assembly was set up? Frankly, one great achievement is that we have created a class of political eunuchs in Wales—not just in Cardiff, but in Westminster, too. In Cardiff, 60 people are being paid to do a job that was previously done by three people. There is a hugely expensive superstructure, a point that was raised by the hon. Member for Ribble Valley in relation to the new building. There are now more civil servants in Wales, so there has been a huge extension of bureaucracy. We were not exactly writhing under the yolk of British rule before last summer.

I understand that the eunuchs of the Ottoman empire spent time extolling the Sultan's characteristics—I am not sure who in Wales could be classified as the Sultan in the harem. The eunuchs invented increasingly elaborate titles for themselves in the harem. I am not suggesting that that is paralleled in the Welsh Assembly, but there seems to be a preoccupation with status and titles—and it is not confined to the Members. The statue of Oliver Cromwell stands outside, and visions of that age are evoked in me when I recall that the principal officer serving the Welsh Assembly is called the Counsel-General, one of the most wonderful titles that I have come across. I am not sure who picked that term out of the mire. I wonder what he is all about.

I also wonder what some of the Cabinet Secretaries actually do for their salary of nearly £70,000 a year, with expenses on top. There is bound to be a limit to the number of cattle markets, newly opened roads or potholes that can be visited. Not many schools or hospitals seem to be in the pipeline. With all due respect—all of them are my colleagues and in the same party—it is not as though they make profound decisions.

The Secretaries do not really have to make decisions. The Assembly is rather like a glorified county council. Many right hon. and hon. Members have served on local authorities. I had the privilege of serving on the old Glamorgan county council, which covered almost half of Wales. It took bigger decisions than many of those being taken by the Welsh Assembly.

I do not envy the role of the First Secretary, as I think that he has a very difficult job. However, one thing that he could do is reduce the number of Cabinet Secretaries. The great virtue is that it would free money to be spent where it should be spent, not on Welsh schools in London—I see that my hon. Friend the Member for Harrow, West (Mr. Thomas) has left the Chamber—but on schools such as the Rhondda special school for handicapped children. Water is coming through the roof and the yard is unsuitable as a playground for these very badly handicapped children. It is a shame to have spent £25 million on a new building for the Welsh Assembly when other buildings were available and there is not enough money to put three 1918 schools into a decent condition for our valley communities.

There is another virtue in getting rid of some of the Cabinet Secretaries. I understand why the former First Secretary appointed so many of them—he wanted a praetorian guard; people who would be loyal and back him through thick and thin. He wanted to ensure that, as a result of his patronage, whenever he was in trouble he could rely on their loyalty and backing all the way. Well, the events of the past few months demonstrate that one certainly cannot buy loyalty in Wales. I was disgusted by the great haste with which they all fled the field and left my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael) on his own. He was further emasculated by the Welsh nationalists who preside over the Welsh Assembly. If ever a dirty deed was done in Welsh politics, it was when Plaid Cymru combined with the Tories and the Liberals to stab him in the back.

Of course, we are no better off. I criticise my colleagues in Cardiff as being eunuchs, but we are also castrated as Members of Parliament. As the Secretary of State said, we still have a role to play. We still have our postbags because people look to us when they desperately need help. In one sense we are the last resort for many of our constituents who have problems. However, we face difficulties in tabling questions to the Executive and we no longer have the ability to question directly in respect of certain areas of government.

That brings me back to my initial point, which relates to a profound democratic issue. Some 200 years ago, America sought independence on the basis of no taxation without representation. The argument was that if taxes were raised and paid, the people's representatives should have the right to know how the money was spent. Now, Members of Parliament are in the ridiculous position of raising taxes, deciding the level of taxation and saying how much should be allocated to Wales, but not having the right to monitor how it is spent in certain areas. We cannot chase the penny, and that is fundamentally wrong.

I am not proposing that decisions should be taken away from the Welsh Assembly—which exists, warts and all. However, there should be a mechanism to enable us to participate and to put direct questions to the First Secretary. Instead of more democracy, we have a democratic deficit.

The Welsh Assembly is an experiment and I know that I am being overly critical of it, but my criticisms are justified because the people of Wales were misled last year. One has only to look at some of the statements that were made at the time to see quite how grossly they were misled on inclusiveness, for example. We have to give it a chance to win, but it is not for the Assembly to create a situation in which it can operate on its own. As I said year after year during the campaign, at the next election every Member of the Welsh Assembly will say of every proposal, "We would love to have done it, but we were prevented from doing so by Westminster. We do not have the chance to raise money or make laws."

There are already voices among the Welsh nationalists—quite rightly; at least they are not hypocritical about it—and elsewhere requesting more powers for the Welsh Assembly. The next election will be fought by every political party in the Welsh Assembly on the basis of more powers being transferred from Westminster. However, the Welsh people were not asked that question. Although, fractionally, there was a yes vote, had there been honesty, forthrightness and less hypocrisy surrounding the yes campaign in Wales, the Welsh people would have thrown it out.

4.16 pm
Mr. Richard Livsey (Brecon and Radnorshire)

This St. David's day is at the dawn of a new century. I believe that it is a good time for Wales and a good time to be Welsh. Wales has a higher and more respected profile in spite of the down side in the press and the media. However, that does not apply to London taxi drivers. Yesterday, when I was discussing St. David's day with a taxi driver, I told him that I had seen daffodils in Gwent yesterday morning. He did not believe me and said, "No. You have to put your daffodil in a pot and keep it in a warm place to get it to flower on 1 March." I replied, "I am very sorry, but I saw them two hours ago." He still did not believe me. There is obviously a big gap in perception between London and Wales.

There are great problems in urban and rural Wales. The question is what we can do about them here in Westminster and whether we have the right legislature in the Assembly to conquer urban and rural deprivation in Wales. Although I did not agree with much of what the hon. Member for Rhondda (Mr. Rogers) said, he pinpointed many current difficulties.

The rural-urban divide is a big problem in Wales. I am sure that many right hon. and hon. Members will have read in today's Western Mail an article by Rhodri Clark about rural Wales being left in the cold. I believe that it should be compulsory reading for Ministers.

The rural areas need to be reconnected with the rest of Wales. As they have fewer parliamentary seats because of their sparse population, urban representatives dominate in the Welsh Assembly and here in Westminster.

Since the 1960s, under Governments of both colours, the county of Powys has lost most of its transport infrastructure, including a huge amount of its railway infrastructure, its health authority, its ambulance service, three county councils, its police service base, its fire service and the Development Board for Rural Wales; and it is about to lose its probation service. That has resulted in a huge loss of decision making within our communities and a huge watering down of services. I would not advise anyone to travel at night in Powys, as, should they be unfortunate enough to have an accident on the road, an ambulance could not be guaranteed to arrive within the statutory response times in the hours between 12 midnight and 8 am. Five years ago, it was guaranteed that one would be picked up by emergency services within that time. There has been a serious decline in those services.

As hon. Members have said, there is a catastrophic crisis in farming. In the previous financial year, many farmers in my constituency earned 39p an hour. Currently, some of them are making no money whatsoever. Although I realise that that is a consequence of global markets and the pound's strength, something has to be done about it.

We have, thankfully, been successful in saving our community hospitals, owing largely to a massive campaign and a sympathetic decision—for which we are very grateful—by the previous Secretary of State for Wales, the right hon. Member for Cardiff, South and Penarth (Mr. Michael).

In my constituency alone, in the past 30 years, 30 rural schools have been closed. We have also had to run campaigns to prevent bank branches and post offices from closing. From all that, hon. Members will perhaps appreciate why we have had to fight a type of guerrilla warfare—against the big battalions of Government, bureaucracy and multinational companies. We now face the threat of at least half our rural post offices being closed because pensions and benefits will be paid directly into bank accounts. However, many poor rural people do not have bank accounts.

Mr. Wigley

Does the hon. Gentleman accept that there is a crying need for greater resources for the health service and rural schools? Does not that need—with a Budget in two weeks—underline the need to ensure that we maintain current taxation levels, so that resources are available rather than given away in tax bribes?

Mr. Livsey

I entirely agree with the right hon. Gentleman. The Liberal Democrats' policy is certainly not to cut tax by 1p, as will happen in the next Budget, but to spend that money on the national health service.

An announcement was made only yesterday on additional charges for using bank cash dispensers. However, in many parts of my constituency, there is only one bank's cash dispenser within a 20-mile radius. The decision to increase the charge might seem rational to someone at the bank's headquarters, in Cardiff or Birmingham, but it will spell disaster for local rural communities.

Our farming community, and what little manufacturing industry we have remaining, is threatened by global economics. Massive job losses are occurring in both sectors. We pay up to 5p a litre more for petrol and diesel. Although we have received a little money from central Government for rural bus services, those services range from few and far between to non-existent. New technology could provide some of the solutions, but some of the new technology infrastructure is inadequate and not up to modern standards.

A consequence of the massive decline in farming is that many of our young people have had to emigrate to find decent jobs. Those young people are replaced by others who come to our area to retire. Although it is not the retirees' fault that a consequence of the prices that they pay for houses is to put the local housing market out of reach of our younger people, or that they put additional strains on social services and the NHS—I do not criticise them personally; I welcome them—that is still the consequence.

There is much that we can and will do to reverse the downward trend, but it cannot be tackled properly unless the whole of Wales is properly unified, with a far greater sense of purpose and leadership than has to date been displayed. The main vehicle for regeneration will undoubtedly come from the National Assembly for Wales and from more enlightened legislation from Westminster, combined with the vital input initiated by the European Union.

The decline of the south Wales valleys has been devastating. I am privileged to represent communities in a part of the upper Swansea valley—an old industrial area containing some of the finest people whom one could ever wish to meet. They have an immense community spirit. Recently, however, global economics has overtaken them.

Lucas SEI, for example, closed because of the uncompetitive pound and rock-bottom wage rates in Poland. The whole operation was spirited away by the multinational company to eastern Europe. We have been left to pick up the pieces, and we are fighting back. The Amman and Tawe Valley Partnership, the Welsh Development Agency and other agencies, with the local elected hon. Members, are doing their best, and we have managed to get a new employer into the Lucas factory. Currently, however, it is employing only one tenth of the previous number of employees.

Every valley, especially in the coalfield areas, has declined. One has only to visit those areas to see the devastation that has been created largely by 18 years of Tory rule, but which is not being helped by the Labour Government's adherence to a far too strong pound and their current refusal to enter the euro zone. Now, the problem for Wales is that the type of decline that the valleys has experienced is rapidly being mirrored in rural Wales, especially in the decline in farming.

The plight of farmers is really terrible. Previously, Wales's Labour party leaders spent much time addressing the issue of the unity of urban and rural Wales. It is time that we again addressed that issue. The interests of Wales, whether urban or rural, should be considered as one entity. However, if we are to address many of those issues, we shall have to make the National Assembly more effective.

It was not surprising to learn that, yesterday—even on St. David's day—the National Assembly was impotent to take decisions on even relatively small adjustments to secondary legislation. The matter began initially with—I think correct—statements that Wales should be a GM-free area. However, because of legal advice, the Assembly could not proceed as directly in achieving that objective as it should have liked to do.

We also learned yesterday that amendments to proposals for performance-related pay and conditions for teachers may not be within the Assembly's province, and that the Assembly's decision on the matter may be pre-empted, at Westminster, by the Secretary of State for Education and Employment. I do not know whether that is true, but it is what is alleged.

I well remember speaking on Third Reading of the Government of Wales Act 1998, and saying that although establishment of the Assembly was an excellent achievement, the nature of the Act would greatly test the new Assembly Members. I said then that the Assembly would be known for what it could not do rather than for what it could do for Wales, and that that would be a very frustrating experience for all those who were involved. It gives me no pleasure now to acknowledge that my prediction has been proved true sooner than I had expected.

The fundamental flaw that has to be addressed, whether we like it or not, is that the Assembly is unable to exercise primary legislative functions—[Interruption.] Ministers may say "Well!", and the hon. Member for Rhondda may say that that was not in the referendum, but throughout the 20th century, the Liberal Democrats' policy was that a Welsh parliament should be created and have primary legislative powers. As that model has not been adopted, the various chickens that I have been describing have been coming home to roost.

I am sure that that legislative need will be recognised, and that, in the not to distant future, the Assembly will be given the powers necessary to match actions with expectations in Wales.

Mr. Evans

Is the Liberal Democrats' policy to push to give primary legislative powers to the Welsh Assembly without a referendum, and to give it tax-raising powers without a referendum?

Mr. Livsey

I was talking about legislation, not taxation. Nor will I abandon my party's adherence to a very important 100-year-old policy of granting primary legislative powers to a Welsh Parliament.

Mr. Rogers

That was a good Liberal Democrat answer.

Mr. Livsey

Yes, it was. I am obliged to the hon. Gentleman.

This week's announcement that the Presiding Officer will, for example, have his own independent legal officer demonstrates another weakness in the 1998 Act. We failed to include in the Act amendments tabled by Liberal Democrats Members that would have enabled the Assembly to have three classes of civil servant. I remind the House that we advocated providing for Executive departmental civil servants; independent civil servants, who would have been designated to work with Members and political parties; and officers of the Assembly, similar to those at the House of Commons, who could independently proffer advice to Assembly Members.

I believe that three classes of civil servant would solve many of the Assembly's problems. I am also quite certain that such reform, in the medium to long term, will make the National Assembly a far more effective democratically accountable body.

The vexed question of match funding for objective 1 and objective 2 initiatives, which was the cause of such a hiatus in the Assembly a few weeks ago, would have been eased to some extent had the Assembly had tax-varying powers. That is probably the most contentious of the proposals that we put forward during the passage of the Government of Wales Bill, but it would have epitomised democratic power with responsibility, which the hon. Member for Rhondda mentioned just now.

Mr. Robert Walter (North Dorset)

Will the hon. Gentleman clarify what he has just said about tax-varying powers? Is it his party's policy that the Welsh Assembly should be given tax-raising powers without reference to a referendum of the Welsh people?

Mr. Livsey

I did not necessarily say that, because that is an important matter. I refer the hon. Gentleman to the Conservative peer, Lord Roberts of Conwy, who has advocated giving the Assembly tax-varying powers and said that it could lower taxes and Wales could become a tax haven.

Mr. Evans

We need clarification on this simple point. Is it Liberal Democrat policy to give the Welsh Assembly tax-varying powers without a referendum? Yes or no?

Mr. Livsey

Yes, of course it is. I am sure that the hon. Gentleman can read our manifesto, which has said that in the past. I do not know why he is trying to persuade me to abandon a policy that, as the hon. Member for Rhondda has said, is entirely logical.

Mr. Ruane

Does the hon. Gentleman think that a proposal to give the National Assembly for Wales tax-raising or tax-varying powers would receive the backing of the people of Wales, with or without a referendum?

Mr. Livsey

We would seek to persuade the people of Wales. The Scottish Parliament has tax-varying powers with a 3p limit. There are various ways of achieving tax-varying powers without going the whole hog, as some have suggested that we would like to do.

I regret that such a hard-working and honest Member of Parliament and of the Assembly as the right hon. Member for Cardiff, South and Penarth should have had such a rough ride in the Assembly, but—[HoN. MEMBERS: "Look behind you."] I am sure that you agree that people should not interrupt half way through a sentence, Mr. Deputy Speaker. There is an element of truth in the description that he was Whitehall's representative in Wales rather than Wales' representative in Whitehall. That perception, together with the vexed question of objective 1 match funding and the Treasury's inability to come up with the necessary transparent evidence of such funding, unfortunately left the Liberal Democrats with no alternative but to vote in the way that they did on the confidence motion in Cardiff.

To paraphrase George Orwell, all votes are equal, but some votes are more equal than others. I welcome the arrival of the hon. Member for Cardiff, West (Mr. Morgan) as the new First Secretary of the National Assembly for Wales. In the end, democracy has won in Wales. Like the Liberal Democrats, the new leader adheres to the concept of one member, one vote—or OMOV, as he fondly describes it. There is something satisfying in the fact that in Wales—a country of fair-minded people with strong democratic principles—people of all political perspectives were able to see justice finally done. The hon. Member for Cardiff, West has clearly said that other systems of election not based on one member, one vote will not be exercised again in Wales. I welcome that. It is real progress and the Liberal Democrats wish the new First Secretary well in his endeavours to obtain for Wales a fair settlement of United Kingdom resources with which to tackle the many problems that I have described in my speech.

I believe that the Secretary of State is of a similar mind to the First Secretary in wanting to achieve success for Wales. Now is the time for real leadership and unity for the whole of Wales. That is very much in the interests of its people. I am optimistic for Wales in the 21st century. It is up to us and the Members of the Assembly to give a lead. Wales and its people together are far bigger than all of us and they deserve greater success in the future.

4.34 pm
Sir Raymond Powell (Ogmore)

It is a pleasure to follow the hon. Member for Brecon and Radnorshire (Mr. Livsey). However, I challenge him on what sort of democracy has won in Wales in the past few weeks. What happened was not democratic. He referred to a resolution that was tabled in the National Assembly for Wales. There is no doubt that the resolution was provoked by the Welsh nationalists for the purpose of disquieting most of the Members of the Assembly.

If we analyse the vote, we find that the result was determined by the unelected Members of the Assembly. Nineteen of those 20 unelected Assembly Members belong to the Opposition parties. They all participated in the debate and voted. I found the attitude of the Opposition parties in the debate disgusting.

Mr. Livsey


Sir Raymond Powell

Let me finish this point first. Unless the facts go on the record, I doubt that the House will ever know what really happened. The Secretary of State handed in his resignation—

Mr. Paul Murphy

No, I did not.

Sir Raymond Powell

I am sorry; it was the First Secretary. My right hon. Friend the Secretary of State has only recently taken up the post—no wonder I forgot. We shall have a long time to remember him afterwards.

The First Secretary gave what I am given to understand was a brilliant speech and handed his resignation to the Presiding Officer. I am sure that Madam Speaker or her Deputy Speakers would not allow a vote to take place on a person who had already handed in their resignation. It was disgusting and humiliating for the person involved and those who participated. The vote should never have been called. The fact that it was called was clear evidence of the political persuasion of the Presiding Officer. Anyone who watches a re-run of the proceedings will know that what I am saying is true. Such procedures would not be tolerated in the House, but we would never have allowed the situation to arise. My right hon. Friend the Secretary of State should negotiate with Madam Speaker, the Deputy Speakers and the Presiding Officer of the Welsh Assembly so that they can at least ensure that it never happens again. They should also look at the procedure for appointing and dismissing a Presiding Officer.

The hon. Member for Ribble Valley (Mr. Evans) took about 15 minutes of my time. If we have a debate on Welsh affairs in future, we may as well have it in Westminster Hall because sufficient time is not available in this Chamber. Perhaps arrangements could be made for a full day's debate on Welsh affairs before the end of this millennium.

I ask my right hon. Friend to consider the suggestion—not necessarily made by the Western Mail, because it always gets things wrong—for a public holiday on St. David's day. I do not want the Welsh nationalists to be able to say, "That was our campaign—we initiated it" because I made that suggestion on the Floor of the House in 1983 and I do not know whether some of them were here at that time.

Listening to my right hon. Friend's speech, I reflected on the two years and nine months that the Government have been in office and realised that he could have said a lot more. He might have done if he had taken twice the time used by the hon. Member for Ribble Valley. He could have recited chapter and verse in respect of all that the Government have delivered since 1 May 1997, especially for Wales. I am not looking for a position on the Front Bench but just stating facts.

Perhaps my right hon. Friend will prepare a detailed statement for right hon. and hon. Members in all parts of the House. Such a statement was published by the Department of Social Security, dated December 1999. It contains key messages on welfare reform running to 15 paragraphs; fairness through reform of the Child Support Agency, 15 paragraphs; fairness through reform of pensions, 20 paragraphs; and fairness through reform of rights and responsibilities. We could publish another three or four pamphlets on the new deal. I have great praise for the efforts made by my hon. Friend the Member for Neath (Mr. Hain) to introduce the new deal system for us.

Another major reform was devolution for Scotland and Wales. In the 1970s, Labour party members and MPs wanted devolution and spent hours, days, weeks, months and years bringing that proposal before our annual conference at Llandudno in 1987. I was proud to be the chairman of the Labour party in Wales at that time and to witness devolution being adopted as party policy. It took many more years before Labour was elected and had the opportunity to introduce devolution.

Many constituents, party members and some Labour Members are critical of devolved power and the Welsh Assembly in general. Of course there is a lot wrong with it. There would not have been much wrong but for the system of proportional representation that was introduced, which created 20 unelected Members and 40 elected Members.

Mr. Livsey

Surely it is incorrect to claim that Members were unelected, given that the election was held as a consequence of primary legislation passed in this House. Those 20 individuals were legally elected under the PR system devised for the Welsh Assembly.

Sir Raymond Powell

One should examine in detail who was elected, how they were elected and to whom they are individually answerable. What rights do they have to hold surgeries? I found one in the surgery that I use at my town hall some months ago, sitting where I usually sit in an office that I normally use. He was a Welsh Assembly Member but not even from the Ogmore constituency. I do not know whether he was taking complaints on my behalf or on behalf of my daughter, who is a Member of the Assembly.

When the votes were counted, there were 27 elected Labour Members out of 40. Without the candidates on the list, the position today would be very different. We are having a meeting in Blaenau Gwent at the weekend on the subject of PR. Eight Tories got elected. Only one of them was elected by the people of Wales. Nine Welsh nationalists were elected but eight went on the list. The leader of the Welsh national party boasted in the Chamber about his membership but he has nine elected Members and nine appointees.

What have the Liberal Democrats to boast about? Have they got as many Members as the Welsh nationalists? No way—but still they had three unelected Members appointed to the Assembly. We were saved only by having the First Secretary elected under the system, and I was very glad about that.

My only consolation from all the voting was that my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael) was elected. I want to say a few words about how much work my right hon. Friend put in to the Welsh Assembly. The Welsh nationalists may not appreciate that—half their Members were not elected anyway—but what my right hon. Friend accomplished was appreciated by many people in the Assembly. It is all right for anyone coming after him to take up the cudgels, but it is a different matter to start it from raw and create the situation that we have today.

I warn the Welsh nationalists, who keep warning the Labour party, against trying again the trick that they tried only a couple of weeks ago—the farcical idea of tabling a motion on a problem that they knew the First Secretary could not solve. They knew that the Treasury had no licence to give money to Wales and that the First Secretary could not obtain match funding for objective 1. We have learned a lot about objective 1; we can study it again. Next time, the Liberal Democrats might not get cold feet—they might come into the Chamber and turn the nationalists down. I warn my right hon. Friend the Secretary of State that we must have a solution to ensure that the people whom we elect in Wales are protected from someone who uses his office as Presiding Officer in the interests of his nationalist party.

Not only do I send my congratulations and condolences to my right hon. Friend the Member for Cardiff, South and Penarth, but I congratulate my right hon. Friend the Secretary of State on taking on this position. I am confident from the work that he has already accomplished for us in the Government, particularly in Northern Ireland, that he will fulfil his duties, as we expect of him, in a most dignified way. I wish him the best of luck and great support for the future.

The Opposition talked earlier today about the difficulties and problems of the Labour party. We are not hiding behind desks—we know that we have had problems. We had problems regarding our election for the leadership, and we have had problems since then that were no fault of ours. One of our Members happened to walk over Clapham common one Sunday night, causing uproar and disgust to a number of his colleagues in the House. That lost us votes, seats, support, Assembly Members and control of councils. It was undoubtedly one of the worst accidents that could have happened not only to the person concerned but to the party. The problems that we had were similar in size and upset to the problems of sleaze that the Tories had before the last election.

We have got over that problem, and I am confident that my hon. Friend the Member for Cardiff, West (Mr. Morgan) will take up the reins as the First Secretary of the Assembly. He will have my support and that of all his colleagues in the House. I hope that we will also see the friendliness, objectivity and comradeship that people talk about wanting for the Assembly, but which the Welsh nationalists, in particular, have not shown so far.

4.53 pm
Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)

I am sure that my contribution will sound moderate and, dare I say, contemporary compared to that of the hon. Member for Ogmore (Sir R. Powell). During the last Welsh Grand Committee debate, I was accused of whingeing and scaremongering. Some—not all—Labour Members said that there was no problem in rural Wales. One of them is in the Chamber now. Unfortunately, we have seen a deepening crisis in rural Wales, and I am afraid that I am not scaremongering.

I said in response to the Secretary of State's reference to the commissioner that I wholeheartedly accepted the Waterhouse report. It is a wonderful piece of work, and I respect him for doing it. I am glad that it will be implemented as soon as possible. The Government are doing many things that I can fully accept. I am not one of those professional whingers who finds against everybody on every count. That does nothing for anyone's credibility.

Our Assembly colleagues tried to sort out the agricultural crisis by introducing a calf-processing scheme and attempting to assist farmers but, every time that they have tried to help, they have been hampered by people in this place. The problems of tir gofal, organic aid, beef on the bone and others have all been made worse by the reluctance of the Ministry of Agriculture, Fisheries and Food to support the Assembly's proposals.

Mr. Flynn

Does the hon. Gentleman agree that 80 per cent. of farm subsidy goes to the 20 per cent. of farmers who are the richest, very few of whom are in Wales? Does he further agree that the NFU in Wales should campaign for modulation to ensure that the poorest farmers—those in real need—receive the subsidies being overpaid to the richest farmers, who are mainly in England?

Mr. Llwyd

I agree entirely and have no doubt that the hon. Gentleman is right. I hope that the NFU will conduct that campaign. However, the hon. Gentleman's party campaigned before the election for modulation, but it has changed its mind. That is one of life's funny quirks, but I hope that the NFU will pick up the ball and run with it after reading today's debate.

Mr. Öpik

Is the hon. Gentleman aware that modulation has been discussed by the Select Committee on Agriculture, and there is strong support for it among some members of the Committee, as well as further afield?

Mr. Llwyd

I am grateful for the hon. Gentleman's support; there is clearly—in the words that the hon. Member for Ogmore could not find—a consensual approach. There is a feeling that MAFF has been less than helpful to the Assembly. If the Assembly decides—excuse the pun—to plough a particular furrow, I hope that MAFF will allow it to do so rather behaving as it has in the past.

There is a general rural crisis. The single programming document submitted on the Assembly's behalf does not include enough about the problems of rural Wales, although its amended form says more. The hon. Member for Newport, West (Mr. Flynn) rightly said that 80 per cent. of support goes to the richest farmers. In my area, most farmers are hill farmers whose incomes have dropped by 62 per cent. over the past two years—and they were hardly raking it in before that. Heaven knows how they exist at all.

The crisis is hitting not just one industry, but the whole rural economy. Shops and businesses are going down too. Every sector of agriculture has fallen. The width of the crisis distinguishes it from previous crises such as that of the 1930s. The situation in rural Wales is absolutely disastrous, but the historical relationship between sterling and farm incomes suggests that 2000 will see yet further falls as sterling continues to appreciate.

To be fair, I must say that the recession in agriculture is not affecting other industries, many of which appear to be doing well. However, incomes in the dairy sector fell by 21 per cent. between 1998–99 and this year. In less favoured areas, cattle and sheep incomes have fallen by 28 per cent. There are few farmers now in the pigmeat industry, in which the crisis has come to a head. We all know of the deepening crisis in the dairy industry.

This is the fifth year of recession for the agricultural industry. How long can it go on? The UK economy grew in 1998 by 2.2 per cent. In 1999, it grew by 3 per cent., and it will grow by probably a little more than 3 per cent. this year. However, there are no signs whatever of a recovery in the agriculture industry.

I am not whingeing without making suggestions as to what can be done, although the suggestions are not mine, but those of the NFU. Several matters can be tackled. Sterling remains over-valued; that makes exports less competitive and renders domestic markets vulnerable to cheap imports. As sterling has appreciated, prices have collapsed. It is obvious what the answer is on that matter.

The BSE crisis left the industry with greatly increased costs throughout the supply chain and with little or no export market for British beef. The collapse in world commodity markets brought on by the Asian and Russian financial crises had impacts on wool prices and so on.

European legislation allows for about £450 million compensation for UK agriculture during 2000—£47 million of that is immediately available to Wales. So far, the Government have promised to pay only 20 per cent. of that to the UK—less than 12 per cent. has been committed to Wales. The agrimonetary compensation package is vital. When the Secretary of State speaks with his colleagues, I urge him to request clarification of that matter.

We understand that there will be a contribution through the Fontainebleau agreement, but the industry is in crisis. Surely if his colleague, the Secretary of State for Trade and Industry, can stump up tens of millions of pounds for Longbridge—good luck to the people of Longbridge—we can have some support for Welsh farmers.

NFU Cymru—Wales—points out that net farm incomes in Wales average only £4,500. One of the Government's catch phrases is social exclusion—rightly. The Select Committee on Welsh Affairs—members of which are in the Chamber—is examining that subject. Considerable work has already been done and evidence has been taken. I hope that useful reports will be prepared in due course, and that the Government will respond accordingly.

However, the Government are not doing anything for social exclusion in rural Wales. I shall not do my credibility any good by agreeing with the Conservative spokesman, the hon. Member for Ribble Valley (Mr. Evans), but his comments on transport and fuel prices in rural areas were right—cars are a necessity, not a luxury.

Will the Minister lend his considerable support to a campaign to persuade Barclays to reconsider the mass closure of its banks in Wales? Two such closures are proposed in my constituency. One is in Blaenau Ffestiniog—an area that was hard hit economically. Now it is recovering and much work is being done, but Barclays has announced that the branch will be closed.

The other proposed closure is in Harlech. I have written to the chief executive and the chairman of the bank to ask for a meeting. I hope that some good will come of that. However, if the Government are serious about tackling social exclusion, I urge the Secretary of State to play his part in that matter—I know that he is a serious gentleman. Other hon. Members in the Chamber face similar threats to rural and urban branches and the matter needs to be addressed. Government intervention would bring about a change. I urge him to consider the matter.

I shall deal briefly with the subject of post offices, because they have been discussed on several occasions. However, the subject is important in rural Wales. The post office is a crucial element in the provision of support to people on low incomes in rural areas. Together with the church, the chapel and possibly the pub, it gives a village a heart. The post office and the small shop are vital.

I live in a village near Bala, where there is one shop. The proprietor told me, "If I lose the post, I'm closing. That's it." Fortunately, I have a car. Many people—some of them retired and on benefits—will not be able travel to the next town just to do some basic shopping without paying £5 or £6 for a return trip. That is how important post offices are to me. I am acutely aware of the problems—as, I am sure, are many Members. We need to consider the fact that the Government seem hell bent on introducing automated credit transfer. It will create havoc in rural areas—I cannot put it any higher than that. It has realistically been estimated that up to 60 per cent. of existing post offices will be under threat if the ACT system is introduced.

For I all know, the Minister for Competitiveness may be sincere in what he says; he has worked in the postal industry. However, I am worried about the way in which the Department of Social Security will approach the matter. Only a few years ago, it tried to get the elderly to receive their money directly in a bank account. In fact, it made it difficult for them to do otherwise. Such an approach would harm post offices in rural Wales. We know that 63 per cent. of the existing post offices in Wales receive 40 per cent. of their turnover from carrying out such transactions. The issue is extremely important.

I am not scaremongering. I am deeply worried about the issue. I live in a community in which people are desperately concerned, and I am rightly raising that concern at this stage. I hope that the Minister will take the issue on board, because there is no doubt that it will impact on rural Wales far more than on the rest of the United Kingdom.

The Parliamentary Under-Secretary of State for Wales (Mr. David Hanson)

Will the hon. Gentleman accept that the Government have said that those members of the public who want to can continue to receive their payments in cash both before and after 2003?

Mr. Llwyd

Yes, I accept what the Minister says on the face of it. However, I do not know what the Department of Social Security is planning to do. Only a short time ago, under the previous Government, DSS mandarins decided that they would close a third of the benefit offices in Wales and they did not even bother to tell the relevant Minister about that. He was alarmed, and I do not know what the hidden agenda is any more than—

Mr. Alan W. Williams

The hon. Gentleman is scaremongering.

Mr. Llwyd

The hon. Gentleman also said that in the Welsh Grand Committee. The only word that he seems able to use is "scaremongering". Perhaps his constituency is different and is immune from the problems that affect the rest of Wales. I hope for his sake that it is; he might even save his seat.

Mr. Williams

I thank the hon. Gentleman for giving way having drawn me into intervening. Will he engage in some joined-up thinking? Earlier he referred to bank closures in Blaenau Ffestiniog and Harlech, and, of course, we regret that when it happens. However, does he not realise that the Post Office will have a great opportunity to develop banking services? The Government are working hard, through the computerisation of all rural post offices, to diversify the services that post offices will be able to provide. In particular, they will be able to offer banking services.

Mr. Llwyd

That argument has a flaw. It is said that automatic cash dispensers will be placed in post offices, and that is fine. However, I tell the hon. Gentleman that they are extremely costly to install and, in many areas, banks were not able to afford them. Even if they are installed, the best reckoning is that it will cost £2.50 a transaction. The hon. Gentleman shakes his head, but he is no expert on the subject. The accepted truth is that it will cost £2.50 a transaction.

Mr. Simon Thomas

Is my hon. Friend aware that many sub-postmasters in my constituency complain that they do not have the turnover to get a national lottery terminal in their sub-post offices, let alone one that would allow a bank to put in an automated teller machine?

Mr. Llwyd

My hon. Friend is right, because we are talking about rural areas. What exactly will a village shop diversify into? For heaven's sake, what can it diversify into? There is nothing much that it can do. It might be able to add a few lines to what it sells, but it is pie in the sky to suggest that every post office will be able to trade itself out of a deeply worrying position.

Mr. Ruane

Will the hon. Gentleman tell us where he gets the figure of £2.50 for each transaction from?

Mr. Llwyd

The figure of £2.50 a transaction has been extensively referred to in the press recently. If it proves to be wrong, I shall gladly apologise.

Mr. Livsey

I support what the hon. Gentleman is saying. Under legislation, the regulator has no power to impose a 30p rate, and the banks have said that they are going ahead with a £2.50 charge.

Mr. Alan W. Williams

Not true.

Mr. Llwyd

I think that I have made the point sufficiently. There is real concern about this issue. I shall not dwell on it now, because it will be for another day. I have received numerous petitions on the subject, and I have sent them on to the Government. I hope that we shall be able to get them to reconsider this very damaging proposal. It might work in some urban areas, but it is certainly no good for any rural area. It will be extremely damaging for rural Wales.

Mrs. Betty Williams (Conwy)

What would be the hon. Gentleman's party's answer for a small village in my constituency, where the postmaster is giving up? The Post Office has written to say that it has advertised extensively to try to find somebody in the village to take over the business. That has nothing to do with the changes in 2003. If an answer is not found by the end of this month, that post office will close. There is another example in my constituency.

Mr. Llwyd

There are several answers. The first is that such businesses are now blighted, because the change is hanging over their heads. I have examples of post offices that have closed. Corners of village halls are being adapted for a few hours a week. It is possible to do that. There is no point in the hon. Lady's shaking her head. She asked for a response and I have given her a reasonable response. We all have the same problems.

Let us see what happens in the coming months. Some people from the hon. Lady's own party are campaigning on the matter. Her neighbour, the hon. Member for Clwyd, West (Mr. Thomas), is campaigning on it now, a bit late in the day. He is getting on the bandwagon. [Interruption.] Not a Hague wagon, but a bandwagon.

I shall leave the subject there. I have flogged it enough, and I do not want to bore the House. However, it is part of the question of social exclusion. In rural areas, public transport is, alas, very poor, and this will mean people having to travel distances for basic provisions. That is the problem facing some of our rural communities.

I ask the Secretary of State whether it is possible to shift the Government's emphasis to encourage small and medium-sized enterprises to take on labour. The truth is that 90 per cent. of the businesses of Wales are small and medium-sized, and many are in rural areas. That is something that surely could be done. There is the question of objective 1 money being used for it, in conjunction with Government policy. I hope that we could look at this in order to assist the growth and revitalisation of rural areas.

Mr. Wigley

My hon. Friend has emphasised the crisis hitting the rural areas, where the post offices are under threat. If they are under threat now, they will be that much more under threat if the changes are made. That does not apply only to rural areas. Sub-post offices in suburbs and some of the mining villages in the valleys will equally be under threat. People in those communities will also be deprived of the services on which they depend.

Mr. Llwyd


I have made my point about the rural areas. There is a genuine crisis. The hon. Member for Brecon and Radnorshire (Mr. Livsey) was right to speak as he did about our problems.

On the positive side, I welcome the new deal, despite the cost of implementing it. It is a step in the right direction, and I am pleased that it is happening. It is having some effect. As the Secretary of State said, it is having an effect in rural Wales as well. It is disproportionately less, because of the sparsity of population. Nevertheless, it is a step forward.

In conclusion, I urge the right hon. Gentleman to look at the problems of rural Wales and do what he can, in conjunction with the First Secretary. We owe it to our constituents to ensure that we have a revitalised rural economy. If we do not, we shall fail our young people, who have to leave to look for jobs, and we shall imperil our culture, language and everything that we all hold dear. Large swathes of inhabited Wales will disappear from the map.

The right hon. Gentleman is a serious politician, and I hope that he will take this message on board.

5.14 pm
Mr. Denzil Davies (Llanelli)

Given that, as my right hon. Friend the Secretary of State pointed out, this is the first Welsh day debate since the Assembly has been up and running, I am tempted to engage in a brief discussion of the relationship between Westminster and Cardiff bay, but, because of the few minutes available to me, I shall not do that. Instead, I shall speak of what is understandably the hottest subject in Wales: objective 1 status. When my right hon. Friends the Prime Minister and the Chancellor of the Exchequer secured objective 1 status, they also secured about £1.2 billion from the European Commission.

Mr. Caton

I hear what my right hon. Friend says, and I have heard the Prime Minister, the Chancellor of the Exchequer and, indeed, the Secretary of State make the same claim. Moreover, I have heard members of Plaid Cymru claim that their party secured objective 1 status. But should we not give credit where it is due? The Tories secured objective 1 status for us by running down the economy during their 18-year tenure.

Mr. Davies

I shall resist the temptation offered by my hon. Friend, and concentrate on the good work done by my right hon. Friends in Brussels. I do not know the extent to which they realised that, although that £1.2 billion is very welcome, something approaching another £1.2 billion from the Treasury was needed to match it. If the Chancellor did not know that at the time, it must have come as a bit of a shock to him on his return. Perhaps the moral is that it is dangerous to be at the heart of Europe, because we do not know what we will get from Europe at the end of the day.

It may not be necessary to draw on all those guaranteed funds if and when they arrive, because funding for projects may come from other sources. Some may come from local government; some may come from other public bodies; some may come from voluntary organisations. Hopefully, much of it will come from the private sector. Indeed, if projects are not financed by the private sector, they are probably not very good in any event, and are certainly not the wealth-producing projects that we want. However, there must be a lender, or provider, of last resort. The Treasury must be the provider of last resort if the £1.2 billion is not matched elsewhere, and the Exchequer must give a guarantee to that effect.

We in Wales may think that this is our peculiar problem, but I understand that it is also a problem for areas in England that have secured objective 1 status. The problems in Yorkshire are probably as great as those in the valleys of south Wales—and I believe that Yorkshire has obtained close to £1.2 billion. We all know of the problems in Liverpool, and those in Cornwall. This is not just a problem for Wales; it is a problem for the British Exchequer, for the British taxpayer and, ultimately, for the House, because the Exchequer is accountable to the House.

Mr. Wigley

I accept that it is vital for Cornwall, South Yorkshire and Merseyside to gain the full advantage of their potential from the funds, but is there not a difference between those areas and Wales? Public expenditure in Wales is defined according to the Barnett block, which was drawn up for the coming financial year—2000–01—before we knew that we would receive money from the European Union. As a result, any money that we must advance as match funding from the Barnett block will inevitably be granted at the expense of health, education or other services that it would otherwise have financed.

Mr. Davies

I understand the point, and I will deal with it, but what I am saying has nothing to do with the Barnett block. I was making the simple point that the problem is not peculiarly Welsh, but relates to Yorkshire and Liverpool as well. The funds that go to those areas must also be matched. We can discuss where the matching funds come from, and I shall do so in relation to Wales, but this is a British problem. British Exchequer money will have to be found as a last resort, and as the British Exchequer is responsible to the House, the House must be involved.

The right hon. Member for Caernarfon (Mr. Wigley) is right in respect of Wales. In theory, the money could be provided as a first charge on the Welsh block grant. As he rightly said, if the money was drawn upon under objective 1 match funding, it would to some extent be denied to health, education and local government. I do not see how it is possible to operate the Welsh block budget against the background of a first charge of £1.2 billion. Quite apart from the consequences, I do not see how, technically, we could spend money on hospitals knowing all along that there was a charge on that money for the payment of objective 1 match funding.

I agree with the right hon. Gentleman that although in theory that is possible, it is not realistic to expect the match funding to come out of the budget for education, health or local government. We all know of the pressures in our constituencies on the health budget and of the debts of health authorities and hospital trusts. There is pressure on local government, which in my constituency is having to close old people's homes.

The match funding can come only from Her Majesty's Treasury, as an ultimate guarantee which may not have to be drawn upon. I would understand if Treasury Ministers and civil servants were concerned about giving a blanket guarantee over six years for projects that had not been dreamt up. No one knows what those projects will be, and they may not produce wealth for Wales. How do we get out of that dilemma? It would be reasonable and sensible for that Treasury guarantee to be given with the condition that when projects concerned with match funding were conceived, they had to be approved by the Treasury and the Welsh Office. That would not be an open-ended commitment.

There is no such open-ended commitment now with the £1.2 billion from Brussels. The European Commission has to give its imprimatur to schemes. Brussels does not, therefore, simply write a cheque for £1.2 billion. If we are, through the House, calling on the Exchequer and the British taxpayer also to provide up to £1.2 billion—it is realistic to ask for that amount—it is right and proper in constitutional terms that the Treasury and the Welsh Office should approve each particular project, as the Commission does and as the Assembly has for the Cardiff bay project.

That would be fair because the match funding is not devolution money. By definition, it is additional to that. The devolution settlement is the block grant, and it comes to about £8 billion a year. That is to be spent by the Welsh Assembly. The match funding will come from the Treasury, which is accountable to the House, and the Welsh Office must also be involved.

There is another reason why there should be approval from central Government Departments such as the Wales Office and Treasury. In Wales, sadly, the amount of money raised in taxation does not come anywhere near the total amount of public expenditure that comes into Wales. About £7.5 billion to £8 billion of public expenditure goes through the National Assembly. Almost an equivalent amount comes to Wales outside the devolution settlement. Total Government public expenditure in Wales is £15 billion to £16 billion. However, the amount raised in Wales in taxation is about £10 billion, so there is about £5 billion leeway. The extra £1.2 billion, if it must all come from the Treasury, does not come from Wales. It does not come from Scotland. It comes from the more prosperous areas of England, whose taxpayers are asked to make that contribution.

The right hon. Member for Caernarfon made a speech some years ago—I hate to remind him of it, as he knows what I am about to say—in which he castigated the gin-swilling colonels in Surrey and Sussex. What he did not appreciate was the fact that the more gin they drink, the more money there is to pay the salaries of those who sit in Cardiff bay. That is the reality. We may like it or dislike it; we may condemn the situation and blame people for it; but if there is, as I believe there should be, a guarantee of £1.2 billion, and if the money does not come from other sources, that money will have to come from the taxpayers—I will not call them gin-swilling colonels—in those areas of England that are far more prosperous than Wales, the north of England or parts of Scotland.

Mr. Wigley

I am grateful to the right hon. Gentleman for giving way. I will not go after the gin for the moment, although the argument advanced by the First Secretary in Cardiff is persuasive. He suggested that the Treasury has an interest in getting the economy in Wales buoyed up, because it will then have more take from taxation in Wales.

Before the right hon. Gentleman concludes his speech, will he address himself not just to the £1.2 billion of match funding, but to the £1.2 billion coming from Europe? That comes through to the Treasury, and in the coming financial year we will not get a single penny extra out of that money. It comes through to the Treasury, it is then passed to Wales, and it is netted off from our Barnett block. Those are the mechanics. That is why we are constrained in the difficult way that we are. The right hon. Gentleman needs to address himself to the £2.4 billion, not just to the £1.2 billion.

Mr. Davies

I am very fond of the right hon. Gentleman, but he is not at his best today. Sometimes he does all right, but today he has not been listening, or perhaps he does not want to hear. I stated clearly that £1.2 billion comes from Europe. That cheque will eventually end up in the Welsh Assembly. [Interruption.] If the right hon. Gentleman denies that £1.2 billion will come under objective 1, I do not know where we are.

Let us assume that I am correct. I know that it upsets the nationalists, but the Prime Minister and the Chancellor of the Exchequer manage to get funds for Wales, and also for South Yorkshire, Liverpool and Cornwall. We know that that is because the economies of those areas are in a bad way, and we are not happy about that. We know that that £1.2 billion will come. I conceded the point made by the right hon. Gentleman, on which we all agree, that under the crazy European system—I do not know who devised it—the £1.2 billion must be match-funded by almost a further £1.2 billion.

Mr. Wigley

I have the Select Committee report, and there are five members of that Committee in the Chamber. The report recognises that we need additional public expenditure survey cover in order to be able to use that money. Unless we get that additional cover, we are constrained to spending within the Barnett block. Unless the money comes in, in the form of additional PES cover, we will lose out on the European component, not to mention the match funding. The Select Committee recognised that, as I hope the right hon. Gentleman will.

Mr. Davies

The right hon. Gentleman is losing the plot. Let us start again. He should put his book down and think. The European Union will write a cheque for £1.2 billion for Wales. We need another £1.2 billion from the British Exchequer. My right hon. Friend the Chancellor of the Exchequer should guarantee from the Dispatch Box the £1.2 billion for Wales to match the £1.2 billion from the European Union. However, the Welsh Office and the Treasury should vet the schemes. The right hon. Member for Caernarfon is nodding. I gather, therefore, that he accepts my generous condition of scrutiny by the Welsh Office and the Treasury.

Mr. Wigley

That can be argued in terms of financial control; I accept that each project has to be justified. However, I implore the right hon. Gentleman to accept that we need not only match funding cover, but PES cover.

Mr. Davies

How much more money does the right hon. Gentleman want? Wales receives £15 billion. We raise £10 billion through taxation, which leaves £5 billion. Wales is to receive £1.2 billion from the European Union, and I have said that the Chancellor should give us £1.2 billion—yet the right hon. Gentleman wants more money. After the debate, perhaps he can explain how much more money he wants on top of the £15 billion, the European £1.2 billion and the other £1.2 billion. I make the simple point that there should be match funding. However, that money cannot come from Wales.

I congratulate the hon. Member for Ceredigion (Mr. Thomas) on his victory. I watched the television when he made his victory speech. He said that he wanted to work himself out of a job and that although he was going to Westminster, he did not want to be there. I can understand that. Even the post-modern Welsh nationalist party believes in some form of separation and Welsh membership of the European Union. The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) nods. I am not sure, but I believe that he also wants to work himself out of a job eventually. To paraphrase a famous saying, "Make me chaste my lord, but not yet."

Mr. Llwyd

Yes, I am trying to work myself out of a job. Like the right hon. Gentleman, I could fall back on another.

Mr. Davies

Perhaps. I am trying to make a serious point. If the Welsh nationalist party wants to leave this place, so that there are no seats here for Meirionnydd Nant Conwy, Ceredigion or Caernarfon, where will the £1.2 billion for Wales come from? It will not come from the crazy policy of variation of taxes that the hon. Member for Brecon and Radnor (Mr. Livsey) proposed. If Wales is one of the poorest areas in Britain, how will we get more money by taxing Wales? That policy is foolhardy. Not even the Welsh nationalist party in its current state would argue that.

Mr. Paterson

Does the right hon. Gentleman know that for every pound we receive from the European Union, the British taxpayer contributes £2.12, according to the Government pink book? Would not it be preferable if all the schemes were repatriated and determined by national Governments so that twice the money could go towards the projects and decisions could be made swiftly?

Mr. Davies

If I pursued that, I would be called a Euro-sceptic or a little Englander. I shall not go down that road. The Treasury should provide match funding and I am glad that even the Welsh nationalists agree that a condition should be attached to that, and that my right hon. Friend the Secretary of State and the House should play a part in vetting projects that use Treasury money.

Mr. Öpik

If the right hon. Gentleman was given the choice between a penny off income tax or £2 billion towards health, what would he vote for?

Mr. Davies

I shall not be drawn down that path.

Mr. Öpik

Tell us.

Mr. Davies

I am trying to give a short answer.

I agree that generally one should not cut taxes any further—we need the public expenditure. One can argue for or against these propositions, but as I understand it, when the married couple's tax allowance is taken away, as it will be from 5 April, and as mortgage interest relief is taken away, many people will pay more tax unless there is some reduction in what used to be called the standard or basic rate of income tax. We shall hear about that in the Budget, but I suspect that there will be a cut in the basic rate to compensate for one or the other, although I do not know whether that will work out perfectly.

I return to the 26 March Budget. I hope that my right hon. Friend the Chancellor announces that the Treasury will be the provider of last resort or guarantor for the £1.2 billion that may be required. It is perfectly possible to do so and I do not think that we need more, although the nationalists apparently do. I know that my right hon. Friend is a very tidy Scotsman and he wants to make sure that everything works perfectly. He wants to act—if he is to do so—in the comprehensive spending review, as it is now called. However, there was a time when public expenditure and the Budget were one and the same.

I am sure that my right hon. Friend will know the public expenditure totals when he stands up to announce them. If he does not, I do not know how he will be able to introduce his Budget. I hope that he makes the announcement on 26 March, he puts us all out of our misery and stops all the argument in Wales so that we can get on with rebuilding the Welsh economy.

5.36 pm
Mr. Simon Thomas (Ceredigion)

As a new, inclusive politician from Wales, I begin by congratulating the Minister on the centenary of the Labour party. I do so as a son of Aberdare—I see the hon. Member for Cynon Valley (Ann Clwyd) in her place—who is proud to have been brought up there. The first Labour Member of Parliament was Keir Hardie, who represented Merthyr Tydfil. I am proud to call myself a Welsh socialist.

Mr. Hanson

Come over to us.

Mr. Thomas

A Welsh socialist, I said. I hope that the Minister will join Plaid Cymru in celebrating our 75th anniversary later this year.

As a new Member, I have been fortunate: shortly after making my maiden speech I have been given this opportunity to round out some of my general descriptions of the constituency by discussing in more detail its economy and rural economy and the effect of Government policy in the rural economy. As the representative of a constituency that is part of the objective 1 area, I make a small plea for essential changes to be made to the Government's approach to the economy in general. That status is a sign that our gross domestic product has fallen below 75 per cent. of the European average.

I acknowledge the Government's hard work in gaining objective 1 status for the area that I represent, but as many Members have said, we need it because the current state of our economy is nothing to be proud of. It is a sad testament to many years of under-investment in rural and urban Wales, although I acknowledge that the present Government are not responsible for a lot of that. Nevertheless, let us be clear that their hard work on objective 1 will come to nothing, as the right hon. Member for Llanelli (Mr. Davies) made clear, if the questions on match funding and additionality are not answered urgently. They are addressed in the Select Committee report and have been discussed across the Chamber today.

I want to concentrate on the wider economic trends that the Government are following. I hope that the Minister will think seriously about how the Welsh economy is performing and not paper over the problems with general comments about the United Kingdom economy. As my hon. Friend the Member for Meirionnydd Nant Conwy (Mr. Llwyd) made clear, parts of the UK economy are doing extremely well, but we have a problem in the rural economy and a general problem in the Welsh economy.

Let us remind ourselves that the area ranks as one of the most underdeveloped, underpaid and underskilled in Europe. Nothing is more crucial to my constituents and, I know, to many constituents of Labour Members, than for the Government to address the problems of regeneration—urban and rural—and to invest in a rural infrastructure that can deliver sustainable development. That is the true test: not whether we have objective 1 status, but what we do with the opportunity.

Let us look at the economic context. Unemployment is falling in my constituency and in many Members' constituencies, but the bald statistics mask a real crisis. The unemployment statistics are skewed by the amount of young people who are leaving my area and rural areas in general, and by the inward migration of older, retired people. The economy is low wage, with many tourism and agricultural jobs, which are seasonal and depend highly on general economic circumstances. People might have a job this week, but not the next. It is like that in many rural areas that I represent.

In particular, the strong pound is hitting both tourism and agriculture. The milk industry in Ceredigion—we need to put it on the record—is on its knees under the strength of the pound. The difference between sterling's current rate and that which would apply under convergence is worth 2p on a litre of milk. On an average Welsh quota for an average Welsh dairy farmer, that is about £15,000 a year. It is the difference between profit and loss, happiness and misery.

An additional factor in the make-up of Ceredigion is the high rate of self-employment. That again reflects the tourism and agriculture sectors, where small businesses dominate. It bodes well for a local "menter", or entrepreneurial approach to objective 1, but it does not bode well for attracting private sector match funding to rural areas as they do not have the large firms. There are no headquarters or large corporations there. On the split and share of objective 1 funding, it should not cluster around the Sony corporations and M4 corridor, where it would be easy to get match funding. It has to be spread throughout the area, particularly rural Wales.

All that may suggest that Wales is the poor man of the UK and goes cap in hand to the Treasury for resources. I do not accept that. There are many hidden subsidies within the tax system. It is not a simple case of saying that the tax take from Wales is X, the amount of Government spending in total on Wales is Y, so Wales is poor and gets money from other areas of the UK. We have to have a much more sophisticated analysis, including in particular things such as the defence industry in south-east England and the hidden subsidies for investment and infrastructure building in the UK.

Mr. Denzil Davies

We are back on the defence industry. Dr. Phil Williams has been writing article after article about the lack of a defence industry in Wales. Does the hon. Gentleman not realise that that has nothing to do with it? The amount of public expenditure that comes in is £15 billion. The amount of taxation raised is £10 billion. On the Maastricht criteria, there is a gap of 15 per cent. of GDP—higher than in any other country in Europe, except Slovakia.

Mr. Thomas

I make three comments on that. First, where are the multinational headquarters of those companies? Where do they pay tax?

Mr. Denzil Davies

In Wales.

Mr. Thomas

I do not think so. Secondly, investment in infrastructure follows that sort of industry, which we do not have in Wales and rural Wales. Thirdly—I hope that the right hon. Gentleman is another Welsh socialist—there is nothing wrong with redistribution of income anyway, if that is the point that he wants.

We will have another debate at another time, but I argue that Wales is getting quite a raw deal from the Government. That is worsening under the Barnett formula. Consequential as it is, it makes things worse for Wales year after year. It started 20 years ago. We need a new, renegotiated formula. [Interruption.] There are nods and disagreements, but many Welsh electors are seeing it for themselves.

The evidence is there. Plaid Cymru won over 30 per cent. of the vote in the Assembly and European elections. We have heard a cogent argument from the hon. Member for Ogmore (Sir R. Powell) against any form of proportional representation and for entrenching the Labour party, even when it fails to win a majority in Wales.

Mr. Llew Smith

How does the Barnett formula make things worse for people in Wales? What statistics does the hon. Gentleman have to prove that point?

Mr. Thomas

I shall send the hon. Gentleman a copy of our detailed proposals.

Mr. Smith

I should like an answer now.

Mr. Thomas

I shall give the hon. Gentleman an answer. The Barnett formula is consequential on spending in English Departments and does not take into account the additionality of European money under objective 5b and objective 2. We have not received the money that we should have had, as Barnett has blocked it. That is why the Barnett formula has failed Wales.

The right hon. Member for Llanelli referred to Merseyside having been allocated £1.2 million under objective 1. Wales deserves 38 per cent. of the objective 1 package for the United Kingdom, but if we apply Barnett we get only 6 per cent. The right hon. Gentleman should put those arguments to the Chancellor, as we are putting them to the people of Wales and receiving their support.

Mr. Llwyd

My hon. Friend should know that the Secretary of State recognises that and has agreed to take it up with his Cabinet colleagues.

Mr. Thomas

I shall press on and turn to the picture in Wales now. Notwithstanding the comments that I made about the Labour party's honourable history and tradition in Wales, that hegemony has now been broken and we have to work within a different pattern of Welsh politics. It has been shattered, and no party now has a majority in Wales. Hon. Members have criticised the work of the Welsh Assembly, but they must recognise that the new century has ushered in a new type of politics.

The first two years under this Government have proved something of a revelation for many people in Wales. The Welsh electorate did not expect new Labour to follow Conservative spending plans for the first two years. After attacking such spending plans when in opposition, the Government now have a lot of explaining to do to the people of Wales.

Mr. Jon Owen Jones

Leaving aside the merits or otherwise of following the Conservatives' budget plans for the first two years, does the hon. Gentleman accept that what he has just said is completely wrong, because when Labour fought the last election, we promised to do precisely that in order to overcome the huge debt that we inherited from the Tories? We told the electorate what we planned to do. Whether the hon. Gentleman agrees with it is another matter, but we told the electorate and they elected us.

Mr. Thomas

I said that the electorate did not expect new Labour to do that. It may have been promised, but the election was fought on the basis of change, and change did not come.

It is time to reveal the real reason for those policies and the comprehensive adoption by new Labour of the right-wing orthodoxy that says internal markets bring efficiency savings and deliver services better than the public sector. A lack of faith in the public sector and the idea that the free market can be a tool for combating social exclusion and delivering economic development in deprived areas is Thatcherism by another name.

We need a reality check here. It cannot be denied that what is being delivered in Wales now is a widening gap between the rich and the poor. It is there in the statistics and the hon. Member for Blaenau Gwent (Mr. Smith) knows it well. There is continuing under-investment in our schools and our health services and a total disregard for the current farming crisis.

New Labour's attitude to public expenditure betrays a shift to the right. For Labour pioneers, spending on public services was seen as an essential tool for achieving social justice. It could pay for comprehensive education, council housing and the national health service. Now, however, new Labour regards public expenditure with great suspicion. We do not share that view. New expenditure has been ruled out and existing expenditure has to yield greater value. Nurses spend less time with patients in the name of efficiency, and teachers spend more time on administration. They do not have the opportunity to provide care. Council tax rises burden the local electorate because of the squeeze on national public expenditure. There is a new orthodoxy—I should like the Minister to deny it—that public expenditure should not rise above 40 per cent. of gross domestic product. The Government have stuck absolutely to that orthodoxy. There is no rhyme or reason for it: it is an article of faith. Public expenditure as a percentage of GDP—[Interruption.] Other European countries have a higher ratio of public expenditure to GDP.

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. May I tell the House that continued sedentary comment is extending speeches to the point that many, many hon. Members will be disappointed?

Mr. Thomas

Public expenditure as a percentage of GDP has fallen since new Labour took office, and the new Labour plan is to continue the trend until the next general election.

Let us consider some of the figures from the Conservative Government's last year in office. Although it pains me to say it, in that year, general Government expenditure was 40.4 per cent. of GDP. In the first year of the current Government, the figure fell below 40 per cent., to 39.4 per cent., and it is predicted to remain below 40 per cent. for the next two years. In 14 of the Tories' 18 years in office, public expenditure was about 40 per cent. of GDP. New Labour has promised and delivered a consistently lower level of public spending.

A particularly apposite question is where those figures leave the Prime Minister's promise to raise health spending as a proportion of GDP. Unless the overall threshold of public expenditure is raised above 40 per cent., his promise can be met only by taking away from other items in GDP. I hope that the Secretary of State and the Minister will work hard in government to break that closed circle, which does nothing to help the socially excluded or the poor and particularly disadvantages vulnerable children and pensioners.

In that context, and in the context of the problems that I see in my constituency, we have to remember that about half public expenditure is spent on individuals—on pensions, and on social security payments. Is it therefore any wonder that, as a new Member of Parliament, I am already deluged by complaints about disability living allowance being taken from people because of cash limits, not because of changes in their disability? Is it any wonder that the 75p pension increase is thought to be risible when, because of rural bank closures and cuts in rural services, people have to spend that much just to take a bus to a bank or a post office?

The amount of public expenditure devoted to those services demonstrates the extent to which a Government are prepared to redistribute wealth. Redistribution of wealth is what it is about. It is perverse for any Government who talk about social equity to set themselves the target of reducing that part of public expenditure as a matter of principle, rather than as a consequence of economic development and the growth of opportunity.

Over the years, the overall 1 per cent. cut in public expenditure has amounted to about £9 billion per year—which is equal to the Welsh block grant. Any voter would be able to tell the Government how to spend that money: on the health service, education and the rural economy. In Wales, the consequence of the cut is that health, education, public transport and the rural economic infrastructure are still starved of the resources that they need. Is that really what people thought they were voting for in 1997?

Interest rate cuts are increasing the effect of the public expenditure cut. The Government, rather than increasing investment in public services, are allowing interest rates to rise. New Labour has bought all the Tory economic arguments. Consequently, the Welsh economy is being run on the guiding principles of low public expenditure, low income tax and low inflation. Interest rates are the only weapon being used to keep the economy on track and to combat economic overheating. The way the economy is being run is disadvantageous to many areas in Wales.

Wales is getting a raw deal from the Government. When the south-east of England sneezes, Wales catches the cold. Wales has a very bad cold at the moment.

5.53 pm
Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

I should like to take the opportunity—it is the first that I have had—to congratulate the hon. Member for Ceredigion (Mr. Thomas) on his impressive victory in Ceredigion. I was fascinated by his observations. We saw in him a Jekyll and Hyde conflict—the socialist trying to reconcile himself with the nationalist. I tell him that they are not reconcilable, and his speech reflected that fact. When the socialist came out, he showed some conviction, but, when the nationalist came out, we saw that the two do not go together. He is also probably the only socialist on the Opposition Benches.

Mr. Öpik

I am.

Mr. Rowlands

I do not think that the hon. Gentleman is a socialist.

I hope that during this Parliament the hon. Member for Ceredigion reconciles the Jekyll and Hyde in him. I hope that we shall be able to convince him that the socialist path is the best, not the nationalist one.

The hon. Gentleman gave his first speech in a debate on Welsh affairs. This could be my last. I shall offer some advice to my right hon. Friend the Secretary of State on his post-devolution role. I understand and appreciate the role that he has had to play in recent months, acting as a go-between, trying to reconcile some of the problems that have broken out in Cardiff. I hope that that will not become the most significant part of his role. It is important to have a first-class, co-operative working relationship between Westminster and the National Assembly for Wales, but I hope that he will not see that as his central role.

One of my right hon. Friend the Prime Minister's favourite phrases is that we must not forget the big picture. I hope that my right hon. Friend the Secretary of State will look at the big picture in Wales and play his role in Whitehall and Westminster to ensure that the needs and wishes of the people whom we represent are met.

The hon. Member for Ceredigion was right to point to the importance of public expenditure as an instrument of redistribution. It is one of the few left in the hands of the Government. However, I am astonished that his party intends to try to reconcile a policy of spending a greater proportion of GDP on public expenditure with a commitment to join economic and monetary union, accepting all the criteria and the straitjacket and imprisonment on public expenditure that go with that. I shall be interested to see how his party does that. I am baffled by the view that it would be a blow for freedom for the Welsh people to escape from some imperial British control only to become a prisoner of imperial European control. I believe that we should be governed as a part of Britain, but retain our distinctive policies and attitudes.

The first aspect of the big picture is public expenditure. My right hon. Friend the Member for Llanelli (Mr. Davies) pointed out that the £8 billion block grant represents only just over half of the total public expenditure in Wales. The other £7 billion that comes into Wales is outside the competence of the Assembly. More than £5 billion of that is accounted for by the social security budget. Marginal changes in overall totals of social security expenditure can have a disproportionate effect on our communities. My right hon. Friend the Secretary of State should spend some time ensuring that social security expenditure is shaped to meet the needs of our communities as well as those of the United Kingdom as a whole.

The other major area of public expenditure outside the control of the Assembly is £780 million of law and order and public protection spending. Those huge sums paid into Wales are spent on matters of considerable concern. I am glad that the Select Committee on Welsh Affairs has decided to deal with social exclusion. It will take evidence from Social Security Ministers because we recognise that they play an important role.

In last year's public expenditure budget, £116 million was spent on industry, employment and energy. Again, that was outside the budget of the National Assembly for Wales. Is that money achieving its purpose in Wales? Is there a role that my right hon. Friend can play in ensuring that that expenditure is geared to the needs of our nation?

The most important part of the big picture is employment and jobs. If one examines the instruments and expenditure available to Ministers to promote training and jobs in our communities, a large proportion of budgets and programmes are outside the competence of the Assembly. The work of the Chancellor of the Exchequer, which my right hon. Friend has passionately supported, on family tax credit, employment zones, and the new deal and its extension to the over-25s—all underpinned by the national minimum wage—is playing a major part in breaking through the fatalism and resignation to a life not on the dole but on benefit that has grown up in our communities over the past 18 to 20 years. That was not a society that we wanted to create but it is one that we have to tackle. The speech of the hon. Member for Ceredigion was hopelessly over the top. The Government have done an enormous amount to address fatalism and resignation.

While I agree with the emphasis placed on developing entrepreneurial spirit and indigenous employment, in my area the majority of new job opportunities come from inward investment. Anyone who turns their back on inward investment is foolish. Fortunately, there are two projects in the pipeline in my constituency. One involves the St. Mary Meat Company from Cornwall; the other is One2One. Both will create an important number of jobs. Inward investment alongside the Chancellor's welfare-to-work programmes is vital to our needs and our future—United Kingdom policies working in and for Wales in every sense.

I hope that my right hon. Friend the Secretary of State will say a cautionary word to the Chancellor about the curious, superficial Treasury view that has emerged in the last few days of the mismatch between 1 million or more job vacancies and unemployment. We must not become bedazzled, as though just tapping those vacancies will solve unemployment. Because there has been so much interest in that claimed level of job vacancies, I checked on job vacancies in Merthyr yesterday and the day before. I hasten to add that I am not looking for a job myself but wanted to check what was available.

Sadly, I found that most of the 115 vacancies available in the past 24 hours were for cooks, cleaners, bar staff, bouncers and security officers. There were also vacancies for a butcher and bailiff, a few mechanics, a hairdresser and sales staff. All those jobs are useful and will supplement incomes in some cases, but many are part-time and some are temporary. Together, they do not add up to the stuff of a major new initiative in the communities I represent.

More interesting was what my analysis of the job vacancies available at the Merthyr jobcentre revealed about the nature of our economy and the valley economy catch-22 situation. The range of jobs available at our jobcentre, apart from those with the major inward investors, do not create or offer the skills and training opportunities that conventional wisdom says is a basis for the modern economy. Those job vacancies will not create the skilled training opportunities that we think are crucial to a 21st century economy. The catch-22 is that as we do not have the job vacancies to create the NVQ 3s and 4s that we are so short of, we do not have the training opportunities. Training means work-based training, so the employment must create the NVQ 3s and 4s that I am told are essential to a 21st century economy.

How are we to address this crucial requirement in communities such as mine? If I accept the conventional wisdom that we have to train and reskill people to higher levels to meet the needs of a 21st century economy and attract new inward investors looking for higher levels of skills and training, how will we do so in this catch-22 situation? That is where objective 1 should come in; it is what objective 1 should be focusing on. As has been said, we spend so much time arguing about match funding that we have not talked much about what we will do with the money. What can we do with it to turn our economy around? If skills and training are vital, let us have a national training programme. I am not talking about a partnership here or a group there, but a programme that goes right across the board—a nationwide Welsh training programme. It should not be buried in competing projects within a partnership in this or that area of Wales; it should be a national programme with a national view.

I have not read in great detail how the Irish transformed their economy with objective 1 money, but what I have read shows that it was not a bottom-up process. It was very much a top-down process—the Irish Government decided that their population's fundamental failing was that it was not well educated, well trained or efficient enough to meet the country's needs.

Mr. Simon Thomas

Will the hon. Gentleman accept from me that the outline of the jobs available in the jobcentre in his area also applies to rural areas of Wales? Will he also accept that Ireland spent more than 38 per cent. of objective 1 money not on infrastructure but on skills training?

Mr. Rowlands

I am glad that the hon. Gentleman has confirmed my impression. In that case, how do we ensure that we do the same in Wales?

Mr. Paterson

Will the hon. Gentleman give way?

Mr. Rowlands

No, I want to deal with this point, and many other hon. Members want to speak.

We cannot afford to let the objective 1 money be dissipated and chopped up into little pieces to filter into the economy. We have to have a national programme. The Employment Service provides a national instrument for delivering that service. The Employment Service in Wales has been transformed since 1997 by the Government's new deal proposals. It has been transformed in spirit, character and personnel. It is extremely proactive—it may not be in Ceredigion, but it is in my area. It has changed from the old dole and benefit mentality to a proactive, exciting service. We should build on that experience and use objective 1 money for the Employment Service.

I am sorry that the right hon. Member for Caernarfon (Mr. Wigley) is not here, because I can even tell him where we can get the match funding from. It does not involve the comprehensive spending review, help from the Treasury or raising taxes. The money already exists in the windfall tax fund, a curious and separate fund which we occasionally ignore. The fund, which falls outside the comprehensive spending review, contains more than £1 billion, £570 million of which is unallocated. If the Employment Service and my right hon. Friend the Secretary of State for Wales, backed by the National Assembly, produced a first-class national training and skills programme, match funding could be found from the windfall tax fund. We need not raise the money, merely allocate it.

I have watched with fascination as my right hon. Friend the Secretary of State for Education and Employment has raided the fund for interesting uses. I would like to raid it for Wales, and I want the Secretary of State to propose that we do so. The European Union could not possibly deny that that would be matched funding, and neither could it deny our objective because training lies at the heart of most EU programmes.

Why are we arguing when the money is available? We share an objective, and we should go out and achieve it instead of spending our time in debate. I hope that during his stewardship my right hon. Friend will raise his sights and his horizons to help to ensure that under objective 1 we can over the next five years transform the Welsh economy into a modern, efficient 21st century economy capable of and willing to meet the needs of all our people.

6.11 pm
Mr. Owen Paterson (North Shropshire)

Having had the honour over the past year to serve on the Select Committee on Welsh Affairs and on the Welsh Grand Committee, it is a pleasure to be called to speak in the debate. I pay tribute to my neighbour, the hon. Member for Clwyd, South (Mr. Jones), who chairs the Welsh Affairs Committee fairly, although he may find my views on devolution poisonous. I pay tribute, too, to the Secretary of State, who kindly allowed me to visit him with the hon. Member for Montgomeryshire (Mr. Öpik) to discuss the anomalous problem of the A483, a Welsh trunk road that passes through my constituency. I should be grateful if the Secretary of State would pay that problem some attention during the coming months, because it has not gone away, and careful liaison is required with his other British colleagues in the Cabinet when he discusses it with them as the representative of Wales.

It is a great shame that we did not hear from the right hon. Member for Llanelli (Mr. Davies) on the relationship between the Welsh Assembly and Westminster.

Mr. Öpik

I apologise to the hon. Gentleman for interrupting his speech so early. Does he agree that, unless the serious trunk road problem is addressed, Wales will remain without a proper north-south road connection?

Mr. Paterson

The hon. Gentleman—my neighbour—is absolutely right.

I should like to make one point about the speech of the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands). I went last year to Ireland with the Welsh Affairs Committee. It is most important that hon. Members—particularly those from Plaid Cymru—should understand that the head of the Irish Development Agency said emphatically that the key to reviving Ireland's economy was not grants. Grants were welcome, he said, and they represented 5 per cent. of Irish gross domestic product.

Mr. Llwyd

Corporation tax made the difference. The hon. Gentleman need not tell me that; I know it already.

Mr. Paterson

Exactly so. Corporation tax was at 10 per cent., and it has been fixed at 12 per cent. until 2026. The idea that Ireland was turned round by grants is a fundamental misunderstanding. The improvement came from highly favourable corporation tax.

As a devo-sceptic—one who did not want devolution—I know that the part of Wales that I know best, the north-east, did not support devolution during the campaign. It is worth remembering that devolution went through on a majority of 168 votes per constituency. Real scepticism remains about it. It is not good enough to say that we have had the result and should forget about it. Whenever I speak to people who come from Wales to Oswestry market or wherever, I hear real doubt about the merits of the exercise.

The ICM poll has confirmed that. Some 40 per cent. said that the Assembly had achieved only a little, and 48 per cent. that it had achieved nothing at all. The Government tempt hubris in both Cardiff and London by discussing the spending of large sums of public money on new buildings. The project is not proven yet. We were told, as my hon. Friend the Member for Ribble Valley (Mr. Evans) said, that the new building would cost £17 million. As recently as 19 January, the then First Secretary—the right hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael)—told us that it would cost £22.8 million. We are now told that the cost could creep up to between £26 million and £30 million. It is tempting hubris to spend such an amount, when money is needed for public services.

The Welsh Office has spent £5.2 million since May 1997 on publicity alone. The Government must be careful about spending such large amounts when in health—a public service that is much in the public eye—9,422 more people are on waiting lists than in 1997; the number of patients waiting more than 12 months for treatment has increased by 3,776; and 3,743 people have been waiting more than 18 months. That is where the majority of the Welsh population would like that money to be spent.

Several Members have mentioned post offices. I shall not go into detail, but post offices are critical in rural areas. There are 1,500 post offices in Wales but the National Federation of Sub-Postmasters predicts that, if the ACT reforms go through, the number could drop to 750. That would have a dramatic impact in rural areas.

Another element of Government activity has caused real damage. We hear much talk of competitiveness, but in the teeth of that there is an extraordinary increase in transport costs. We have the most expensive diesel and petrol in western Europe; 85 per cent. of the cost of fuel goes to the Government in tax. We are heading well north of a £3.50 gallon to a £4 gallon. That was never predicted when the Government came to power.

In rural areas of Wales, 98 to 99 per cent. of goods are carried by diesel-powered lorry. Between 70 and 80 per cent. of people in rural areas drive to work. As was pointed out, the car is the last thing that a working family can afford to lose. Those people are faced with substantial increases. The AA reckons that the cost of running an average car is £900 a year. That does not make rural Wales more competitive; it damages businesses.

Mr. Ruane

Will the hon. Gentleman remind the House who introduced the fuel escalator?

Mr. Paterson

The Pavlovs would have been delighted if their dogs had reacted so predictably. That is what Labour Members always say. The fuel escalator began at 3 per cent. The previous Conservative Government increased it to 5 per cent., but this Labour Government have increased it to more than 6 per cent. If the hon. Gentleman reads table B9 on page 154 of the "Pre-Budget Report", he will see that the fuel duty take is to increase over the next three years.

The Secretary of State must tell his colleague, the Chancellor, that increases in fuel duties do real damage to the rural economy.

Dr. Julian Lewis

I apologise for intervening so early in my hon. Friend's speech. Is not the argument that was made to him rather like saying that, just because someone invented income tax, that person is to blame when other people increase it by vast amounts?

Mr. Paterson

That is right.

Several hon. Members


Mr. Paterson

Other Members want to speak, so I shall push on.

Recently, the Agriculture and Rural Development Secretary of the Welsh Assembly visited a farm not far from Oswestry, while I was visiting Oswestry market. The farm had 180 cows and 600 sheep, but the farmer was on income support. That is terrible.

The Secretary of State is a fair man, but I did not think that the cursory attention in his speech to the problems of agriculture was good enough. He touched on the matter, but he did not cover the depth of the crisis. An article in this week's Farmers Guardian referred to another visit by the Welsh Agriculture Secretary to a farm—a family farm that had been going for 400 years, but may close by the end of the year. It is a good mixed farm—dairy and sheep.

There is a dramatic crisis. Farm incomes have been slashed. The National Farmers Union in Wales reckons that some hill farmers are earning as little as £15 a week. Between 1997–98 and 1998–99, dairy farm incomes fell


37.5 per cent. Incomes from cattle and sheep fell by 75 per cent. Those figures are dreadful. Unemployment is rising. About 2,000 jobs were lost in Welsh farming between 1998 and 1999.

It is not usual to mention suicides without paying due care to the circumstances. However, in 1997 there were eight recorded suicides of Welsh farmers; there were nine in 1998. The problem is growing worse. A study carried out by PhD students at Swansea university showed that a combination of social and economic factors was driving many Welsh farmers to feel suicidal. The position is desperate, but the problems are resolvable. Farming should not be seen as a problem, because many of its difficulties come from government agencies. I admit that they did not all happen at once, but this Government have placed extra costs on farming.

I was involved in the consideration of the Food Standards Act 1999, so someone from an abattoir in north Wales wrote to me. Before 1999, its total Meat Hygiene Service costs were £596.73 a week, but from April this year they will be £2,602. Another abattoir in mid-Wales wrote to me: its costs have risen from £300 to £17,000 a year in inspection charges, and are £180 a tonne compared to £1 a tonne in a large commercial plant. Small abattoirs are vital if we are to maintain the quality of Welsh meat and use its production as the basis for future prosperity. We shall not be able to market meat without working with such small businesses.

The Government have been extraordinarily slow to react to many of the recommendations in the Pooley report, which they themselves commissioned. The Secretary of State should push his colleagues in the Ministry of Agriculture, Fisheries and Food to put reforms into action.

The Government could lift other costs that are imposed only in this country. Why are we the only country that insists on taking the spine out of sheep aged over 12 months? Why do we have a crisis in the calves scheme? It is traumatic for Welsh farmers to bring into the world male dairy calves only for them to have to shoot them on the spot and send the meat to hunt kennels. That is going on. The market in France sells calves for £150 each and it would make a large difference to dairy farming in Wales if that market could be opened up.

The dairy industry needs efficient production. Our dairy products cost twice as much as those on the continent. The break-up of Milk Marque has not helped, and I ask Ministers to consider what has happened to Eden Vale and Dairy Crest in the past week. It is not good enough to victimise Milk Marque and to put it in a difficult position where it cannot get production, and not to pay attention to what other producers do.

In summary, let me say there is a large contrast between what the Government spend on their agencies, publicity and services, which are not being delivered, and the devastating crisis in rural Wales.

6.22 pm
Mr. Jon Owen Jones (Cardiff, Central)

I would like to follow the comments of the hon. Member for North Shropshire (Mr. Paterson) on agriculture, but unfortunately time does not permit me to do that. We have had an interesting debate, and it is regrettable that many of my hon. Friends will not be able to contribute.

During the past few years, Wales has seen a period of great political change, if not turmoil. It is understandable that there should now be a call for a period of consolidation around the new constitutional settlement. Indeed, my right hon. Friend the Secretary of State has today and on other occasions referred to a need for stability. Other Members have also done that in the debate. Stability would enable the Welsh Assembly to begin to use its powers and its budget for the better provision of essential services, such as health and education, for the people of Wales.

In the Assembly's work, there will be from time to time a call for new powers that will require primary legislation. In the debates on the Government of Wales Act 1998, it was always envisaged that that would be so. Indeed, an important part of Ministers' work is to enable the view of the Assembly and the people of Wales to be incorporated into legislation that comes before the House. How exactly that will work in practice, as well as in theory, we are about to discover over the next few years.

Ms Julie Morgan (Cardiff, North)

Does my hon. Friend agree that the unique way that we shall first see that operating is through the appointment of the children's commissioner for Wales? People and voluntary bodies in Wales, as well as the Welsh Assembly, have a unique idea about how the commissioner should work and should be appointed. It is a test case, and the Secretary of State's announcement today shows that the wishes of the Assembly and the people of Wales are being followed.

Mr. Jones

My hon. Friend anticipates my comments. That was one of the examples that I had intended to use.

I shall discuss another example first, not because I think it is more important, but because it is very topical. In another place yesterday Lord Roberts called for a Welsh bank holiday on St. David's day. That is a very popular request, with which many of us, though perhaps not all, would wish to be associated. In order for us to have that bank holiday, the Welsh Assembly would need to implement it, but this House would need to sanction it.

Another example, which my hon. Friend has just given, is the desire to have a children's commissioner appointed in Wales. There is a very strong call for a similar commissioner to be appointed in England. But those commissioners might not have exactly the same sort of roles. In any case, we in this place might not want a commissioner to be appointed in England. If Wales desired the appointment of a children's commissioner, but one was not to be appointed in England, what legislative vehicle would be required to set up that post?

Those are two very recent examples. I am not sure that they are the best examples, but they are the most recent, of a trend that will grow. The Welsh Assembly will consider how it can best deliver services, and from time to time it will call upon this place to enact legislation so that it can do its work.

Mr. Rogers

Will my hon. Friend give way?

Mr. Jones

I will not, because my hon. Friend spoke at length and I do not have much time.

How will Parliament deal with those requests? Some issues may be conveniently tagged on to forthcoming Bills; others may not he dealt with so easily. If matters are uncontentious and have cross-party support, there should be little difficulty in bringing the legislation forward. But what if the issues are contentious? How often will calls for new legislation come before the House, and how can they be dealt with? As I see it, there are four options.

First, we fit the legislation in as best we can under the processes that we now use. However, the present procedures in the House mean that a Government are very reluctant to bring in further legislation or make significant amendments to existing legislation—and even where there are consensual issues, with cross-party support, we have seen only this week and in the week before the half-term recess how a few malcontents can keep the House up all night and endanger Government business.

Therefore, it is not surprising that, with the best will in the world and the utmost sympathy, a Government would be reluctant to bring forward legislation which it might regard as marginal and which might endanger the time required to proceed with their own legislation. Would a Government be prepared to risk losing valuable parliamentary time to pass a purely Welsh Bill or a purely Welsh amendment?

A second option is to reform the House so that Bills could be routinely timetabled. I am sure that there are several reasons why that would be desired by some hon. Members, including new hon. Members, for its own sake. It would be a way in which we could deal better with the demands that would be put upon the House by the Welsh Assembly.

A third option is to introduce some sort of fast-track procedure, following an agreed process with the Welsh Assembly, so that Welsh matters can be dealt with more expeditiously and not cause the difficulties that might otherwise arise. There is a fourth option: we could empower the Welsh Assembly to deal with these matters on its own.

Over the past two months, there has been considerable public disquiet about council allowances paid in Cardiff, which far exceed the levels recommended by the Assembly to local authorities. Indeed, they exceed the rate recommended by the Assembly to the Local Government Association in Wales by more than 300 per cent. They are also far higher than any allowances that have been paid to any councils in England. This appears to be a peculiarly Welsh problem; but, although the Welsh Assembly is responsible for overseeing local authorities in Wales, as far as I know it has no ability to band or otherwise set limits on council allowances. This place, which is responsible for English authorities, can always take on itself the power to deal with problems if they arise. Perhaps it is the Assembly's lack of power to match its responsibility that has led to the current unique situation in Wales.

The House of Lords recently debated the Local Government Bill. That Bill, which we could amend, might provide a convenient vehicle for the Assembly to exercise sensible limits on the allowances given to councillors in Wales. I urge my hon. Friends to ensure that a Government amendment is tabled, before the House of Commons debates the Bill, conferring such powers on the Assembly. If the present procedures prove inadequate to deal with practical issues—I have given a number of examples—we shall not see the stability that the Secretary of State rightly wishes to see.

6.33 pm
Mr. Robert Walter (North Dorset)

We have had a good debate, although it has been squeezed by a number of statements which have prevented some hon. Members from speaking. Those who have spoken have, I think, led us to the conclusion that neither side of the House has been overwhelmed by satisfaction with Government policies in Wales, or by what has been achieved by the Labour Administration in the Assembly.

I believe, however, that Members in all parts of the House agree about matters concerning the Waterhouse report. We welcome the report, which has been discussed here on other occasions. It is a tragic tale of child abuse, and, as I have said before, I have considerable admiration for those who were involved in compiling it. I had a similar experience, although not as harrowing as the experience of the people who compiled this report, when as a member of the Select Committee on Health I dealt with people who had been victims of abuse as child migrants in the 1950s and 1960s. Conservative Members welcome the statement made by the Secretary of State today about the establishment of a children's commissioner.

Mr. Öpik

Does the hon. Gentleman agree that the commissioner and his or her "civil service" must exercise such probity that children can trust the process? An awful lot of damage has been done to the very people who need to use this service, and it is the only way in which we can get to the heart of whatever paedophilia is going on in Wales and has not been discovered.

Mr. Walter

Trust is a very important part of the process, and we must have genuinely independent people who children can trust and to whom they can speak in confidence. We have had a fascinating debate. We have seen that there is dissatisfaction with Labour as a Government at Westminster and as an Administration in Cardiff. My hon. Friend the Member for Ribble Valley (Mr. Evans) responded very well to the Secretary of State's opening speech, and Conservative Members will continue to express our dissatisfaction with Labour's treatment of Wales at Westminster and in Cardiff.

It is no understatement to say that Labour is all mouth and no delivery in Wales. Many promises have been made by the Government in Westminster and the Labour Administration in Cardiff, but they have failed to deliver. The Prime Minister, the Secretary of State and the First Secretary are failing to deliver for the people of Wales. This year, council tax payers in Wales will experience massive increases in their bills. In many areas, a large percentage of the increase will go on bailing out wasteful Labour and Plaid Cymru-run councils. The Labour Executive in the Assembly are failing to deliver on the priorities of the Welsh people. All they have done is waste taxpayers' money on a completely unnecessary new Assembly building.

Mr. Flynn

Before the hon. Gentleman gets into his political rant, will he answer a serious question? Is he happy that the Labour Government have delivered on proportional representation by ensuring that in the National Assembly elections, the proportion of Conservative candidates elected was roughly equal to the number of votes that the Conservatives had in Wales, or was he happy with the 1997 general election result, when 20 per cent. of the population of Wales voted Conservative, but the party did not have a single one of the 40 Welsh Members of Parliament?

Mr. Walter

I do not want to get drawn into a debate about the merits of proportional representation. All I will say is that if one is looking for a declaration of popular support, the Conservative candidate in Ceredigion did somewhat better than the Labour candidate.

Labour has also failed to ensure that Wales receives its funding from the European Union. The Prime Minister said: We do not intend to let the people of Wales down.—[Official Report, 20 October 1999; Vol. 336, c. 439.] Yet now Labour is refusing to give a commitment to secure the extra funding that Wales needs.

Mr. Rogers

The hon. Gentleman ought to be fair. I spent five years in the European Parliament, and the problem of additionality in member states supporting European funding existed some years ago, right through the period of the Tory Government. When local authorities in Wales submitted schemes, they always ran up against the problem that the Government would not support European funding to the extent that they desired.

Mr. Walter

Under previous Governments, the funding was provided. I shall come to the specifics of this case in a moment, but the Secretary of State and the Chancellor have made no commitment to provide that extra £1.2 billion.

Labour is failing to deliver on agriculture in Wales, and is totally insensitive to the needs of the industry. It has already been mentioned that the net income of dairy and livestock farms in Wales is forecast to fall by 25 per cent. in the current financial year to an average of £4,500 per farm.

I shall deal briefly with local government spending. Under Labour, council tax bills in Wales are set for a massive rise. They will increase by more than 18 per cent. in Monmouthshire and by 14 per cent. in Swansea. Many of the increases are due to the fact that the Labour Administration in Cardiff is using the council tax reduction scheme to subsidise profligate councils.

The previous Government introduced the scheme as a temporary measure to deal with the problems of changing from a two-tier to a unitary system of local government. The scheme is now being used to cover the wasteful spending of four Labour and Plaid Cymru councils. Council tax payers in areas such as Monmouthshire will be forced to pay for the overspending of councils in Neath Port Talbot, Rhondda Cynon Taff, Merthyr Tydfil and Blaenau Gwent.

My hon. Friend the Member for Ribble Valley mentioned some of the figures. In Anglesey, council tax bills will rise by 16.5 per cent., in Powys by 13.8 per cent. and in Monmouthshire by 18.2 per cent.—an average rise across Wales of 10.5 per cent.

The Assembly is failing to deliver. According to a recent ICM poll, 88 per cent. of Welsh people feel that devolution has achieved little or nothing. Instead of delivering on the real issues for the people of Wales, the Assembly has concentrated on seeking higher allowances for Assembly Members and securing the new building for the Assembly.

The First Secretary recently announced that the total cost of the new building would be £22.8 million, but in reality it is likely to be at least £26 million and possibly nearer £30 million. The people in Wales do not want to see so much money being spent on a new Assembly building. They would prefer their money to be spent on real priorities, such as education. The hon. Member for Rhondda (Mr. Rogers) was delightfully off-message. He referred to education spending and the expenditure necessary to repair leaking school roofs and to provide new school lavatories, and he compared that with the spending on the Assembly building.

There is utter confusion about ensuring that Wales receives the funding promised by the Prime Minister and the European Union. On objective 1 funding, the Prime Minister said: We do not intend to let the people of Wales down.—[Official Report, 20 October 1999; Vol. 336, c. 439.] However, as was mentioned in the debate, the Select Committee on Welsh Affairs has criticised the Government's approach to objective 1, stating that the Government's "trust us" approach is not enough. There is a real risk that the continued uncertainty is deterring people, particularly in the private sector, from investing in developing projects. It is another case of Labour being all mouth and no delivery. The Prime Minister has promised the earth, but he will not make the commitment to give Wales the funding that it needs.

In appendix 8 to the Select Committee report, table 3.2 shows clearly that over the seven years of the programme, the total national contribution from public expenditure is £885 million, of which £152.8 million is supposed to come in 2000 and £132 million in 2001, yet the Secretary of State has told us on numerous occasions that he has secured no extra funding to date from the Treasury in respect of that contribution.

Furthermore, in a parliamentary answer to me, the Secretary of State stated that there would be no increase in the departmental expenditure limit of the Wales Office in the current financial year or the next financial year. Even if the extra money was available, it would have to be spent within the existing departmental expenditure limit. I was intrigued by an intervention by the right hon. Member for Caernarfon (Mr. Wigley), who had worked that out. He said that if there was no increase in the departmental expenditure limit, any money that the Treasury was willing to make available could be spent only at the expense of other programmes in Wales. The right hon. Gentleman did not receive the answer that he sought. I shall be interested to hear the answer in the Minister's winding-up speech.

The Labour party is also letting down the people of Wales on the health service. It is failing to deliver on its waiting list pledge in Wales, where out-patient figures continue to increase. In March 1997, 28,401 people were on a waiting list for more than three months for their first out-patient appointment. That figure almost trebled; it was 75,386 for the month ending on 31 January 2000—an increase of more than 165 per cent., which is well above the appalling 100 per cent. rise throughout the United Kingdom for the equivalent period.

In-patient waiting lists have increased in Wales from 66,609 in 1997 to 77,031 in January 2000, despite the Government's waiting list initiative. Overall, the number of people on all waiting lists has risen by more than 60,000 in Wales. The Labour party is failing the health service in Wales, as it is failing in every other area. Labour cannot be trusted in Wales. The Prime Minister's pledge not to let Wales down is empty and the House will realise that in the coming months.

6.47 pm
The Parliamentary Under-Secretary of State for Wales (Mr. David Hanson)

I welcome the first St. David's day debate since devolution and, indeed, the first of the millennium. I welcome the hon. Member for Ceredigion (Mr. Thomas) to his first St. David's day debate. He made a thoughtful contribution, and I look forward to seeing him return to his socialist roots and joining the Labour party.

The debate has emphasised the importance of set-piece Welsh debates, which examine the Government's role now and in the future. Today we had an opportunity to discuss the important issues that my right hon. Friend the Secretary of State covered: delivery, partnership and stability. Hon. Members from all parties have talked about a range of issues that reflect those themes, sometimes from different perspectives. The comments of my hon. Friend the Member for Rhondda (Mr. Rogers) did not chime with party policy but we welcome different perspectives, and we shall reflect on them.

Mr. Rogers

I criticised not Labour party policies or achievements in Wales, but the structure in which the Labour party has to operate in government in Wales.

Mr. Hanson

I welcome my hon. Friend's comments because they add to the flavour of the debate and to today's valuable discussions. The comments that have been made from all parts of the House are the meat and drink of day-to-day discussions in the Wales Office, which has changed since our last debate, but has retained its significant impact on Welsh issues and the role of the House.

Hon. Members have raised issues that we tackle daily in Cabinet Committees in discussions that affect Wales and through our contacts with organisations, businesses, the voluntary sector, trade unions and others, and in Government correspondence with colleagues and Assembly Members. The anxieties that have been expressed today have reflected those discussions.

Twelve contributions were made to the debate and they covered a range of important issues. I shall try to deal with them all, but if I cannot, I shall write to hon. Members who contributed to the debate to give a flavour of our view on those matters.

All the issues are important, but I particularly want to mention rural affairs. The hon. Members for North Shropshire (Mr. Paterson), for Meirionnydd Nant Conwy (Mr. Llwyd), for Brecon and Radnorshire (Mr. Livsey) and for Ceredigion (Mr. Thomas) mentioned rural Wales. Delyn, my constituency, is rural, and Labour Members represent constituencies containing significant rural areas. We recognise that there has been a crisis over the past few years and that there are issues that need to be addressed. For example, the Government have given extra support through additional hill livestock compensatory allowance schemes in recent years and are considering a range of proposals such as rural rate relief to provide help. Measures such as the working families tax credit, the minimum wage and child benefit also have an impact on rural areas. I acknowledge that they are experiencing difficult times, but we are giving a great deal of support.

Mr. Livsey

Will the Minister use his best endeavours to get agrimonetary compensation for farmers in Wales, who are owed about £45 million as a result of prices not being achieved over the past 12 months?

Mr. Hanson

The hon. Gentleman will be aware that the Government have already given agrimonetary compensation to farmers in Wales and the rest of the United Kingdom. Further compensation is an issue, but the Fontainebleau agreement is in place and that will involve additional taxpayers' money for farming communities. We are concerned about rural areas and acknowledge those issues.

Objective 1 funding is another major theme. It was referred to by my right hon. Friend the Member for Llanelli (Mr. Davies) and other colleagues, including Opposition Front Benchers. All Members know, because my right hon. Friend the Secretary of State has said so on a number of occasions, that public expenditure survey cover and match funding are being examined by the Government in the spending review. I recognise why Members raise those important issues, but I refer to remarks made yesterday by Hugh Richards, the president of the National Farmers Union in Wales: We have heard much about match funding for Objective 1 structural funds in the past few weeks but we must make progress. It is important that the right projects are proposed and backed to create sustainability for Welsh agriculture. We should focus on that.

We have had our debate and people should recognise that the Government are not complacent—we secured objective 1 funding. Match funding and PES cover are important. The hon. Member for North Dorset (Mr. Walter) complained about a lack of match funding commitments. However, the right hon. Member for Wells (Mr. Heathcoat—Amory), the shadow Chief Secretary, does not believe in objective 1 money or structural funds in the first place, so that complaint was slightly hypocritical.

The other key issue is the devolution settlement generally and the hon. Member for North Shropshire, my hon. Friends the Members for Ogmore (Sir R. Powell) and for Rhondda. the hon. Member for Brecon and Radnorshire and my hon. Friend the Member for Cardiff, Central (Mr. Jones) all made important points about the way in which it is working in Wales. It is less than nine months since the advent of devolution on 1 July 1999. It represents a major structural change in the governance of Wales and the way in which Members of the House and others relate to it. I say to my hon. Friends and other Members, let us see how it operates and consider how it is developing from all angles. Most of all, let us make it work and make it stable. We have to consolidate and work with what we have at the moment.

Delivery of services, stability, partnership and the themes discussed by my right hon. Friend the Secretary of State are extremely important and we want to emphasise them. However, I remind the House that we must not forget the big picture, which was mentioned by my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), and what the Government can do and have done to help to transform Wales. My hon. Friend the Member for Ogmore asked for a detailed statement of what the Government have done to help to support the people of Wales. I can tell him without fear of contradiction that we have had a busy and productive time since the general election. A lot has been achieved for Wales and there is a lot more to follow. I say to my right hon. and hon. Friends that the hon. Members for North Dorset and for Ribble Valley (Mr. Evans) and every other Conservative Member who participated in the debate have opposed every single thing done by the Government since the election.

We have talked about the economy and employment. As has been mentioned, the new deal has transformed the lives of many individuals in my constituency and others throughout Wales. In Wales, 12,000 young people, 2,000 long-term unemployed and lone parents have secured jobs through the new deal. It has transformed people's lives in Wales, which the Conservative party has opposed. At the end of last year, I attended the new deal launch for the over-50s in north Wales, the launch of the new deal for musicians in Cardiff, and the ONE launch in Cwmbran in the constituency of the Secretary of State in November, all of which are transforming people's lives. An additional 46,000 people are in work in Wales since the general election.

Mr. Paterson

Is the Minister aware that one calculation has it that each job, unsubsidised in the real market, costs £23,544?

Mr. Hanson

The hon. Gentleman has voted against the new deal and does not support it, but it is transforming lives. Colleagues who represent seats in Wales know that to be a fact.

The hon. Member for Meirionnydd Nant Conwy mentioned tackling poverty and social exclusion, as have others. The working families tax credit has meant that 87,000 Welsh families have had an increase of £24 a week. I and my hon. Friend the Member for Vale of Clwyd (Mr. Ruane) launched the initiative in his constituency in November.

A total of 585,000 pensioners have benefited from the winter fuel allowance. In November, the first pensioner in Wales received the cheque from me on behalf of the Wales Office in Bangor. About 109,000 people have benefited from the minimum wage in Wales.

I know that the right hon. Member for Kensington and Chelsea (Mr. Portillo), who is now gracing the debate, is a convert to the minimum wage, but the Conservative party voted against it. The predecessor of my hon. Friend the Member for Merthyr Tydfil and Rhymney, Keir Hardie, would have been proud of our party and its achievements in Wales. When we look at free television licences for pensioners, the massive increase in child benefit and our targets to tackle child poverty in Wales, as in the rest of the UK, we realise that the Government are delivering for Wales.

My hon. Friend the Member for Merthyr Tydfil and Rhymney said that crime was an important issue. Police numbers are up in every police force in Wales since the general election because of the Government's assistance and help. Three police forces out of four have shown a fall in recorded crime from the highest ever levels, recorded under the Conservative Government.

The hon. Member for North Dorset criticised the Labour Government's achievements on health in Wales. He should be aware that, in partnership with the Assembly for Wales, this year the NHS in Wales will receive an additional £175 million worth of expenditure and has an additional £1 billion to spend over the next three years. In the first two years of the Labour Government, 11,000 more in-patients were treated than in the last two years of the Conservative Government.

The Labour Government has given an extra £844 million for the Assembly to spend on education over and above current plans. The money is transforming the lives of children throughout Wales, building new class rooms, putting new teachers in place and giving new skills. The Labour Government are achieving for Wales. All the points that hon. Members have made are important and valid.

We have made a difference to people in Wales. It is about delivery on those issues, making a change, transforming people's lives, and partnership with the Assembly to achieve that. The Queen's Speech included a range of legislative opportunities: the Local Government Bill, the Care Standards Bill and the Learning and Skills Bill, which all give opportunities to let the Assembly look at those things in a Welsh context. I am particularly pleased to welcome the Secretary of State's announcement about the independent children's commissioner for Wales.

The Labour Government have delivered for Wales, are working in partnership and do make a difference to people's lives. We have a vision for Wales, which includes local decision making, helping to make the Assembly work and ensuring that the Wales Office fulfils that job in central Government.

We want to create fairness, enterprise, stability and opportunity for all, and to show the importance of the UK being central in Europe. We want to ensure that we have a Wales that is for all, celebrating Labour's history in our 100th year, what we have delivered for the Labour party in Wales and for the people of Wales, and modernising for the future, with the Conservative party remaining where it is now: it has little influence, no power and no support.

It being Seven o'clock, the Motion for the Adjournment lapsed, without Question put.

Mr. Livsey

On a point of order, Mr. Deputy Speaker. Could you use your good influence? We have lost one and a half hours of our Welsh debate today and although 18 right hon. and hon. Members wished to speak, only 12 managed to do so. My hon. Friend the Member for Montgomeryshire (Mr. Öpik) wished to celebrate his birthday by speaking in the debate and was unable to do so.

Mr. Deputy Speaker

The hon. Gentleman knows that from time to time Government statements have to be made on important issues. After that, it was for hon. Members to govern the length of their speeches. Had speeches been shorter, many more hon. Members would have been called and we could even have celebrated the birthday of the hon. Member for Montgomeryshire (Mr. Öpik).