HC Deb 05 February 2001 vol 362 cc662-719
Mr. Speaker

I should inform the House that I have selected the amendment in the name of the Prime Minister.

3.33 pm
Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)

I beg to move, That this House notes that there is growing poverty throughout Wales, both in rural and urban areas with a widening gap between rich and poor; further notes the Government's failure to avoid the problems in the manufacturing industry as evidenced by the huge job losses announced by Corus which will add greatly to the problems of social exclusion in Wales; further notes that the Welsh Affairs Committee in the Third Report of Session 1999–2000, HC 365, `Social Exclusion in Wales' reported on the matter, concluding that: Government should consider regional variations in tax to encourage investment, that it may well be necessary for the basic state pension to be increased in line with average earnings, that Government should initiate a comprehensive national benefit take-up campaign, that increasing the level of benefits is central to tackling social exclusion, and that the Barnett formula should be reassessed to reflect a needs-based formula. The term "social exclusion" conjures up many images and has been subject to a great deal of academic debate. It appears to be a moot point whether social exclusion must include poverty, but it seems to me that wherever there is an example of social exclusion, poverty is there or thereabouts.

Social exclusion is not confined to urban areas—far from it; it also exists in rural areas where public transport is poor, where village shops and post offices are closing and where the infrastructure of rural life is under threat. All of that is exacerbated by the crisis in agriculture, which has had a huge impact on the rural economy. Throughout Wales, once-bustling market towns are now quiet; the effects of out-of-town shopping and the current crisis cast a dark shadow on them. The rural post office is in danger of becoming merely a fond memory. Again, that affects people in the greatest need and those most at risk of exclusion—the elderly, the poor, the unemployed and those for whom public transport is the only means of transport.

Since taking office, the Government have stood by as one in eight of our sub-post offices have closed. Every month, Members receive a pro forma letter from Post Office Counters Ltd. about proposed closures, asking whether we know of anyone who would be interested in taking over such businesses. The advertising campaign mounted by Post Office Counters is a joke. Typically, it consists of putting up one sheet of A4 in the shop window of the nearest sub-post office for six or seven days. One would have thought that this Labour Government—of all Governments—would realise that such publicity was not very effective.

The Select Committee on Welsh Affairs has made some useful suggestions on the matter. It recommends that the Post Office should appoint a network development officer and officers in rural and socially deprived areas to ensure that unnecessary post office closures are avoided. The Committee recommends that, when it is known that a manager is about to retire, Post Office Counters should immediately initiate an active campaign to find a replacement on terms favourable to a prospective applicant.

The Select Committee calls for full implementation of the performance and innovation unit report. Let us not forget, however, that it was the Labour Government who initiated the Horizon project and who will, I fear, deprive us of our rural post offices—40 per cent. of their income is under threat and 60 per cent. of the existing network is estimated to be at risk.

Freudian slips are being made by Post Office Counters. When a decision is taken to close a given sub-post office, reference is made only to the nearest sub-post office that remains open. I have no doubt that the agenda of Post Office Counters is that of so-called rationalisation. An excellent candidate in my constituency—with an already flourishing business and an extremely good track record—was told by a Post Office Counters operative that taking over the post office was a waste of his time and "not worth it". How do we counter that?

Last Thursday, the Secretary of State for Trade and Industry spoke in the House about job losses at Corus. I share the right hon. Gentleman's genuine concern at the behaviour of Corus and its chairman, but the Government must face up to the fact that they have done little over the past 18 months to two years. It should have been obvious that Corus was in some difficulty—18 months ago, the company's accounts showed a loss of £1 billion. That should have rung some alarm bells among the Government.

I do not accept that it is good enough for a Minister to claim that Corus would not speak to the Government about that or that a Minister could have remained in ignorance—in the strictest sense—of what was going on. I always thought that Governments had certain economic levers available to them; after all, they have an interest in our communities and in maintaining a good manufacturing sector. Unfortunately, it appears that they have done nothing. During Labour's time in office—more than three years—16,000 manufacturing jobs have been lost in Wales alone.

Mr. Huw Edwards (Monmouth)

The hon. Gentleman mentions discussions between Corus and Ministers. I should be interested to know whether he has held discussions with the chief executive and chairman of Corus. I assure him that, on the Monday before the announcement, my Labour colleagues held discussions with the chief executive and chairman, who told us categorically that no decision had been made on any plant. If he was telling the truth, it shows that the decisions were made in only two days; if he was not telling the truth, it shows both deceit and the contempt in which he holds the work force, Parliament and the Government. Does the hon. Gentleman agree?

Mr. Llwyd

I certainly partly agree, but I agree most definitely about last week's behaviour. I was making the point that it has been known that the industry was in difficulty for more than 18 months, and that operating aids could have been offered. We should be considering better regional policies, given the disparity between the south-east and the other constituent parts of the United Kingdom.

I take the point made by the hon. Member for Monmouth (Mr. Edwards) and I certainly could not condone such behaviour, but the risks have been known for some time and the Government have been inactive. Until I hear differently, that is my view. During Thursday's statement, I specifically asked the Secretary of State for Trade and Industry what help had been offered to Corus. His answer was that I should find out what the National Assembly had done. With respect, his reply did not take the matter much further, and it tends to support my view that very little has been done. We can think about what happened to Rover.

Mr. Barry Jones (Alyn and Deeside)

The hon. Gentleman and I disagree on some matters, but does he agree that the statement made by my hon. Friend the Member for Monmouth (Mr. Edwards) is true? Many of us attended the meeting with the chairman of Corus. Does the hon. Gentleman agree that Corus has treated a magnificent work force most shabbily? He might agree that the Shotton work force should not have had that kick in the teeth and that Shotton steelworks should receive investment. He might find that some of his ideas agree with ours.

Mr. Llwyd

The right hon. Gentleman is right. I do not doubt for a second what the hon. Member for Monmouth says. I know him too well to doubt anything that he says on the Floor of the House. I agree entirely with the right hon. Gentleman that things should not have happened as they did, but we have to question what action the Government took in the preceding few months. No one can condone what happened, and it is an absolute disgrace that those communities in Wales are now being cast aside in such a callous, cynical manner—the worst possible example of capitalism gone bad. [HON. MEMBERS: "Blame Corus."] That is exactly the point that I want to make if hon. Members will contain themselves for a minute or two.

I am trying to develop the point that a regional policy, operating aids and so on should be considered. If not, what is the point of objective 1, under which it is recognised that parts of the United Kingdom are doing very badly, while others are doing well? That is not only my view. I shall quote the following: Since 1990 the share of GDP within the UK has declined significantly in the North East, the North West, the West Midlands, Wales and Scotland. It has increased significantly in the Eastern Region, London and the South East. These are symptoms of something fundamental. We don't have to look far for some of the causes. In 1998 manufacturing businesses invested over ten times as much in research and development in the South East—£1.9 billion—than in the North East—£164 million. Lack of investment, poor skills and education qualification, these are some of the underlying causes we need to tackle. Those comments were made by the Secretary of State for Trade and Industry in November. Obviously, he recognises that there are regional economic disparities in the United Kingdom, but what has been done to counter the problem in Wales? I shall leave the point there; I hope that it is well made. Although there is much agreement in the Chamber, it is still a moot point, and I am sure that one of my right hon. or hon. Friends will develop it further.

The quotation that I cited shows that the Secretary of State has acknowledged the disparities for some time. Therefore, why has no attempt been made to develop a regional economic policy for Wales? I mentioned operating aids, and in this context the Government would be entitled to introduce a lower corporation tax and a lower employer's national insurance contribution. Other grant aid is available as a spur for manufacturing industry in general. A specific package could have been introduced to assist Corus with its difficulties.

Why have those suggestions not been taken up? It is all very well making a speech about economic disparities, but what answers have been given to deal with the problems of the various regions and parts of the United Kingdom?

Mr. Llew Smith (Blaenau Gwent)

The hon. Gentleman refers to disparities in Wales and elsewhere and to the answers that have been given to overcome them, but will he comment on what happened in the Assembly when his colleagues abstained in the vote that provided an additional £5.5 million for Blaenau Gwent? They failed to vote for that money. If their inactivity had been rewarded and the money had not come to Blaenau Gwent, not only would public services have been slashed dramatically but our council taxes would have increased by between 50 and 60 per cent. Does he think that not voting for money for areas such as Blaenau Gwent is the answer to overcoming disparities and deprivation?

Mr. Llwyd

The answer is that the settlement was totally inadequate. [Interruption.] The hon. Gentleman may laugh, but he has made his point and I did not find it very funny.

Mr. Smith


Mr. Llwyd

If the hon. Gentleman bears with me, I shall respond to him. The settlement was insufficient—cuts have been made here, there and everywhere in local government. More important, much of that money has gone towards match funding for objective 1 projects, and I speak with some authority on that subject.

Mr. Smith

Does the hon. Gentleman accept that the logic of his argument is that nothing is better than something? The nationalist party did not vote for any additional money for Blaenau Gwent; it failed to vote for the £5.5 million that was allocated to our community.

Mr. Llwyd

I thank the hon. Gentleman for that point, but it was a Labour budget and it was unamendable. What does he suggest could have been done in those circumstances?

Mr. Smith

The nationalists could have shown their support for some of the most deprived communities in Wales by voting for the £5.5 million that the Labour Administration allocated for Blaenau Gwent. The fact that they failed to do so showed their disdain for my community and for some of the poorest communities in Wales.

Mr. Llwyd

I shall not respond to that final point, because it was getting ridiculous.

I shall return to the main point of this debate and the 16,000 jobs that have been lost to manufacturing industry in Wales since the Government took office. I can conclude only that some inactivity—either intentional or Otherwise—has led to many jobs being lost in the perceived Labour heartlands in Wales. The mood is one of anger—anger at inactivity and anger at being taken for granted as traditional Labour voters.

The next election in Wales will prove to be very interesting, and more interesting even than the National Assembly election. That might have something to do with the peculiar behaviour of Mr. Adrian McMenamin.

Mr. Denzil Davies (Llanelli)

Who is he?

Mr. Llwyd

The right hon. Gentleman asks, "Who is he?" I did not know either until Mr. McMenamin started misbehaving; he is such a useful member of the Wales Office team. He was employed by the Secretary of State for Wales as a ministerial special adviser and he is still employed—lucky man. He is paid out of the public purse and he spends time at home and in working hours denigrating members of Plaid Cymru—the Party of Wales—in the most offensive manner. The Secretary of State for Wales says that such behaviour is okay, but I will not dwell long on his view. He is not here today and I have been told why, so I shall not make an issue of it.

The Secretary of State cannot get away with the argument that Mr. McMenamin is not prohibited from behaving in the way that I have described outside office hours, because he jolly well is. Under his designation, he is not supposed to take political actions—however strange they may be—during office hours or at any other time. I sincerely believe that, if the right hon. Gentleman wants to consider himself a right hon. Gentleman, he must dismiss Mr. McMenamin, whether he is a maverick or part and parcel of something else.

Currently, two computers are busily churning out offensive remarks about members of my party. One has been registered to Millbank and the other to the Wales Office. We know that the previous Government were beset by sleaze, but it is sleazy of the Labour party to pay an official to insult Plaid Cymru Members as individuals. The last thing that I would do is insult a Labour Member, or, indeed, a member of any political party. We have a right to express our views and not to be denigrated and slagged off.

Mrs. Jackie Lawrence (Preseli Pembrokeshire)

I was interested by the hon. Gentleman's remarks about the use of public funds for political opportunity. Will he assure me that the press releases sent out in my area from the office of a Plaid Cymru Member of the European Parliament are paid for by his party, rather than from the public funds allocated to MEPs?

Mr. Llwyd

Of course they are paid for properly, but, if the hon. Lady wants to raise that issue, why does not she write to the person concerned? We are such a growing party that I cannot know what goes on in every office.

Mrs. Lawrence

I did write to the office, but I did not receive a reply.

Mr. Llwyd

I hope that the hon. Lady will take cognisance of my words. I shall e-mail the MEP concerned and ask her to address the point. I hope that that will be helpful.

Parts of the British economy are doing very well, mainly because of the way in which economic policies are being implemented. However, their success has its cost in other areas, as Welsh Members of Parliament know. I am afraid that Wales is bottom of the United Kingdom regional competitive index table—a place that I think is shared by the north-east. Wales is also bottom of the regional knowledge-based business index table. In terms of the knowledge economy, it is lacking and is in worse circumstances than any other area. Although we agree with the long-term goal, the short to medium term looks very bleak for Wales, because of the difficulties caused by the failure to establish a regional policy and to target the region's specific problems.

There must be greater balance between high-tech jobs and those in more traditional industries such as manufacturing. The Government are rightly putting a lot of emphasis on the knowledge economy, but they seem to be ignoring the needs of traditional economies. We need to ensure that incoming companies feel comfortable with the development of regional policies. We should be taking measures such as those that I have mentioned, including cuts in corporation tax, national insurance and so on.

Mr. Chris Ruane (Vale of Clwyd)

The hon. Gentleman mentioned the need for incoming companies to be attracted to Wales. What does he think of the comment made by Seimon Glyn, a Plaid Cymru councillor, who said that the English are a drain on Welsh resources? Does he think that that comment will attract or repel inward investors?

Mr. Llwyd

Before I answer that question, I refer the hon. Gentleman to remarks made by the hon. Member for Clwyd, West (Mr. Thomas), who said: One particular area of concern I have brought to the attention of the Committee is the way in which some landlords are able to play the system and bring in large numbers of people from outside the area to live in substandard accommodation. He pointed out that the cost was placed on local government. Worse still—I am quoting a publication of which the hon. Gentleman is aware—he said: The police do recognise there are problems in Colwyn Bay. There are those with little or no stake in the community who are known to be criminally active. Before the hon. Gentleman or any other Labour Member throws any brickbats, let me say that I know the councillor to whom he referred, and I am not sure what he said, but he has since apologised.

Perhaps Labour Members should look a bit nearer home. A serving Member of the House has been terribly abusive to incomers to north Wales, so let us not start insulting each other across the House on that subject—there is nothing in it for the Labour party.

Mr. Ruane

Will the hon. Gentleman give way again?

Mr. Llwyd

No, I will not. The hon. Gentleman should sit down.

According to a recent report published by Robert Higgins of the centre for advanced studies at Cardiff university, entitled "An Index of Competitiveness in the UK: Local, regional and global analysis", Wales ranks last but one in the UK regional competitiveness index. Higgins notes: The index makes it abundantly clear it is the southern regions of England that are driving economic growth in the UK. Good luck to them. I am saying that there should be a different approach in other parts of the UK. Higgins goes on to say: It is these regions that are home to the highest density of firms, the most knowledge-intensive firms, the highest level of economic activity, which in turn gives firms based in the areas a higher level of productivity". He asks: Should we not be pushing for stronger incentives to help make the uncompetitive areas more competitive? That is my point.

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

The hon. Gentleman's main theory about the economy is that Wales is being treated unfavourably and is at the bottom of various league tables. I understand his argument, but will he concede that in his constituency unemployment has fallen by a third from 1,640 in December 1996 to 1,051 at present and that there have been parallel falls in unemployment throughout Wales? Despite the picture of doom and gloom that he is painting, the job situation in Wales, including in traditional industries, the rural economy and south Wales, is pretty good.

Mr. Llwyd

Modesty prevents me from saying why unemployment has fallen in Meirionnydd Nant Conwy, but I can assure the hon. Gentleman that the constituency has an effective Member of Parliament. If he were to listen to my contribution, he would realise that I am not whingeing but talking about what could be done to improve various areas of the UK. I say good luck to the south-east, but this is not a one-size-fits-all situation, as the Department of Trade and Industry appears to believe. I give due credit to the Government because unemployment has fallen, and of course I am pleased about that. However, manufacturing jobs have been lost, and we need to take our eye off one ball and keep it on another. We must ensure that we have a comprehensive regional approach to the problem, and that is what I am developing. I agree with the hon. Gentleman about the figures that he quoted.

The Welsh Affairs Committee made a recommendation about regional variations in tax, and I hope that the Government will respond in due course. Happily, Plaid Cymru policy accords with that recommendation.

Mr. Dafydd Wigley (Caernarfon)

That is because Meirionnydd has a good MP.

Mr. Llwyd

I will not overdo the self-congratulation.

The Select Committee also made an important point about pensions. It said that it will watch the combination of the Pension Credit proposals and the Minimum Income Guarantee take-up campaign to ensure that pensioners are not left in poverty in future. It concluded that if those proposals do not work, the basic state pension will have to be linked once more to average earnings. That mirrors a recommendation by the Scottish Affairs Committee, and it is long overdue. That argument has long been raging in this place, and I am sure that we will revisit the matter. Suffice it to say that pensioners require a better deal than they are receiving at present. Few people, inside or outside the Chamber, can forget the 75p debacle.

On benefits, the Select Committee took the view that the Government should conduct a comprehensive national benefit take-up campaign". It said that the benefits system allows people to survive, but does not lift them out of poverty. It rightly concluded: Lifting the level of benefits is central to tackling social exclusion. The Committee also examined the poverty trap, which acts as a disincentive to re-entering work. To be fair, the working families tax credit should assist. However, a substantial disincentive remains for childless people. In my view, and in that of many commentators and others who gave evidence to the Committee, there should be a transitional or tapering benefit for the first three to six months of new employment to attempt to deal with that damaging disincentive.

The Secretary of State for Wales and I have fallen out drastically about what he said or did not say in answer to a question that I asked or did not ask about the vexed matter of the Barnett formula. The Committee concludes that the Barnett formula needs reconsidering and to be made more needs based. Lord Barnett said: I had always assumed its use would be temporary until a more sophisticated method that took account of needs could be devised. "Temporary" in that context is as temporary as the old traffic lights at Drws-y-nant in Rhydymain. It meant 23 years in that case; the Barnett formula is doing even better. We appreciate that such matters need to be reconsidered from time to time because they are important to the governance of Wales.

A preliminary glance at the figures shows that Wales has nothing to fear from a needs-based assessment as long as it is impartially conducted. Wales does not have to depend on the Barnett formula in its current form and would do better from a fairly calculated Barnett mark 2. We hope that the Government will take the initiative and develop a new formula after the next general election. There will be increasing pressure to reconsider an outmoded mechanism, which has worked well in the past, but should be re-examined after such a long time.

The Barnett formula constitutes a mechanistic approach and does not take account of the changing or current needs of Wales. The National Assembly has had much to say about that. It behoves us as Members of Parliament of all parties to chip in on the debate, further it, discuss it with our Assembly colleagues and try to devise a formula that is more needs based. I am therefore happy to endorse the Select Committee's recommendation that the Barnett formula should be reviewed or replaced by a needs-based system. Indeed, that is self-evident, given the huge disparity in GDP between England and Wales.

I know that several hon. Members want to speak in the debate, and I shall not take up much more time.

Mr. Paul Flynn (Newport, West)

Before the hon. Gentleman concludes his jocular remarks, will he explain the reason for his belief that there is growing poverty in Wales? He said that 20,000 jobs had been lost, but that 40,000 jobs had come to Wales, including 500 today to Bridgend and 500 two days ago to Rogerstone.

The hon. Gentleman said that pensioners had a raw deal last year. Will he acknowledge that they had the biggest increase in 25 years this year? They will get rises beyond the level of earnings and that of inflation. When will he produce the evidence to support his case that there is growing poverty in Wales?

Mr. Llwyd

I do not have to look far: the GDP of Wales is decreasing. Sometimes the hon. Gentleman is beset by prejudice. He described my remarks as jocular. They are not. He might find the subject funny, but I do not. It is serious, and other Select Committee members are fully aware of the evidence that was taken in the past 12 months. We know that poverty in Wales is increasing. Yes, the Government are attempting to address the problem, but GDP in Wales goes ever downward. Let us not beat about that bush.

When the Government were elected, the cry of "Things can only get better" was uttered ad nauseam. Things have not got better for students, schools, people on benefits—such as those who have been taken off invalidity benefit—coal miners, members of the farming community, rural dwellers or Welsh steelmakers. Things have, however, got even better for the well off. That is a grave indictment of the new Labour Government and their priorities.

4.5 pm

The Parliamentary Under-Secretary of State for Social Security (Mr. Hugh Bayley)

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof: notes the Government's central aim is a fair and prosperous society that offers opportunity for all, and that both economic prosperity and social justice depend on people being able to achieve their full potential; endorses the Government's commitment to eradicating child poverty, to providing employment opportunities for all who can work, to rewarding saving, and to ensuring that older people live secure, active and fulfilling lives and to tackling the root causes of poverty and social exclusion; further notes and expresses concern at the announcement by Corus on 1st February 2001; believes that the Corus action is a short term solution which is damaging for the individuals affected and the communities concerned; and calls on the company to think again about the planned closures and redundancies and instead work with the trade unions, Government and the National Assembly for Wales to identify a better way forward.". Every right hon. and hon. Member will have been shocked by the devastating announcement made by Corus last week. The company has made a short-term decision that is bad for Wales and I believe that it will look back on it and regret it. Our steel industry has achieved magnificent productivity gains over the past 20 years, averaging 10 per cent. a year. We have the greatest output per employee in Europe: 571 tonnes per man, compared with 543 tonnes in Germany and 534 tonnes in France.

There is strong evidence of the underlying strength of the economy. Employment grew by 239,000 last year, and, as my hon. Friend the Member for Newport, West (Mr. Flynn) pointed out, it grew in Wales, too. Manufacturing output rose by 0.7 per cent. and manufacturing exports, despite a high pound, grew by 7 per cent. Many other companies recognise that underlying strength in the economy. In the past two months, many companies have announced important investments in Wales, including Wireless Systems International, which is investing to create 264 new jobs at a high-tech telecommunications project in Cwmbran, and Ford, which announced 500 new jobs at Bridgend today.

The Government urge Corus to reconsider its decision. The company should be working with the trade unions, the National Assembly for Wales and the Government. The Secretary of State for Wales had meetings in Cardiff today with the First Minister and the Finance Minister of the Assembly, and he will also have meetings with Cabinet colleagues today, including the Secretary of State for Trade and Industry and the Secretary of State for Education and Employment. At this moment, he is having a meeting with the Prime Minister.

Mr. Alun Michael (Cardiff, South and Penarth)

Would my hon. Friend care to contrast the behaviour of Corus with that of Ford when jobs at Bridgend were threatened? Over a considerable period, the management of Ford in the UK—right up to Ian McAllister—and the local trade unions at Bridgend worked closely with Ministers, particularly with me when I was Secretary of State for Wales. The battle was taken to the management, and the door was open for negotiations as far away as Detroit. Is it not sad that Corus will not take such a positive approach and work with us on such difficult issues in these difficult times?

Mr. Bayley

My right hon. Friend is absolutely right and his experience gives real weight to his comments. It is in the interest of Wales, of the work force, of the Government and of the company for Corus to work with the Government to look for ways forward in circumstances such as these.

Mr. Ieuan Wyn Jones (Ynys Môn)

Does the Minister accept that if Corus had wanted to announce in Holland the kind of redundancies that it has just announced in Wales, it would not have been able to do so because the Dutch Government have adopted the EU regulation on consultation between trade unions, the Government and other bodies? Will the Minister give us an assurance that the Government will reconsider the introduction of those regulations? We do not want any company to treat Welsh workers in this way again.

Mr. Bayley

I do not accept that, because the redundancy package in the Netherlands is broadly the same as the severance arrangements here in the United Kingdom. Furthermore, there has been dialogue between the Government and the company. We have raised the question of a package of measures, including assistance with business rates, environmental projects—[Interruption.] The hon. Gentleman shakes his head, which shows that he is not interested in tackling the real issues. It is right that the Government made those offers to the company and it is unfortunate that the company did not respond, but we still want to work with Corus. The Government urge it to think again.

Mr. Wigley

Will the Minister give way?

Mr. Bayley

No, I must make progress.

Across the board, the Government are making progress in tackling poverty and social exclusion. The Corus announcement is a painful reminder that obstacles will continue to get in our way and that the Government have more to do, but let us consider the facts. When the Government came to power three and a half years ago, the problems of poverty and social exclusion in Wales were stark and the gap between rich and poor had been widening for two decades. One child in three in Wales lived in a low-income household; one child in five lived in a household in which no adult was in work; about one pensioner in four in Wales lived in a low-income household; and the poorest communities in Wales had high unemployment, high levels of poor housing and high crime. After years of neglect by the Conservatives, whole generations and whole communities in Wales had been written off.

Those problems are deep and complex, interlinked and inter-generational. They span people's lives, from childhood through working age to retirement. New solutions were desperately needed to challenge years of Conservative complacency and inaction. My right hon. Friend the Secretary of State for Social Security announced in February 1999 that we would publish not a vague wish list, but an annual report setting out the action that we were taking to tackle poverty, backed up by indicators against which we would be judged.

In March 1999, the Prime Minister put tackling child poverty right at the heart of that strategy with his historic pledge to halve child poverty in 10 years and eradicate it in 20. Alongside that, we set goals to end long-term unemployment, to help adults into work when they can work—while providing more support for those who cannot work—to ensure that pensioners live secure, active and fulfilling lives and to ensure that we rebuild communities crippled by years of inaction by the previous Government.

Those goals are challenging, not easy, and cannot be achieved overnight. There is no simple way to brush aside two decades of high unemployment and growing poverty. As the Corus announcement shows, there will be setbacks even when progress is being made, but the Government remain determined to make a difference, and we are making a difference because we are following policies that make a difference. Our first annual report on poverty, which was published in September 1999, examined the problems that we faced and outlined what we would do to overcome them. In September last year, we published our second annual report, which provided a detailed account of the actions that we have taken in Wales and elsewhere since we announced our strategy in September 1999.

The motion stresses the importance of benefit levels and take-up. Those are indeed important, but the motion ignores what the Government have done to improve benefits in real terms for those who cannot work and what we have done and are doing to promote take-up. We introduced a minimum income guarantee for pensioners in 1999 to target more help on those who need it most. Last year, we launched the most comprehensive take-up campaign ever run to help more pensioners to claim the minimum income guarantee, but poverty and exclusion are much wider ranging and more complex than just a lack of cash. Therefore, the Government strategy set out in the "Opportunity for All" reports focuses not simply on low income, but on access to education and quality in child care, housing and health.

Instead of focusing only on benefits and income, our strategy is to address the causes of poverty as well as the symptoms and to tackle in the round the problems that can drag people down into poverty and social exclusion at different stages in their lives.

Mr. Edwards

Will my hon. Friend confirm that the success of the Government's welfare-to-work policies has led in part to a reduction in expenditure on social security? Will he acknowledge the concerns of citizens advice bureaux and other advice agencies and the recommendation in paragraph 69 of the Select Committee's social exclusion report that, as a result of those savings, the Government could centrally fund independent advice agencies like the citizens advice bureaux and thus improve the take-up of benefits and other services?

Mr. Bayley

Let me pay tribute to my hon. Friend, and to my hon. Friend the Member for Clwyd, South (Mr. Jones) and all the members of his Committee, for producing an important piece of work. The Government are considering it and will respond in the normal way to the report and its recommendations. The fundamental point that my hon. Friend raises is absolutely right: we promised in our manifesto to reduce spending on the costs of economic failure and instead to make pathways back into work for people who could work. We have done so, and unemployment is now at its lowest level for two decades. That has released resources that we are able to spend elsewhere, not least on making substantial increases in pensions, which will be introduced in April this year.

Children are a special priority in our poverty strategy, because they have only one opportunity to get a good start in life. That is why £11 million a year has been spent on sure start in Wales, on programmes approved by the Assembly and delivered by a partnership of local authorities, health services and voluntary organisations, to provide better services in the crucial early years of a child's life. We are investing in education, too, to give children the tools they need to succeed in the 21st century. An extra £12 billion was announced in the spending review for education and training in the UK over the next three years.

If we are to raise children out of poverty we need to raise family incomes, and we are doing that. Measures in the past four Budgets will lift some 50,000 children out of poverty in Wales. Those measures include a significant increase in child benefit—now £15 a week for the eldest child and £10 a week for other children. Plaid Cymru, in its manifesto at the last election, promised to link child benefit with the cost of living. We have linked child benefit with the cost of living and done more—26 per cent. more—than that. There has been a 26 per cent. real-terms rise in child benefit since 1997. If hon. Members want to do something to relieve child poverty, here is something that the Government are doing. Some 650,000 children in 360,000 families in Wales gain from those increases.

The introduction of the working families tax credit and the minimum wage together guarantee families with children, with one person in full-time work, a minimum income of £208 a week, which rises to £214 a week in April of this year. Some 67,000 families in Wales are benefiting from that. We also increased the sure start maternity grant from £200 to £300 in September last year.

Thus all families with children in Wales will be better off by on average £15 a week. A couple on income support with two children under the age of 11 will be better off by nearly £30 a week compared with 1997. Families on the working families tax credit receive on average £30 a week more than they received on family credit, which it replaced. More than 30,000 lone parents in Wales receive benefit from the new working families tax credit.

However, we can and should do more for parents and their children by encouraging parents into work, which we are doing through the new deals and the ONE service. Children are benefiting from being in families with higher incomes and from seeing at first hand that work is the route out of poverty and the way to a better life. The new deal for young people has helped some 35,000 young people in Wales so far. Half of those have found work, while a further 11,000 have entered training or education.

Another barrier to work is the difficulty in getting affordable child care. That is why we have introduced the child care tax credit, which is now claimed by 5,600 families in Wales. The average gain from the child care tax credit is about £32 a week, compared with £22 a week with the family credit.

The Tories used to say that they wanted wealth to cascade down the generations. It always has, but poverty is inherited, too. If people are poor, their children grow up in poverty and are more likely to be in poverty in adult life. We want to break that cycle of deprivation. We are helping people of working age to rise out of poverty and social exclusion.

The system that we inherited was designed 50 years ago and is no longer up to the job. Our goal is clear: we want a modern, active welfare state that creates opportunities and incentives, and is based on the fundamental principle of work for those who can work and security for those who cannot. We are making progress towards that goal. Employment is up by more than 1 million since the election. More people are in work than ever before. Since 1997, we have more than halved the number of long-term unemployed in Wales: it went down from 27,000 in May 1997 to around 12,000 in May 2000. We have reduced youth unemployment, which went down from 22,000 to about 15,000 in the same period. We have also cut the overall level of unemployment in Wales from 6.5 per cent. to 4.6 per cent. We are investing £89 million in the ONE service to bring together benefit and employment services in 12 pilot areas, including south-east Gwent, which will help the unemployed to work.

Mr. Simon Thomas (Ceredigion)

At the start of this long list of Government achievements, the hon. Gentleman gave three headline figures for poverty in Wales which were the legacy of the Conservative Government when the Labour party took over. Will he give the current figures, so that the people of Wales can see what has been achieved in the past four years—not what will be achieved?

Mr. Bayley

The hon. Gentleman may have stopped concentrating for a minute. I gave him the unemployment figures for May 2000. [Interruption.] He asks me a question, then he will not listen to the answer. He asked for figures for May 1997.

Mr. Thomas


Mr. Bayley

Yes. The hon. Gentleman asked for figures for May 1997 and for more recent figures. I have given him the figures that are available, which are the unemployment figures. Unemployment has come down in Wales.

Mr. Thomas

I fear that I may have misled the Minister, although not deliberately. I referred him to the three headline figures that he used at the start of his list of Government achievements. They had nothing to do with the unemployment figures. He referred to the number of children in fatherless, unemployed households, and the number in pensioner poverty. What are those figures after four years? He has not given them.

Mr. Bayley

Those figures for Wales, as opposed to the United Kingdom as a whole, are not yet available because of the way in which the statistics are collected. However, I hope that the hon. Gentleman will be pleased to hear that the number of children growing up in workless households is down in Wales as it is elsewhere in the UK. That is good. Some of the other figures will take longer, because they are produced two years after the event. They will be published, and we should and will be judged by them. Progress is being made, but I agree with the hon. Gentleman that more is needed. We cannot wipe out 20 years of increasing social exclusion and deprivation under the previous Government in just a few years. It is a long haul, but we have started.

Mr. Nigel Evans (Ribble Valley)

While the Minister is rattling through this glorious Government's wonderful list of achievements, will he give some attention to the farming industry, which is suffering greatly under this Government? Will he tell us how many people have left farming, and the levels of income in the industry under this Administration?

Mr. Bayley

The hon. Gentleman ignores his party's lamentable record on farming. The level of support for farming, in Wales and elsewhere, is higher than the level of support for all other industries put together. I do not deny for a minute that smaller farmers have real problems, but our Government are addressing those problems.

To encourage people to move from welfare into work, we need to ensure that work pays. We have introduced the national minimum wage, which is helping about 90,000 workers in Wales. As I have said, we are doing more to give extra help to pensioners: the minimum income guarantee has already helped around 95,000 of the poorest pensioners in Wales.

Over the weekend I read the Select Committee's report. It is a very good report, but let me be clear about one thing. Those 95,000 pensioners who benefit from the guarantee would not have gained at all from an earnings uprating of the basic state pension, because every penny that they received on the basic pension would have been taken off their income support.

The Tories may have different plans, but let me make it crystal clear that under this Labour Government the basic state pension will remain the foundation of retirement income. For most people, however, the best way to secure a good standard of living in retirement is to contribute to a good second pension. As a result of our reforms, more people than ever will retire with better second pensions, and some will be able to receive such pensions for the first time ever.

As we promised, we are building on SERPS through the new state second pension, and 18 million people will have significantly better second pensions as a result. For the lower paid, the state second pension will in some cases more than double what they would have received under SERPS. That means that someone earning £120 a week will be £40 a week better off in retirement than he or she would have been under the Tories.

Moreover, for the first time, full-time parents, carers and disabled people will receive more money in retirement. For example, a state second pension of £50 a week, on top of the basic state pension, will be available to someone who has been a carer throughout his or her adult life. For people who cannot have access to occupational pensions and for whom personal pensions are inappropriate, we have introduced stakeholder pensions, which are flexible, secure and good value for money. They are revolutionising the way the pensions industry does business, by cutting charges, although they are coming on stream only from April this year. Those reforms mean that more and more people will retire on decent incomes. We will ensure that people who save during their working lives are rewarded.

More recently, my right hon. Friends the Chancellor and the Secretary of State for Social Security announced further help for vulnerable groups. We are tackling pensioner poverty by aligning all the rates of the minimum income guarantee with the highest rate. The winter fuel payment has been increased from £150 to £200 for this winter only, as part of a bridge to our new pension credit. We have abolished capital limits in the sure start maternity grant and funeral payments, to ensure that families on low incomes with small amounts of savings receive support to help cover the costs associated with the birth of a baby or the death of a close relative.

We have introduced a package of measures to help carers and the severely disabled on low incomes. That means that from April this year there will be an extra £10 a week for carers on income support, increasing the rate from £14.15 to £24.40. The disabled child premium, within income support, will rise from £22.25 to £30, a real-terms increase of £7.40. The new disability income guarantee will increase the weekly incomes of the poorest and most severely disabled people by £7.25 a week for single people and children and by £11.05 a week for couples, which means that a single person on DIG will receive £142 a week while couples will get £186.80.

These policies are already making a difference to people's lives, but we are developing more. By 2003 we shall be introducing the integrated child credit, a new employment tax credit and a pension credit to reward pensioners who have worked and saved hard during their working lives.

Mr. Lembit Öpik (Montgomeryshire)

Will the Minister give way?

Mr. Bayley

No, I shall not.

We are already witnessing real change as a result of our policies. The close consultation and co-operation between the United Kingdom Government and the devolved Administration lie at the heart of our joined-up strategy. We are determined to continue to make a difference to people who live in Wales by providing real opportunity for all.

4.30 pm
Mr. Nigel Evans (Ribble Valley)

I am grateful to have an opportunity to contribute to the debate.

Mr. Ruane

Where are the hon. Gentleman's mates?

Mr. Evans

Plenty of my mates will be here after the next general election. We will be sitting on the Government Benches, not on the Opposition Benches. We look forward to that and we will miss the hon. Gentleman.

I have been told that the Secretary of State cannot be here because he is having a meeting with the Prime Minister today about the steel job losses. I accept that fully. I hope that considerable progress can be made at that meeting. I urge the Minister to encourage lobbying for the traditional 1 March debate, so that we can discuss Welsh issues on a much wider scale.

This is a vital debate on social exclusion, poverty and job losses in Wales. I welcome the Minister, with his particular remit on social security. As we have heard, he knows his statistics well, although many people living in Wales will be scratching their heads and wondering how much of that relates to them. I think that he will understand what I mean when I refer to certain sectors in Wales that he failed to mention.

The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) said that there were many interpretations of social exclusion. He referred to the rural economy, although the Minister made scant reference to it. It plays a dominant part in Wales. We need a vital rural economy to ensure that many people, particularly those living in west, mid and north Wales, can benefit from any growth in the economy generally.

Mr. Öpik

Does the hon. Gentleman agree that the rural economy is affected by the on-going loss of manufacturing jobs in places such as mid-Wales? For example, uncertainty surrounds 200 jobs at the firm formerly known as BSK, in Llanidloes. Does he agree that it is incumbent on the Government to work with the Assembly in Wales to ensure that those rural jobs are not forgotten, despite the situation at Corus, which naturally gives rise to concern?

Mr. Evans

I rarely agree with the hon. Gentleman, but on this occasion I do. Manufacturing jobs are vital: if jobs in rural areas are lost, it will be incredibly difficult to attract industry back to those areas. Infrastructural and service problems exist there, so losing 200 jobs in a rural area has a greater impact than it would in an urban area. Long-term problems of attracting jobs back to rural areas is that much more difficult.

Mr. Alan W. Williams

I have looked up the unemployment figures for the constituency of the hon. Member for Montgomeryshire (Mr. Öpik). The latest figures for December show that 594 people were out of work, an unemployment rate of 2.2 per cent. I think that he and many of us who represent rural areas are relieved that unemployment is relatively very low in our areas.

Mr. Evans

I hope that the hon. Gentleman never loses that book, because he will have nothing to say if he does. It is all very well to trot out statistics glibly and to say what the rate of unemployment in the Montgomeryshire constituency is, but everything the hon. Member for Montgomeryshire (Mr. Öpik) said was right. People are fearful of jobs going in rural areas. The arrogance that the hon. Member for East Carmarthen and Dinefwr (Mr. Williams) is displaying does him no great credit. People who work in manufacturing industries, not just in Wales but throughout the United Kingdom, will know that, since 1997, 370,000 manufacturing jobs have been lost. In Wales, 16,000 have been lost. It is a real problem when manufacturing jobs, the bread and butter, the guts, of British industry, are lost.

Mr. Öpik

Does the hon. Gentleman agree that, although the statistics for Montgomeryshire are very good, that is not an excuse for ignoring the dangers that he has been describing? The thousands of Corus job losses are unquestionably a serious matter. However, the loss of 200 jobs—the losses are not definite yet—in a place like Llanidloes would have at least the same impact as the Corus job losses will have at Ebbw Vale.

Mr. Evans

Of course I accept that job losses in rural areas have a disproportionate impact. I suspect that Labour Members representing rural constituencies will also accept that and realise how much more difficult it is to attract industry to those areas. I should hope that all hon. Members agree that jobs, particularly manufacturing jobs, in rural areas are hard to come by.

We have already heard about the post office closures of the past four years. We also know that, for many people, the post office may be their only village shop. It is pointless saying that those people can simply get into their cars and go to a neighbouring village where a post office may have survived, because many people do not have a vehicle. Additionally, rural transport is poor—although I concede that it has always been poor. The state of rural transport, however, should only make us recognise all the more the importance of the post office network in rural Wales.

Petrol is another bugbear. We now have some of the highest petrol prices and petrol taxation in the world. We really do need to recognise that fact. Several months ago, spontaneous petrol disputes were a recognition of that fact. Since then, however, very little has happened to change the situation. We have all heard about the wonderful new low sulphur petrol, but I have yet to see it being sold in any of the garages that I visit—[Interruption.] I am not saying that it will not be available, but currently many garages do not sell it.

Mrs. Lawrence

As the hon. Gentleman does not represent a Welsh constituency, he may not be aware that the Government's policy on both ultra-low sulphur diesel and ultra-low sulphur petrol has secured, in the medium to long term, the refinery in my constituency which is one of the major employers there.

Mr. Evans

I was in the hon. Lady's constituency, with the excellent Stephen Crabb, the prospective parliamentary candidate for her constituency, who showed me round Haverfordwest and Milford Haven. As she herself would concede, Milford Haven is an unemployment black spot and has tremendous problems, and it would take a disproportionate effort to attract jobs to her constituency. I realise that. I lived in Swansea for 33 years, and it was difficult to attract investment even there, although it is only an hour from Cardiff. It will take even more energy to attract investment further west.

Mrs. Lawrence

The hon. Gentleman's comments seem to highlight his lack of knowledge—despite his recent visit to my constituency, about which he did not notify me. The employment figures in my constituency have improved massively, primarily because of the 1,500 jobs at Cyber Park that we anticipate will have been created by June, although almost as many have already been created. Most of Cyber Park's employees come from my constituency. At the opening of the latest development there, the Employment Service made the point that those jobs have had the knock-on effect of creating another 4,000 jobs in the community. Perhaps, having been to my constituency, the hon. Gentleman will acknowledge at least those facts.

Mr. Evans

I have apologised privately to the hon. Lady for the discourtesy in not notifying her, and I do so again publicly. I can also guarantee her that, in just a couple of weeks, when I visit her constituency with the most excellent Stephen Crabb, I shall most certainly let her know. Perhaps she could join me in a walk-round. Perhaps we could go to Milford Haven and see the problems there. Although I hear what she says, I am sure that she will concede the difficulty of dealing with unemployment in western and rural Wales and the need for even more energy to be devoted to attracting industry there.

Mr. Alan W. Williams

Will the hon. Gentleman give way?

Mr. Evans

No. I have to make a little more progress, but I shall give way later.

I asked the Minister about farming, and he conceded that it is experiencing real and severe problems. Even the Minister, however, may not fully understand the impact that the farming crisis is having in parts of Wales. Recently, the Western Mail reported that 73 jobs a week were being lost to Welsh farming. The total number of people employed on Welsh farms in June 2000 was 55,700, 3,800 fewer than a year before. These statistics come from the National Assembly. The president of the Farmers Union of Wales, Bob Parry, said: This serves to underline just how badly the agricultural sector in Wales is suffering. Hugh Richards, the president of the National Farmers Union in Wales, described the figure as a very sad indictment of the appalling state of the agriculture industry in Wales. There has been a dramatic fall of 13 per cent. in the number of full-time farmers over two years, from 25,800 in 1998 to 22,600 in 2000. Mr. Parry said: Politicians must take this crisis seriously and take positive action to stem the flow of jobs from farming. Losing 73 jobs every week in rural Wales has a detrimental knock-on effect on the entire economy, a fact that must be recognised by the Assembly and also by Whitehall. From 1995–99 to date, farm incomes have fallen by more than half, and some farmers now survive on well below the minimum wage. They are self-employed; as one farmer said to me, not all farmers go out of business, but a lot go poor. Unfortunately, that is happening in too many areas. When we talk about poverty and social exclusion in Wales, we must not forget the farming industry.

Many of those involved in farming are coming to London on 18 March. I have encouraged the Prime Minister to be here on that date to meet a delegation of rural dwellers from my constituency. Perhaps the Under-Secretary of State could say whether he will be here on that date to meet representatives of Welsh farmers and those who live in rural areas; they will have a strong message to send to him. Many people in Wales are scratching their heads and wondering why time is being taken to legislate on hunting with hounds when there are so many deep-seated problems in Wales.

An additional problem for which the Government are specifically responsible is the introduction of the climate change levy. I ask Ministers to look carefully at the impact that that will have on those farmers in Wales—particularly horticulturists—who use a lot of energy. Will Ministers scrap this dreadful and appalling tax?

Tax on petrol, in particular, is regressive and hits the poorest parts of society. On average, each family in Wales is paying £670 net more taxes today than in May 1997; after the Government's promise that there would be no new taxes, that seems a bit rich to these people. The real problem comes when people think, "We are paying the taxes, so where are the services?"

I shall refer to one example that should worry everyone in the country. Nothing is more socially excluding or hurtful to the poor than to have the NHS not delivering the decent health care that they expect after paying their taxes. Many people in this Chamber could afford private health care if they so wished. Those who are socially excluded and live on low incomes have no choice; they must use the health service. The total of Welsh residents waiting for in-patient or day-case treatment has gone up from March 1997 by 14.7 per cent. The number of patients waiting over 12 months rose between 31 March 1997 and 31 December 2000 by 85 per cent. For the same period, the number of patients waiting more than 18 months has gone up by 251 per cent. Those are chilling figures, and the Government should work with the Welsh Assembly to ensure that we get a much improved service for the people of Wales.

When the Government of Wales Act 1998 was enacted, establishing the Assembly, Government Members gave the impression that everything would be rosy and that it was guaranteed that waiting lists would go down. We were almost tempted to believe that the Welsh rugby team would win every game—although, sadly, after Saturday, that is clearly not the case. There is not much that the Government can do about Welsh rugby, but there is everything that they can do about the health service in Wales.

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

How will the hon. Gentleman's proposed cuts in public spending help the national health service in Wales? How will his opposition to the working families tax credit, to child benefit rises, to the minimum wage and to public spending by local authorities help socially excluded rural areas?

Mr. Evans

The Government trot out the line that the Conservatives plan to cut expenditure, but they fail to recognise that we may well plan to cut the proposed enormous increases in expenditure by £8 billion overall, which will be returned to the people in tax cuts that they can spend themselves; but we also intend to ensure that we spend money more effectively and efficiently.

The cost of government has gone up by £2 billion a year, for example. In Wales, we now have MEPs, MPs, Assembly Members, local authority councillors—where does it all stop? This all costs an enormous sum. Are the people of Wales getting a better service? No. At a time of crisis in the national health service in Wales, the Welsh Assembly is to spend £42 million on a new building, when people who voted in the referendum were told that it would cost between £12 million and £17 million. Surely it would be better to stay within budget and spend the difference on the health service. Does anyone here believe that the money should be spent on the Assembly building? The silence at least indicates some consensus. [HON. MEMBERS: "No."] Plaid Cymru may have something to say.

Mr. John Bercow (Buckingham)

My hon. Friend will have heard the Under-Secretary referring to the working families tax credit. Does he agree that it shares with the child care credit and the student loan repayment administration regulations, whatever their intrinsic merits or demerits, the characteristic of shuffling responsibility from central Government to beleaguered businesses, forcing them to become unpaid tax collectors and benefit distributors? Would not it be sensible, instead of creating the deepest sea of regulation that businesses have ever had to negotiate, if the Government eased the burden and allowed them to breathe, to grow and to prosper?

Mr. Evans

My hon. Friend is absolutely right. [Interruption.] He can see that many hon. Members are keen to reply to his telling point.

Several hon. Members


Mr. Evans

I think that Plaid Cymru should have its say on the Assembly building.

Mr. Llwyd

The hon. Gentleman mentioned £42 million being spent on the Assembly building. Will he remind the House of the cost of the office in which he is situated, and perhaps compare the figures?

Mr. Evans

I had no involvement in the costs of that building and have gone on the record to condemn its extortionate cost. If the hon. Gentleman is saying that the people of Wales, who were told that the new building would cost between £12 million and £17 million, but who now face a bill of £42 million—and no one seriously expects it to be built for much under £60 million; at least, I do not—would rather have the money spent on a palace for self-styled Ministers than on the NHS, he is more out of touch than I suspected.

The hon. Gentleman cannot deflect me from the excellent points made by my hon. Friend the Member for Buckingham (Mr. Bercow). I attended the launch of "Barriers to Survival and Growth in UK Small Firms", a document produced by the Federation of Small Businesses in November 2000 following responses from 927 small businesses. I own a small business in Wales, but I am not a member of the federation so have no interest to declare. Small businesses make the economy grow, and we must look to them to expand it in all parts of Wales, particularly rural Wales.

Mr. Ruane

Will the hon. Gentleman give way?

Mr. Evans

In a moment.

Some 95 per cent. of respondents said that they were dissatisfied with fuel costs, a fact that should not be lost on the Government. Some 71 per cent. said that they were dissatisfied with local council business charges, and 76 per cent. were dissatisfied with the amount of local business. On the very point made by my hon. Friend the Member for Buckingham, table 28 on page 25 refers to dissatisfaction with legislation. Some 81 per cent. were dissatisfied with the volume of legislation; 83 per cent. with its complexity; 79 per cent. with the rate of change in legislation; 79 per cent. with the interpretation of legislation; 59 per cent. with the ability to employ staff—

Mr. Flynn

The weather?

Mr. Evans

The hon. Gentleman may make light of the problems that small businesses face, but steelworkers in his constituency are losing their jobs and will seek new jobs from small businesses. If I were he, I should not treat so lightly the concerns of 927 small businesses in Wales. He should listen instead of making cheap comments.

Some 65 per cent. of respondents were dissatisfied with the cost of compliance, and 66 per cent. were unhappy with the implementation of European Union regulations. The Minister may already have read this excellent document; he is giving half a nod, so I shall ensure that he is sent a copy and will highlight the tables to which I hope he will pay some attention. Small businesses want to grow but the Government are stifling them.

Mr. Bayley

Does the hon. Gentleman acknowledge that employment in Wales is going up and that unemployment is falling? Many of the new jobs are in the small business sector.

Mr. Evans

Of course unemployment has gone down, as it did towards the end of the period of Conservative government. The trend left as part of the previous Government's economic legacy has been continued, but we fear that the legacy will be destroyed. If job losses rise, I am sure that the Government will say that it is not their fault—"it's not me, guv.com." Nothing is ever the responsibility of the Government, but the United States of America is in fear of job losses and a recession, and the same thing is happening in Wales.

Mr. Ruane

Will the hon. Gentleman give way?

Mr. Evans

In a moment.

Manufacturing industry is Wales's bread and butter, and more important, proportionally, than it is elsewhere in the United Kingdom. The hon. Member for Montgomeryshire spoke of fears of job losses in his constituency, which I am certain are real. I applaud the announcement of 600 new jobs made today by Ford; the £240 million investment in Wales comes as a welcome tonic for us all. However, it cannot be taken in isolation.

As I listened to the Secretary of State for Trade and Industry making his statement on the job losses at Corus, it was almost as though he were making a speech about how wonderful manufacturing is in Britain; but we know that there are real problems. We cannot hide the fact that there are severe job losses in manufacturing: at Courtaulds Textiles in Wrexham, 167 jobs were lost; we know exactly how many jobs will be lost at Corus—on top of job losses at the company last year; at Dewhirst, the women's clothing factory in Pembrokeshire, 300 jobs were lost—

Several hon. Members


Mr. Evans

I shall give way in a moment.

At Scottish Courage, 1,300 jobs were lost. There were also job losses at Hitachi, Sony and Panasonic. The announcement about Corus was made the day after Dairy Crest announced 500 job losses and the creation of 250 jobs—a net decrease.

Mrs. Lawrence

The hon. Gentleman again makes a fundamental mistake about my constituency. No job losses have occurred at Dewhirst in my constituency. Hopefully, with the help of the Assembly and Members of the House, there will be no such losses. Negotiations are at a sensitive stage; the matter depends on commercial considerations. I would be grateful if the hon. Gentleman got his facts right for once.

Mr. Evans

All I can say is that the announcement was made. If the National Assembly for Wales is able—

Mrs. Lawrence


Mr. Evans

Perhaps the hon. Lady could restrain herself for a moment.

If the National Assembly and, indeed, the Secretary of State for Wales and the First Minister, can do something to alleviate job losses from that factory, I should welcome it.

Mr. Simon Thomas

Will the hon. Gentleman give way?

Mr. Evans

I shall give way in a moment. I am always grateful for any assistance from the hon. Gentleman; I once tried—completely unsuccessfully—to prevent him from getting his job.

On the job losses at Corus and elsewhere, we all have to recognise that part of the problem relates to who is speaking for Wales on the economy—that came out on Thursday when the job losses were announced. Is it the Secretary of State for Trade and Industry? Is it the Secretary of State for Wales? Is it the First Minister? Is it the Liberal Democrat Deputy First Minister, the Minister for Economic Development? There has been such fragmentation of responsibility.

People who are losing their jobs realise that the one great growth industry in Wales is politics—there are far more politicians and assistants for politicians. However, it certainly did not help the workers at Corus to hear the Secretary of State for Trade and Industry say at the Dispatch Box that he knew nothing about the job losses. If only the right hon. Gentleman read the Financial Times, The Daily Telegraph, The Times or any other newspaper, perhaps he would have had an inkling.

Mr. Thomas

The hon. Gentleman recently visited my constituency and informed me of his plans to do so. Unfortunately, he has not realised that the job losses at Dewhirst to which he referred took place in my constituency—165 jobs were lost. There is also a threat of job losses in Fishguard, to which many of my constituents travel to work. That is the reality of job losses in rural areas; in a small town such as Lampeter, the loss of 165 jobs—mainly held by women—is a tremendous blow.

Mr. Evans

On top of all that, an enormous number of jobs has been lost at Associated Dairies during the past two to three years. Furthermore, it is extremely hard to put jobs back into the dairy sector.

I know that a meeting on job losses is being held today. Many people will be affected; not just those who work directly for Corus, but those working in other industries that rely on the company. Service jobs and those in other manufacturing sectors depend on the health of Corus. Those people will be looking to the Government to set up a package of support and regeneration in the area. I hope that the Under-Secretary of State for Wales will be able to offer us some guidance on that matter as quickly as possible; those people must be extremely worried about the job losses. I do not know whether the meeting has finished—[Interruption.] The hon. Gentleman indicates that it will finish shortly.

The Library has produced figures on social exclusion in Wales; in each category, the document gives figures for the United Kingdom as a whole, followed by the figures for Wales. The number of children in workless households is higher than in the United Kingdom generally. The number of children in households with relatively low income is higher in Wales. The number of working-age people in employment is obviously lower in Wales. The number of working-age people in workless households is higher in Wales. The number of working-age adults on income support for two years or more is higher in Wales. That makes fairly bleak reading.

The report entitled "Social Exclusion in Wales"—to which the hon. Member for Clwyd, South (Mr. Jones) will, no doubt, shortly refer—contains some chilling statistics, especially those on teenage pregnancies, to which he refers specifically.

Mr. Martin Caton (Gower)

If the Conservative party is so concerned about social exclusion in Wales, why has it boycotted the entire social exclusion inquiry by the Select Committee on Welsh Affairs?

Mr. Evans

The hon. Gentleman is referring to the fact that the Select Committee's Conservative Members were unable to be present during the deliberations.

Several hon. Members


Mr. Evans

I will not give way. The hon. Gentleman will be able to discuss that matter with the individuals concerned.

The incoming Labour Government told us that things could only get better in Wales; they were trusted by people in Wales, but things have got decidedly worse in the past four years. Things will get better; they will get better in a few weeks' time when we have a general election. We are fed up to the back teeth with hearing statistic after statistic from Ministers. They tell us how good things are, but we know from visiting villages, towns and cities in Wales that there is real poverty. There are areas of growth, too, but the pockets of poverty hurt deeply. Things will only get better when this rotten Government are chucked out a few weeks from now.

5.1 pm

Mr. Denzil Davies (Llanelli)

The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) requests that there should be a further look at the Barnett formula. He calls for a Barnett formula mark 2, which would be more needs based and perhaps more sophisticated than the current one. The Select Committee on Welsh Affairs also issued that call. I certainly would not resile from that, but if we have a needs-based Barnett formula mark 2, more money will presumably come to Wales from the British Exchequer. I do not object to that; it is the purpose of having a better formula, but neither the hon. Gentleman nor his hon. Friends have told us how their policies could bridge the gap between the even greater public expenditure derived from a Barnett formula mark 2 and the amount of tax, sadly, that is raised in Wales.

Total public expenditure in Wales is about a third higher than the total sum raised in tax. If we had a better Barnett formula—let us have one—that gap would be even greater. Plaid Cymru Members want to leave the British Union and join the European Union. That is their policy, and they are perfectly entitled to it, but they must tell the people of Wales how they would bridge that gap in expenditure.

Plaid Cymru Members may say that they could somehow borrow the difference, but that would be practically impossible because a borrowing requirement of 15 per cent. of GDP would be involved, but the Maastricht criteria allow for 3 per cent. at most. If they borrowed at that 15 per cent. rate, they would not be allowed to join the euro, and they would have given up the British pound. Perhaps they will therefore tell us in what currency would the Welsh steel industry trade. Clearly, that policy would be a total disaster not only for the Welsh steel industry, but for the Welsh economy.

I agree with the hon. Member for Meirionnydd Nant Conwy and the terms of the motion tabled by his party that the Corus cuts and closures will worsen the problems of social exclusion in Wales. Of course, they will certainly make them worse in the short term, but I hope that the position can be retrieved in the medium term. I speak as the Member of Parliament for a constituency that does not produce basic steel, but it does produce tinplate. It has produced tinplate from before the first world war and it was producing it when President McKinley and the United States imposed the McKinley tariff on Llanelli tinplate.

In the 1970s, three factories in Wales produced tinplate. They were at Trostre in my constituency; Velindre in the constituency of my hon. Friend the Member for Gower (Mr. Caton); and Ebbw Vale in the constituency of my hon. Friend the Member for Blaenau Gwent (Mr. Smith). If the Corus proposals go through, only one plant will remain. In the 1970s, those three factories had 90 per cent. of the domestic tinplate market in the United Kingdom. More than 20 years later, that figure is now down to 50 per cent. and British Steel has never explained to me how it managed to lose almost 40 per cent. of the market. Perhaps it was too much to expect it to hold on to 90 per cent. of the domestic market—that figure may have been artificial—but the considerable decline has left us with the prospect that only the plant at Trostre will remain.

It gives no pleasure to those who work in Trostre and those who live in my constituency—they have lived with the problem for years—that our plant will be the last one remaining. Under the plans, the plant at Ebbw Vale is expected to close. We hope that the proposals put forward by the trade unions mean that at least two plants will produce tinplate in Wales. We need two plants to maintain a 50 per cent. market share, and, if that share is eroded any further, it will affect the plant in my constituency and the plant at Port Talbot that produces steel for the tinplate industry.

My hon. Friend the Member for Monmouth (Mr. Edwards) and others mentioned the meeting that some of us had with the chairman and chief executive of Corus. We heard what was said and have considered it carefully. Indeed, I have studied the press release that Corus issued. It seems fair to say that Corus gave three reasons for embarking on this venture. First, the euro-sterling exchange rate is a problem; secondly, it sees a decline in the UK's manufacturing base; and, thirdly, problems are associated with the overproduction and price of steel. I shall return to those three reasons shortly, but they are all external to the company.

I accept that the company was losing money but, as I understand it, the reconfigurated debt will be higher than the one it had before the reconstruction and all the cuts and closures took place. Although the company was losing money, no one has ever suggested that there were internal reasons for that. As we have heard, productivity is excellent and the steel industry in Britain is probably as efficient as almost any steel industry in Europe and it is close to being as efficient as the industry in Japan. The problems are not internal, but Corus is using internal measures—a blood sacrifice or slaughter of the innocents among the workers in the industry—to try to solve or react to external problems. It is not sitting down with the Government and the trade unions to consider how to deal with those external factors.

No one is suggesting that a solution is easy—some forces are outside all our control—but the company should do what Ford did. It should sit down with Government to try come to terms with the problems. The company's problems are not the result of a lack of productivity, but of external factors. Although we accept that the chairman and chief executive of Corus is under considerable pressure, it is totally indefensible for him not to come to Government to describe the external problems that the industry faces and to ask for help in alleviating them as best we can. The company failed to do that and engaged in an old-fashioned blood sacrifice that will not resolve the problem. Such an approach is totally out of date.

I should like to deal with the three reasons to which I referred, for which I have a ladder of escalation. The third reason on that ladder is the relative values of the pound and the euro. There is no doubt of the importance of that factor, as the exchange rate clearly worked against the steel industry. It has now improved a little, but the weakness of the euro was bound to affect British companies—including those in the steel industry—that were trying to export to the continent at a time when the pound was strong.

However, we should not imagine that the problems would not have arisen or that jobs would not have been lost if we had joined the euro. Indeed, we are not hearing that suggestion as much as we did previously and I certainly do not believe that Corus takes that view. When I ask people who favour joining the euro at what rate they would do so, I do not get an answer. Joining it at the present exchange rates or even the higher rates of six months ago would crucify not only the steel industry, but most of Welsh and British manufacturing.

On the other hand, it is sometimes suggested that devaluation is a great panacea. I have never thought that that is the case; devaluation is merely something that occasionally has to happen. I shall not betray any confidences, but I think that the Corus chief executive said in our meeting that, if devaluation was to help the company, it would have to occur at a rate of some 20 per cent. on present levels. Indeed, some European Commissioners have suggested a devaluation of 20 to 25 per cent. I find surprising the idea that the Germans and French would allow us to devalue at such a rate. If they did so, there would be other consequences: higher interest rates, higher taxes, cuts in public expenditure or a combination of the three. We would be in a completely different situation. Devaluation is not a panacea, and neither is joining the euro.

The second factor on my escalator of reasons is the decline in manufacturing industry. We must agree with Corus to some extent on that point. Yes, there has been a decline.

Mr. Öpik

I was of the belief that the reduction of interest rates was a mechanism by which one could devalue a currency. The right hon. Gentleman appears to feel that the opposite is true.

Mr. Davies

If the hon. Gentleman is speaking about a slow and gradual devaluation that enables us to slide into the euro at a much lower rate, then perhaps we could reduce the interest rates, but how would that affect inflation? Interest rates cannot be reduced for the sake of devaluation alone; other factors must be taken into account.

There has been a decline in manufacturing, partly for structural reasons. Emerging countries have moved into the basic manufacturing activities in which Wales has been especially involved. Years ago, people laughed at Brazilian steel, but that does not happen these days. The emerging countries are producing the basic heavy metals and goods that Wales produced in the past. Structural decline has occurred not only in Wales and Britain, but in Europe and the United States. British Steel was responsible for the reduction from 90 per cent. to 50 per cent. of Wales' share in the tinplate market. That affected the steel industry; less steel can be produced in Port Talbot because so much of the tinplate market was lost. British Steel was, therefore, responsible for some of the decline.

I remember well the benign neglect and antipathy with which successive Conservative Governments treated the manufacturing industry in the 1980s. They had a hatred of the industry and its unions that was seen by the House time after time, year after year. Perhaps reality crept in towards the early 1990s, when it was, to some extent, realised that such an attitude was mistaken. However, manufacturing was a pariah for long periods and was not to be supported in any way.

All Governments seem to have the notion that they cannot touch manufacturing or the markets. The European Union has introduced competition rules that did not exist in the 1970s, and which make it much more difficult, although not impossible, to support manufacturing. The general agreement on tariffs and trade and the World Trade Organisation also make that much more difficult. Governments and politicians have to try to reassert themselves. We must state that we have a role. These rules cannot be made to dominate us when our communities and entire economies are under threat. It will not be easy, but politicians must stand up, rather than allowing matters to drift and fashion to prevent us from assisting manufacturing.

Corus gave three reasons for its decision. Hon. Members can choose which one is the most important, but for me, the main reason is our old friend—or perhaps not a friend—global capitalism. I talk to people in manufacturing industry in my constituency, such as those at Trostre. Enormous pressure is exerted on prices by global forces that none of us can really understand or control. That pressure means that costs must constantly be driven down to try to make a profit at the lower prices.

At our meeting with the chairman and chief executive, he said, in answer to a question that I asked, that we are getting to a point at which there is a world price for steel. I am not a great expert on the steel industry, but having been the Member for Llanelli, where tinplate is made, for 30 years, I have observed the industry. There did not used to be a world price for steel. I can see that the right hon. Member for Caernarfon (Mr. Wigley) is anticipating what I am about to say. There used to be a national steel price and a regional steel price. Indeed, there was a common belief in the industry that the prices were fixed. I do not know whether they were fixed, but if they were, those who fixed them were very clever about it, because the steel industry managed to keep out of the restrictive trade practices court, unlike cement manufacturers, who were frequently before that court.

It was thought that there was an unofficial European steel cartel. I do not blame the industry for that. Territories were carved up, partly because steel is heavy and it costs a great deal to transport it a long way. There was, perhaps, some price fixing, but it is all disappearing. It is significant that the chairman and chief executive of Corus said that we are close to having a world price for steel. He said it as if he could not believe it—after all, he is of that earlier generation in the industry.

We have heard a lot about farming. I do not want to provoke some of my hon. Friends who are not as keen on the farming community, but we have world prices for agricultural products. World prices, whether in manufacturing or farming, are determined by the lowest costs, which are often in emerging economies outside Europe and north America. When asked about that, the chairman and chief executive of Corus said, "Where is the steel coming from then?" It is coming from Brazil and former Soviet Union countries such as Russia, and Soviet satellites such as Poland and Czechoslovakia. Perhaps it is not very good steel—I do not know. Maybe one could not make tinplate from it; it probably has too many impurities. However, it is pouring into Europe and creating a world price for steel.

I understand that the European export price for hot-rolled coil has fallen by $100 a tonne in the past 12 months. The price at the beginning of that period was $300 a tonne, and is now down to $200 a tonne. I am not saying that the price will fall further. Maybe special factors were involved. I am not an expert on the steel industry, but what will happen to Corus if the price falls again by $100 or even $50 a tonne? Where will that leave our industries? All Governments and politicians must pay less obeisance to the market and to globalisation than we have tended to in the past. We must see what we can do; otherwise, our communities and our economies may gradually disappear. That is why Corus should have talked to the Government. Perhaps they could not have provided a solution, but the company did not have an answer either, and it should therefore have consulted the Government. It is better to talk, to get together and try to resolve the problem.

We live in deflationary times but we have a structure for inflation. The marketplace determines the price and the grand governors of central banks—the Basle mafia—decide interest rates and pretend that they are all powerful and that they have made a great impact. That also applies to Dr. Alan Greenspan. Perhaps those bankers are all right when there is inflation, but they are no good in times of deflation. For example, half the Japanese banks have gone bankrupt. In times of deflation, we do not need central bankers, but government. We needed government in the past in such times, and we shall need it again in future if deflation worsens.

I have listed the three factors, and I believe that the third is most significant. Whatever factor is most important, companies should talk to Governments, let them get involved and ascertain whether we can tame the forces that often drive our industry to the wall. It will be a major task to rebuild our communities, but I believe that it can be done. We must try to broaden our manufacturing base. Everybody says that, and it is easy to say, but harder to do. We must broaden our base to include information and communication technology if we can. That will not be done by what my noble Friend Lord Healey used to describe as monetary and financial wheezes. A couple of points off corporation tax and 0.5 per cent. off the interest rate may help—I do not decry such measures—but many of our communities in south Wales have a genuine structural problem.

There is also a structural problem in education, especially in science and mathematics. I do not mean training after leaving school, but basic education in those subjects. Why is the south-east of England powering ahead in manufacturing? Why is the gap widening, as the hon. Member for Meirionnydd Nant Conwy said? Partly because the education and training that people receive there is better than that in Wales. We must match the best. We must start pursuing excellence again, and stop equating excellence with elitism, which is different. We did it once, and we can do it again. We must show the political will to achieve that. Yes, we must have the resources, the money from the Treasury, but let us show the political will to raise the standard of education and learning in our communities. Then we will solve the problem.

5.23 pm
Mr. Dafydd Wigley (Caernarfon)

I congratulate the right hon. Member for Llanelli (Mr. Davies) on his speech. I agree with many of his comments, and his point about education was vital. We must regenerate our pride in education and our commitment to it. It is essential to future industries, technologies and job opportunities in Wales.

I congratulate the Select Committee on Welsh Affairs on its comprehensive report, which forms the background to the debate. It makes many excellent recommendations, and I congratulate its Chairman, the hon. Member for Clwyd, South (Mr. Jones) and its members. I congratulate especially my hon. Friend the Member for Meirionnydd Nant Conwy (Mr. Llwyd) on getting so many Plaid Cymru policies adopted by the Committee. His influence is far reaching.

The challenge is to persuade the Government to adopt the Committee's recommendations and not to leave the report on dusty shelves. They need to be implemented. The Minister's opening speech made no commitment to taking any action on the report. As he knows, I have a lot of respect for him, but his speech was awash with complacency. He boasted about action that the Government claim to have taken. Poor people in Wales know the truth; they experience the reality of poverty. No amount of Government spin can change that.

Let us consider some of the economic factors that form the background to the report. Gross domestic product per head in Wales has dropped from 92 per cent. of the United Kingdom average in the 1960s to 79 per cent. now. In 1999, the proportion of working-age people in employment in Wales was 68 per cent., compared with 80 per cent. in south-east England. The proportion of working-age people in workless households in Wales was 16 per cent., more than twice as high as in south-east England.

The employment rate for people with disabilities in Wales was only 31 per cent., compared with 51 per cent. in south-east England. The employment rate for lone parents in Wales was 47 per cent., compared with 56 per cent. in south-east England. The employment rate for those aged over 50 was 56 per cent. in Wales, compared with 74 per cent. in south-east England. Those are some of the background figures to the social and economic problems that Wales is facing.

Mr. Ruane

The right hon. Gentleman mentioned some of the negative statistics for Wales. May I counter them with some positive ones? There have been 40,000 new jobs in Wales since 1997—29,400 in the two years to September 2000—and 67,000 families have benefited from the working families tax credit. The new deal has helped 27,000 jobless people into work in Wales. More than 100,000 workers in Wales are benefiting from the national minimum wage—approximately 10 per cent. of the work force. All that has been achieved under Labour over the past three and a half years.

Mr. Wigley

I was not expecting the hon. Gentleman to read out his manifesto for the forthcoming election in his Clwyd constituency. No doubt he will put the best spin that he can on the figures that exist. However, he acknowledges that—as the Committee stated in its report—severe problems face Wales. Of course, we welcome the new jobs have that have been created, such as the 600 at Bridgend that were re-announced today by Ford. We welcome any good news. However, we must look at the targets at which we should be aiming. The gulf in GDP per head has widened over the past 20 years, and the problem is getting progressively worse—even over the past three years, as my hon. Friend the Member for Ynys Môn (Mr. Jones) rightly said.

I turn to this week's disastrous news about the job losses in the steel industry. The hon. Member for Vale of Clwyd (Mr. Ruane) will not be surprised that I am referring to this, because the decision has hit Shotton as it has hit the steelworking towns of south Wales. The First Minister in the Assembly, who represents Cardiff, West here at Westminster, has estimated that the total effect of the decision, including knock-on effects, will be the loss of about 7,000 jobs in Wales.

That loss will be on top of a loss of between 2,000 and 3,000 jobs in the agricultural sector over the past 18 months, which was mentioned earlier. Although we welcome the confirmation of the new jobs that have been announced, even with the knock-on effect taken into account, they go only one tenth of the way towards remedying the recent job losses, and they will certainly not represent any progress in increasing the amount of income per head in Wales.

It is unacceptable that any company should treat its work force as Corus has done. It is equally unacceptable that the Government should have stood back from the crisis that has been rapidly developing over the past 18 months. When we warned of the dangers, we were told to stop scaremongering. However, not only the steel industry but all manufacturing has been hit by the Government's policy of maintaining the high parity of the pound. The number of manufacturing jobs in Wales decreased from 230,000 in 1990 to 192,000 last year—a decrease of 38,000 jobs. Tourism and agriculture have also been hit by the over-valued pound.

Mr. Martyn Jones (Clwyd, South)

I want to correct the right hon. Gentleman. As I understand it, the Government's policy is not to maintain the parity of the pound but to maintain interest rates. That has nothing to do with the parity of the pound.

Mr. Wigley

Goodness me! If one retains interest rates as the only tool with which to control inflation, and holds them at too high a level, that will inevitably affect the parity of the pound because money will be sucked in. That is basic economics. Handing over control to the Bank of England, with only one objective—to control inflation—will inevitably have a knock-on effect on employment. Even the United States gives its central bank the twin objective of having regard to employment and to inflation. The Government are totally culpable in passing over responsibility to the Bank of England without giving it responsibility for employment as well as inflation.

Mr. Llew Smith

The right hon. Gentleman obviously disapproves of handing over powers to the Bank of England, and I agree with him about that, but what are his views on handing over powers to the European central bank? As I understand it, if we hand over such powers, the matters that the right hon. Gentleman believes should remain in our control will no longer do so.

Mr. Wigley

I believe that such policies must be accountable to the people and that policies followed by the Bank of England or the European central bank must have an eye on what is acceptable to the people in terms of employment as well as inflation. For the Government—a Labour Government—to have abandoned employment as a criterion for the Bank of England in controlling the economy beggars belief. The founding fathers of the Labour party, including those in the hon. Gentleman's Blaenau Gwent constituency, must be turning in their graves as they contemplate this situation.

There is a need to get the pound to a realistic parity against the euro and I believe that, having achieved that realistic level, we should be in the European currency system to give manufacturing the confidence it needs to plan its future. It is unacceptable that the factories of Wales—

Mr. Smith

Will the right hon. Gentleman give way?

Mr. Wigley

No, not at the moment. I shall make progress rather than take running interventions from the hon. Gentleman.

I hope that some Labour Members agree, unless they have totally changed their colours, that it is unacceptable that the factories of Wales should be put in jeopardy by the vagaries of the currency casino from which we are suffering, now and over recent years.

The steel issue runs even deeper. Steel is a basic commodity of the manufacturing economy, basic for construction and basic for any independent defence policy of these islands. For the Government to sit back and allow the future of that basic industry to be determined by shareholders in the New York stock exchange and decisions of Dutch executives is not acceptable. The steel job losses will hit Gorseinon and Shotton and cast a grave shadow over the future of the Llanwern steelworks, where productivity is 20 per cent. higher than that of the Dutch steelworks that will benefit from Corus's cuts in the United Kingdom.

For Ebbw Vale—yes, the constituency of the hon. Member for Blaenau Gwent (Mr. Smith)—the news is absolutely calamitous. That community depends on steel. It still has not got over the previous round of cuts and has some of the worst figures in Wales for poverty and deprivation. Now it is to be hit by the scandalous and unacceptable closure decision. A Labour Government—yes, a Labour Government—are sitting back and letting that happen, but let us not pretend that they are helpless.

Of course the Government can do something, as the right hon. Member for Llanelli suggested. They could and should have intervened to tell Corus in no uncertain terms that they would not sit back and allow such a vital industry to be undermined, but they did not. They could intervene even now on the basis of the strategic importance of the steel industry, as suggested last week by Edwina Hart, Labour's Minister for Finance and Communities in the National Assembly. They could say that, unless Corus rethinks, they will act to take the United Kingdom steel industry back into some form of public ownership or, at the very least, to underwrite the trade union proposals for a takeover or a management buy-out. They could examine the model successfully followed by Tower colliery or the Glas Cymru model for Welsh Water.

What is not acceptable is for the Government to wring their hands, shake their head and utter spurious, cynical noises of sympathy while doing absolutely nothing to save those vital jobs.

Mr. Smith

Will the right hon. Gentleman give way?

Mr. Wigley

Not at the moment.

What on earth is the point of electing a Labour Government if they stand back and watch communities such as Ebbw Vale be sacrificed on the altar of the New York stock exchange?

Mr. Hanson

The Labour Government are not sitting back and watching jobs being lost. Like my right hon. Friend the Member for Llanelli (Mr. Davies) and some of my hon. Friends, I represent steelworkers. We met Corus and met the unions before, during and after the announcement and we shall continue to do so. I will not take posturing from the right hon. Gentleman on those points.

Mr. Wigley

And I will not take mock anger at the Dispatch Box from the Minister. If the Government were doing something, we should have known what they were doing. By now, they should have shown their colours by their actions.

It is time that the Government shook themselves out of the self-congratulatory complacency that they have shown in the debate. We need action on steel. We need a proactive regional policy, as recommended by the Select Committee. We need to lower corporation tax to attract new investment, as has been done in Ireland. We need regional variation of tax as a tool of regional policy, as recommended by the Select Committee. We need operating aids such as lower national insurance in objective 1 areas. We need—again, as highlighted by the Select Committee—a revised Barnett formula to ensure that resources are available to tackle social deprivation in Wales in line with our needs. It is sad to see that the Secretary of State for Wales has already ruled out that option in his reply to a question on 18 January.

It is outrageous that the funding available for Wales in 2001 is still based on the 1978 formula, taking no notice of the enormous structural changes in the Welsh economy over the past 20 years. Unless the Labour Government are prepared to act on such social priorities, what on earth is the point of their existence? The clock is ticking not just for Ebbw Vale and Llanwern, but for new Labour in Wales. Unless they change course, their time will soon be up.

5.35 pm
Mr. Llew Smith (Blaenau Gwent)

For me and for my constituency, the past week has been sad, dramatic and awful—to say the least.

For many years, my community has been built on coal and steel. The coal industry was wiped out by the previous Tory Government immediately after the 1984 miners' strike, when miners in my community stood up to defend their industry and, indeed, their community. Now, the steel industry might also be wiped out, once again by the privatisation policies of the previous Tory Government.

What annoys many people in my community is the refusal to accept that privatisation is the problem. What makes us angry is when Corus spews out a long list of excuses why Ebbw Vale as a steel town should close and why other steel jobs should go. We are told on one day that it is a problem of transport costs, on another that it is because of the climate change levy and on yet another that it is a problem of rates. We are then told that it is a problem of the euro.

Corus seems to have changed its position on the euro almost daily. A few weeks ago, it said that the euro was the problem. A week or so ago, one of its chief executives said that the euro was not the problem. When the closure was announced, we were told once again that the euro was the problem. However, some 24 hours after the closure, the Financial Times reported that the euro was not the problem. I do not believe that the euro, transport costs, the climate change levy or rates had anything to do with the closure of the Ebbw Vale tinplate plant and the loss of other jobs throughout the steel industry. I believe that it has happened as a result of the incompetence of the Corus directors, who, instead of building on the productivity achieved by the work force, spent the past 18 months asset-stripping the industry. The community in Blaenau Gwent is now paying for that.

I have said it before and I shall say it again: ominously, on the day on which Corus was formed, one of its first acts was not to make a statement saying that it was determined to build up the steel industry but to hand over approximately £700 million, which Moffatt described as a special payment, to its shareholders. As Moffatt said, had the £700 million not been handed over, it is unlikely that the merger would have gone ahead. Thus, we know that the merger was about money, not about building up one of our greatest industries.

Corus also appropriated some £900 million from the workers' pension fund. It was a workers' pension fund in more ways than one. Corus seemed to have forgotten that much of the money was paid into that fund when the steel industry was publicly owned. Over the past 18 months, Corus has spent some £135 million buying up companies throughout the world. Although it found the £135 million to do that, it could find only £3 million to invest in the UK steel industry.

It is ironic and obscene not only that Corus did not invest in the plant in Ebbw Vale as it should have done, but that 24 hours before the closure was announced, it got around to investing in a nameplate for the plant. During the previous 18 months, the company had not been willing to invest in a new nameplate. A piece of white tarpaulin with the name "Corus" splattered across it had been thrown over the previous nameplate. That says something about the company's contribution.

The joint chief executives were sacked a while back. If we accept what we were told, they were sacked for incompetence, so why were they given millions of pounds of compensation? On top of that, when Corus was formed, one of its first acts was to give massive wage increases to the former Dutch managers. Surely that cannot be right. It is certainly not right when we compare that with the treatment of the steelworkers—the people who built the industry, and turned the plant in Ebbw Vale into one of the most efficient and productive in the world.

Steelworkers in Ebbw Vale have made sacrifice after sacrifice by accepting changes in their conditions of employment and wages. All that seems to be irrelevant to Corus. After making those sacrifices and building the industry and the plant into one of the most successful in the world, surely the workers should have been rewarded for their endeavours. In fact, they have been punished.

The media have reported that 750 jobs will be lost if that plant closes. They are wrong. Over the past couple of years, Corus has outsourced much of its work. People who were previously employed by the company are now employed by other firms but are still working at the plant. That is another 250 jobs. On 1 March, another 250 workers will be made redundant as a result of the last lot of job losses. The small community of Ebbw Vale will suffer 1,250 job losses. No matter how we measure deprivation—unemployment, low wages, ill health or bad housing—sadly, that community is top of the list. We have not recovered from the previous job losses in the steel industry or from the wiping out of the mining industry.

What annoys people in the community is that they made cuts in their conditions of employment, such as wage standstills, but Corus has never accepted that it is those workers who are the real experts. They have worked in the steel industry not for one or two years, but for 20, 30 or 40 years. They know the industry inside out. Sadly, their skills, talents and creativity were ignored by Corus's management. On no occasion did Corus say to those workers that it wanted to use their skills, talent and creativity to help it to build up the industry in the months ahead.

Cores showed disdain not only for the work force but for the Government, trade unions and other public representatives. I have been going into the tinplate works in Ebbw Vale for many a long year, but in recent years there has been a change and I have been prevented from doing so. A few weeks back, I said to Mr. Stuart Wilkie, the works manager, that I wanted to go into the plant to have a chat with the management and the union regarding the problems facing the industry and the possible job losses. Mr. Wilkie said that I could go into the plant, but only after the decision had been taken. Indeed, on the day of the decision, Mr. Wilkie said that Mr. Vickers, one of the managing directors, had asked him to contact me to explain the redundancies.

Like most other Members who are present, I never use foul language. Never does an "expletive deleted" pass my lips. That occasion, however, was an exception, because the Mr. Vickers who advised the plant manager to inform me on the telephone of redundancies and the closure of the plant was the very same Mr. Vickers—the very same managing director—who, on the day on which Corus was formed, rang me at home at 8.30 am and assured me that there would be no job losses, that the plant's future was not threatened and that the plant was secure. Obviously the position has changed dramatically, because of the contribution of the Moffats of this world, the Vickerses of this world and yes, the works managers of this world. Instead of building up the industry, those people have tried to destroy it.

I think I am known in my group as one who, when I think the Government are wrong, says so and votes accordingly. In this instance, however, I do not believe that the Government are to blame. The blame lies entirely with Corus, and any Member who tries to shift the blame will do a disservice to my community—to the 1,250 people who will lose their jobs, and the 1,250 families who will suffer. They will suffer as a result of Corus: Corus and privatisation have caused this disaster.

When we met Mr. Moffat some days ago, I came away totally demoralized—not just in the context of the future of Ebbw Vale, but in the context of the steel industry's future in the United Kingdom. If the Moffats of this world remain in power within the industry, I predict that in five years there will be no steel industry in the United Kingdom. It seemed to me that Mr. Moffat had no commitment to the industry and no strategy for it; I sensed short-termism.

What probably happened was this. Mr. Moffat sacked the two chief executives and then thought, "I will sort this out", but he could not sort it out. He could not sort out the problems that obviously existed with the banks.

Another thing annoyed me. Mr. Moffat told us that no decision had been made about the future of the Ebbw Vale plant, yet about 24 hours later he and the others were planning a press release saying that the Ebbw Vale tinplate works would close. Mr. Moffat was lying through his teeth: it is impossible to reach any other conclusion.

It was bad enough to lie to me. What is more repulsive is the fact that Mr. Moffat lied to people who depended on the industry and the plant for their future: he and people like him will not be forgiven for that.

The current debate in Ebbw Vale is not about whether the Government can provide extra money; it is still about saving the plant, and that is what we must do. By working-class standards—by the standards of Blaenau Gwent—those were 1,250 good jobs. When the people who no longer have those jobs sign on the dole, the alternative will be not 1,250 jobs in some other manufacturing firm but, probably, security officers' jobs at £4 an hour. That cannot be right.

All our energies must go into saving the plant. In doing so, we shall not only be saving the lives of many people in that community; we shall be saving the life of the steel industry. That is a goal worth fighting for, which is what those in my community are still doing.

5.49 pm
Mr. Richard Livsey (Brecon and Radnorshire)

My heart goes out to the hon. Member for Blaenau Gwent (Mr. Smith). What Corus has done to his community is unforgivable, and he rightly makes a cry for a fightback by the work force. We must all support him in that, whatever party we are in. We must do something to save the community, which depends totally on the steel industry. I feel strongly about the matter.

In Wales, the background to this subject is extraordinary. Social exclusion has been linked with problems of unemployment, poor skills, low incomes, poor housing, high crime, poor environment, bad health and family breakdown. The archetypal view is that social exclusion is found on inner-city estates, but one must remember that it can be found in rural areas, too, and that poor people in rural areas can be particularly excluded because of a lack of transport, increased costs and remote services.

Wales suffers disproportionately compared with other areas in the United Kingdom. Wales has a higher rate of children living in poverty, lower levels of educational achievement, more housing of poor quality, low rates of pay, a higher rate of households with no one in employment, a higher proportion of people on income-replacement benefits, a particularly high proportion of people in receipt of sickness and disability benefits, lower life expectancy and higher mortality rates. I am sorry to have to say it, but that is a legacy of 18 years of Conservative rule. The Conservatives have nothing to be proud of in leaving that legacy for us to pick up.

Social exclusion refers to more than a set level of income. It refers to the marginalisation of people in society and to their exclusion from what we would normally think was a thoroughly decent society.

Gender is important in this respect. In Wales, 245,000 women live on or around the poverty line. That is inexcusable. Lone parents, who are nearly always women, are even less likely to be in paid employment. Women represent the most significant group of socially excluded members of society. That must not be forgotten. With all the job losses, it is the women who have to struggle to bring up their families in poverty—that is what we are talking about.

People over state retirement age comprise 20 per cent. of the Welsh population. That is higher than in the UK as a whole. In my constituency, 24 per cent. of the population are in that category.

Mr. Öpik

Does my hon. Friend agree that sparsity considerations make it more expensive to cater for the social needs of the elderly in rural areas such as mid-Wales and that it is important that the Government are sensitive to that? Otherwise, they create elderly ghettoisation, which exacerbates the life expectancy and health problems that he describes.

Mr. Livsey

I thank my hon. Friend for that intervention, but, as he knows, that problem already exists in many areas. Indeed, where post offices have closed, elderly people cannot go to collect their pensions. I know that they can get them through the post, but that contributes to closures of even more post offices. The blame for that lies both with the previous and present Governments. They have both closed an awful lot of sub-post offices.

Chronic ill health and mortality rates are significantly higher in Wales than in England. A lack of public transport, particularly in rural areas, hits people very hard.

Children and young people are disproportionately affected by social exclusion. Thirty-seven per cent. of children live in poverty—in a household with well below 50 per cent. of average income, which currently stands at £200 a week. More than 5 per cent. leave school at 16 with no qualifications. In some parts of Wales, the figure is much higher than that. It used to be about 20 per cent. in some of the valley areas, but that is being tackled.

Young people aged 16 to 18 are excluded from the national minimum wage. I am a member of the Select Committee on Welsh Affairs, which investigated social exclusion. We met that problem head on in interviews with young people. They must get fair treatment and assistance to earn the full minimum wage. Few young people have access to a car, so they are particularly affected by the lack of public transport.

The rate of teenage pregnancy is particularly high in Wales. The vulnerability of children who are looked after by local authorities has been highlighted by the north Wales child abuse tribunal. It is important to remember that children in care and those leaving care are highly vulnerable. We are starting to attack that problem, rightly, with the establishment of a Children's Commissioner for Wales.

People with disabilities or long-term illnesses are frequently excluded from the mainstream of society. People in ethnic minorities suffer higher unemployment by far than those in other categories.

The crisis in agriculture and the disastrous decline in farm incomes have had a knock-on effect on the rural economy. Good jobs in the sector are in short supply. The rural population is ageing. As those of us in mid-Wales know, the average age of farmers in the area is 58. I do not know whether young people will replace them. We are losing an entire generation of young farmers, who are finding work elsewhere and, indeed, leaving our communities. A graphic figure has been quoted in a different context: between 1998 and 2000, 6,000 farmers left the land in Wales. That is the equivalent of the announcement by Corus last week on the steel industry: 6,000 people in England and Wales as a whole will have to leave the industry.

There is a crisis in both manufacturing and farming. Wales overall depends on both sectors. The 3,000 job losses at Corus are supplemented by 550 job losses in the dairy manufacturing industry in Carmarthen and Cardiff. Welsh milk is to be bottled in Gloucestershire and sent back again. The environmental costs of that are frightening.

Wales's gross domestic product has declined by 12 per cent. in the past 20 years. Half a point of GDP went for every year of the 18 years that the Conservatives were in power.

The problems with pay are serious. We have 28.3 per cent. of the population earning less than £250 a week. As a result of unemployment and low pay, many people in Wales depend on social security benefits. Twenty-five per cent. of households in Wales and nearly 500,000 people received income support or family credit in 1997, for example.

The Corus announcement comes on top of everything that I have referred to. We believe that many aspects of the Corus shutdown and the redundancies in the steel industry mean that there will be very little, if any, investment and a great decline in jobs.

There is a strong case for a management buy-out of the Ebbw Vale plant. It should be by a combination of management and work force. The Government should support that with investment money. We should start with Ebbw Vale and go through to Llanwern because, again, almost half the work force is going there.

It was stated over the weekend that Corus had no plans whatever for new investment in the steel industry. I agree with the hon. Member for Blaenau Gwent—I do not think that there will be a steel industry left in five years. I am critical of the Government for allowing British Steel to be amalgamated into Corus, which was a fundamental error of judgment.

Steel is a fundamental part of our economy and we can have very little manufacturing without it. The Government must intervene in the matter, but that must not involve straightforward renationalisation. The work force have to be assisted to manage plants, perhaps by bringing in management, and to secure a profitable industry. There may have to be restructuring and the industry may have to be made more efficient, but that cannot happen without massive investment to make the industry more competitive.

Mr. Llew Smith

The hon. Gentleman talks about a management and workers' buy-out at Ebbw Vale. Although I have no knowledge of such a buy-out, he may be aware that Mr. Moffat, the chairman and chief executive of Corus, has said that he does not favour competition and that he will not accept a buy-out of any part of the industry. It seems ironic that people who oppose public ownership because they oppose monopolies and who support privatisation because they support competition do not favour competition when it is in their own backyards.

Mr. Livsey

I understand why the hon. Gentleman says that. However, Corus's objective is to remove 3 million tonnes of steel from United Kingdom steel production. That figure has been chosen because it is the amount of UK steel production that is currently being exported unprofitably.

We cannot expect a very sympathetic response from some multinational companies. I worked for a multinational company for quite some time and I realise that some boardrooms will cut and run. I think that we are dealing with just such a boardroom in this case. Other boardrooms will co-operate and negotiate. In its announcement today, on Bridgend, Ford has given an example of the latter type of management. Hon. Members are wrong, however, if they think that Corus will negotiate; it will not. Corus will not even try to negotiate.

I believe that we must resurrect the steel industry and that we have to do so in the many plants that will be closed down.

Mr. Smith

There is obviously a communication problem. I thought that the point of my comments was to make it clear that Corus is not going to negotiate with the Government, public representatives or trade unions. It is not going to negotiate, full stop. I was not implying that Corus will suddenly decide to negotiate on the possibility of allowing alternative ownership for plants being closed. Corus has categorically stated that it will not sell those plants. We therefore assume that it will knock down and clear away the buildings.

Mr. Livsey

The hon. Gentleman is correct to say that Corus is a public company. However, if the company is £1.6 billion in debt, as it is, and if an offer can be made, surely it would be better to pursue that option than to spend money for years on social security payments for those who have lost their jobs, which is what could happen. There is room for a constructive initiative to save Britain's steel industry. That is what we are talking about. We must save our steel industry as a basic part of our economy.

There are many ways in which action can be taken. We have to encourage the development of skills in the work force. I should say, to be fair, that the National Assembly is taking some action to address that issue. We are committed to training programmes that will bring enormous benefits to the overall economy. However, it is essential that we have even more investment in education.

We must also reduce the gap between rich and poor, and not allow it to widen as happened under the previous, Conservative Government and is occurring even under this Government. However, I applaud the efforts being made, through the new deal and other measures, to try to plug the wealth gap.

More has to be done for pensioners and for people on low incomes to improve their quality of life. As the Welsh Affairs Committee's report makes clear, much more assistance must be given to poor nations and regions. Additionally, reform of the Barnett formula has to be based on needs themselves. We should help lower-paid people by reducing taxation for poor taxpayers. The Liberal Democrats' policy is to raise tax on those earning more than £100,000 and to redistribute it among those who are on very low incomes.

We hope to regenerate deprived rural and urban communities, wherever they are, and to boost local services by directing more money to the provision of high-quality services, such as those provided in post offices. We also believe in tackling social disadvantage by developing an inclusive society.

Liberal Democrat Members believe very strongly that the Assembly must have more power and that fundamental new primary legislation would enable us to take immediate action to abolish, for example, tuition fees for students. We could also take immediate action to provide free care for the elderly, as has happened in Scotland.

Such legislation would also enable us more strongly to encourage the Government to change employment law, to ensure that the type of disaster that Corus has thrust upon us does not happen again. There was an opportunity at the Nice summit to take action on that issue, but it did not happen. The Government must think again about providing our employees with greater protection. Additionally, corporation tax relief and national insurance tax relief should be available in hard-hit regions.

One of our fundamental problems is that, on 1 January 1999, we did not enter the eurozone. It is a massive problem which has aggravated the difficulties with the steel industry and the exchange rate. I disagree with hon. Members who believe that it has not been a problem. Steel is not profitable largely because of the exchange rate and our position outside the euro. Manufacturing and agricultural commodity prices, whether for milk, lamb or steel, have all been affected by the disparity. The Government have to tackle the problem.

There is a lot of work to be done. The steel industry has to be saved, but only Government intervention can do that. There was intervention in the 1920s and 1930s, when my family was ejected from the iron and steel industry in south Wales, to which we were never to return. I do not want another generation to be placed in a similar position.

About 20 years ago, 14,000 people were working in that plant in the constituency of the hon. Member for Blaenau Gwent. Today, we are bemoaning the loss of 1,250 jobs there. The massive productivity of the steelworkers has made those jobs much more precious. Wales's steelworkers have to be rewarded for their efforts. We must give them a hand up and help them as much as possible. If that requires direct Government intervention, so be it.

6.8 pm

Mr. Martyn Jones (Clwyd, South)

I am pleased to have an opportunity to speak on an issue that, for much of the past two years, has exercised the Welsh Affairs Committee and been the focus of our work. The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) is not only a Committee member, but moved today's Opposition motion. Although I am pleased to be able today to debate and to defend the Government's action to tackle social exclusion in Wales, I am somewhat puzzled about Plaid Cymru's real reason and motive for initiating the debate.

On Monday 15 January 2001, the Welsh Affairs Committee published its much awaited report "Social Exclusion in Wales", which has attracted cross-party support in Wales. On that very day, in an interview with BBC Radio Wales, the hon. Member for Meirionnydd Nant Conwy said: The Report is a step in the right direction". It is indeed a step in the right direction.

The hon. Gentleman went on to tell the BBC that he wanted to see both the Government and the National Assembly for Wales working together to tackle social exclusion. As he put it, he wanted to see "all agencies working together". In today's motion, however, he has demonstrated supreme impatience with and discourtesy to one of those partners, by criticising the Government before they have been able to give their considered response to the Committee's report. Allowing such a response to be made is not only a convention of the House, but the most sensible way of approaching serious and important matters such as social exclusion.

By tabling today's motion, Plaid Cymru is simply jumping the general election gun. I believe that Plaid Cymru Members are losing their nerve at the most critical moment because they see that we have put in place the new deal, achieved the lowest ever unemployment in Wales, helped 100,000 people in Wales with the minimum wage and created the pensioners' minimum income guarantee and the working families tax credit. Only today, we heard the Government's announcement on the child tax credit. Plaid Cymru has demonstrated possibly the worst case of premature elaboration seen in this House for many years.

Mr. Llwyd

I am not going on the record as a sufferer. With respect to the hon. Gentleman, he knows as well as I do that it took nine months for the Government to respond to the last report. Frankly, that is not good enough. All Committee members were concerned about that; this debate may elicit an early response.

Mr. Jones

I agree, but the Government have not had time to respond to the report—they have had 21 days—so what he says is slightly disingenuous. Plaid Cymru wants things both ways. The motion castigates the Government for their alleged failure, yet it cannot wait for the Government to give a detailed response. That is not good enough.

Last June, the hon. Member for Meirionnydd Nant Conwy rightly berated the Government, saying: Over the past few years, we have been disappointed in the content of the responses from Governments to reports, and in the fact that there have been delays of nine, 10 or 12 months before such responses have been made available. These delays have been something of a scandal."—[Official Report, Westminster Hall, 21 June 2000; Vol. 352. c 69WH.] I agree. However, that does not mean that the Government can respond in 21 days.

Mr. Llwyd

Has the hon. Gentleman read the motion? It does not ask for a response within any given time; the motion merely "notes" certain matters.

Mr. Jones

That is a bit disingenuous. The hon. Gentleman must be expecting a response to a motion that asks the House to take note of a report. If he carries on at this rate, he will be demanding that the Government respond to our reports before we have even had the inquiries.

What have Plaid Cymru achieved by holding this debate today? If the motion is an attempt somehow to wrong-foot the Government, it has failed miserably. If it is a serious attempt to address the problems facing Wales, it has failed. The Welsh Affairs Committee has already had an inquiry into social exclusion and we now await the Government's response. If the motion is an attempt by Plaid Cymru to advance its own agenda on social exclusion, it has failed, on its own admission. I am sure the House will be delighted to learn that Plaid Cymru fully supported the recommendations of the report.

Let me not just criticise Plaid Cymru, however. At least its Members are here—all four of them. The official Opposition showed their contempt for the issue by having only two Members sitting on their Benches. I tell a lie; the hon. Member for Buckingham (Mr. Bercow) popped in after 56 minutes, stayed for 25 minutes and has now disappeared.

Mr. Evans

My hon. Friend spoke more sense during his short contribution than the hon. Gentleman is speaking now.

Mr. Jones

Oh no, he didn't. That is the hon. Gentleman's opinion; I do not think any other Member of the House would agree.

Mr. Edwards

Could I remind my hon. Friend that when the hon. Member for Buckingham was on the Welsh Affairs Committee, he did at least attend the Committee? Would my hon. Friend confirm that the two Opposition Committee members during the social exclusion inquiry attended virtually no sittings whatever in the entire year?

Mr. Jones

My hon. Friend can say that; as the Chairman of the Committee, I could not possibly comment.

One of the problems with having the debate today is that it is likely that the Liaison Committee will not now accept my bid for a debate on the report. Although we have very little time, I need to make a few points about the report.

The inquiry that led to our report started early in 1999—a few months before devolution—and continued until nearly the end of last year. It was one of the largest inquiries undertaken by the Committee, involving consultation with nearly 100 organisations, nine formal hearings and 11 days of visits throughout Wales. We also held three seminars—two with academics and one with representatives of ethnic minority groups in Cardiff—and an informal meeting, to which the hon. Member for Brecon and Radnorshire (Mr. Livsey) referred, with young people in Machynlleth. That was very enlightening. In addition, we visited the Republic of Ireland in March 2000, and the United States of America in June 2000.

Tackling social exclusion is a key area in which co-operation between the UK Government and the National Assembly for Wales is crucial. The National Assembly has responsibility for housing, health, transport, education and training and local government in Wales; but responsibility for social security benefits, taxation, the Employment Service, the regulation of financial services, the indirect management of the Post Office and the fight against crime all rest with the UK Government.

The Committee's main emphasis was on those areas for which the UK Government have responsibility. It is quite proper that, as a Committee of the UK Parliament, we should seek to examine most closely the activities of the UK Government. Equally, it would be difficult for us to carry out our scrutiny of the Government effectively without impinging from time to time on matters that are properly for the National Assembly for Wales.

The main area where we believe the Government can make a difference in tackling social exclusion in Wales is in tackling poverty and financial exclusion. By poverty, I mean the lack of money to buy the necessities of life and to participate fully in society. There is obviously scope for debate on what constitutes poverty and what constitute the necessities of life. The Government use an indicator of relative poverty to measure poverty—normally 50 per cent. of average incomes—but some of our witnesses argued for different definitions.

Whatever definition of poverty is used, it is all too clear that many people in Wales are poor. Unemployment in Wales is higher than in the UK as a whole, and the employment rate is lower. In some areas of Wales, such as Blaenau Gwent and Merthyr Tydfil, the proportion of the working-age population in employment is less than 60 per cent. However, there is no evidence of absolute poverty increasing and plenty of evidence of employment rising.

It is not only a matter of unemployment; for those who are in work, low pay contributes to poverty in Wales. Some 28.3 per cent. of full-time adult employees in Wales earn less than £250 a week, compared with 23.7 per cent. for Great Britain as a whole. We recommended the lower rate of the national minimum wage for 18 to 21-year-olds and entitlement to the minimum wage being extended to 16 and 17-year-olds, as the hon. Member for Brecon and Radnorshire pointed out. I hope the Government will respond to that, although we would not expect a response today.

The problem of poverty is further exacerbated by the fact that, for many poor people, the necessities of life are more expensive. Those who have no car often pay more for their food in local shops than they would if they could reach the out-of-town supermarket. Meter payment rates for gas and electricity are higher than the rates available to those who pay monthly by direct debit.

We believe that uplifting social security benefits is central to tackling social exclusion. At present, the benefits system allows people to survive, but does not lift them out of poverty. Although poverty is one of the most obvious causes, and one of the symptoms, of social exclusion, it is not the whole problem. People may be socially excluded because they are elderly; because they have a disability; because of poor education or language barriers; because they live in a remote area with poor amenities; or for a host of other reasons. It is important to bear in mind the fact that the problems that we are addressing are varied and complex, and we should not expect simple solutions to be effective.

Central to our report is the emphasis on local solutions within a national framework. During our visits in Wales, one of the common, positive themes that emerged was that the community spirit is very much alive and just needs a helping hand. We witnessed that in the Maes Geirchan estate, in Caia Park in Wrexham, at Llanelli Hill in Abergavenny, in the City of Swansea—

Mr. Ruane

In Rhyl?

Mr. Jones

As my hon. Friend says, we witnessed it in Rhyl, and when we published our report last month at the Dusty Forge centre in Ely, Cardiff.

Capacity-building programmes—led from the bottom up by enthusiastic, energetic local people—can, we believe, be extremely effective in tackling social exclusion, especially when they are run in close co-operation with a supportive local authority, as we observed in Swansea, Torfaen and Wrexham.

The common problem associated with all the projects has been a lack of stable, sustainable funding. To address this, we recommend that funding for social exclusion projects should in most cases be for a minimum of five years. Project organisers should be given a little breathing room to put their begging bowls away for a few years and concentrate on the core work of the project. It struck us that many enthusiastic, talented people who wanted to put their energies into regenerating their local community had to spend much of their time justifying their funding and trying to make sure that the project would still exist the following year.

Pump-priming has its place and can produce impressive results, but it will not be enough in every case. In some of the most disadvantaged areas, funding may be required on a permanent, or at least an on-going, basis. We also believe that the funding regime for social exclusion projects should be streamlined and simplified. At the moment, there are too many different pots of money and too much bureaucratic control is exercised over them. It may be that we need to learn to accept a degree of risk in our social investment. After all, how often is the cost of not investing in a project given equal consideration to the cost of spending the money?

We need to move away from challenge funding to sustainable funding wherever it is required. But the National Assembly will be unable to provide this unless it is provided with adequate resources. Objective 1 offers a unique opportunity to bring a large injection of public funding to west Wales and the valleys, and we must ensure that it is used to good effect to tackle social exclusion. European funding is not the only answer, though. The Government must match their fine words by tackling social exclusion with hard money. The extent of social exclusion in Wales must be recognised in the funding allocation to Wales.

Ms Julie Morgan (Cardiff, North)

Does my hon. Friend agree that one of the key issues highlighted in the Select Committee's inquiry was the difficulty of moving from benefits into work? Is it not one of the important recommendations that new benefit ideas should be tried out in a pilot area in Wales?

Mr. Jones

Indeed. We need to test which benefit changes might work in the effort to tackle social exclusion. In Ireland, benefits are tapered to allow people back into work without running into a brick wall of benefit loss.

It is true that the Barnett formula is probably overdue for a revamp to reflect the real needs of both Wales and other parts of the United Kingdom. We need an anti-poverty strategy with the goal of eliminating not only child poverty—as the Prime Minister has already pledged—but all poverty, within a realistic time scale, based on clear, objective measures of the number of poor people. The Government have set the date of 2020 for the elimination of child poverty, so perhaps we could aim at eliminating all poverty in 30 years.

Mrs. Lawrence

Does my hon. Friend agree that the fact that 360,000 children are benefiting from increased child benefit shows that the motion is totally incorrect in its insinuations?

Mr. Jones

Absolutely. I will not read out the whole list of all the benefits that the Government have brought to Wales. [HON. MEMBERS: "Oh, go on.''] All right, then. In Wales, 67,000 families are benefiting from the working families tax credit; 27,000 jobless people have been helped into work through the new deal; since the launch of the new deal throughout Wales, the number of 18 to 24 year-olds unemployed and claiming jobseeker's allowance for six months or more has fallen by 73 per cent; more than 100,000 workers are benefiting from the national minimum wage—that is especially impressive in Wales, with our lower gross domestic product; and 500,000 pensioner households are receiving the increased winter fuel payment of £200.

Mr. Ruane

How does my hon. Friend feel about the contrast with the Conservative Government, under whom 5,000 pensioners froze to death—they had hypothermia—in their own homes in 1985 because they were too scared to turn on their gas or electric fires? How does that compare with Labour's record of reducing VAT on fuel from 8 per cent. to 5 per cent.—the Tories wanted to stick it up to 17.5 per cent.—and giving pensioners £200 last December in a winter fuel allowance so that they can be secure in their own homes and know that they can keep warm and pay their fuel bills?

Mr. Jones

Winter fuel allowance for those on income support means that they, too, need not suffer from cold in the winter.

In Wales, 210,000 pensioner households are entitled to free television licences; all 630,000 pensioners are to gain from above-inflation pension increases this year and next: 360,000 children are benefiting from increases in child benefit; and we have had the longest period of sustained low inflation since the 1960s.

The Government are also responsible for the tax regime, which is so important to the economic prosperity of Wales. In Ireland, the tax regime—notably the low rate of corporation tax—is attractive to both inward investors and domestic entrepreneurs, who consider it far more important than objective 1 funding in promoting economic growth and regeneration. It is time for the Government to consider regional variations in tax to encourage investment in the less developed areas.

Mrs. Lawrence

Does my hon. Friend agree that one of the major issues in tackling social exclusion must be economic stability, especially for people on low incomes? Does he agree that the fact that we have the lowest mortgage and interest rates for 30 years and the lowest unemployment rate since 1978 will go a long way towards tackling social exclusion?

Mr. Jones

Absolutely, and that also gives the Government the wherewithal to help those areas of the economy that have not yet benefited from the economic turnaround.

Mr. Evans

I am sorry to intrude on the love-in taking place on the Government Back Benches, but what about the fuel tax, which hits poor people disproportionately hard?

Mr. Jones

We reduced fuel tax from 8 per cent. to 5 per cent., as my hon. Friend the Member for Vale of Clwyd (Mr. Ruane) said. The hon. Gentleman cannot have been listening.

Mr. Evans

I am talking about petrol tax. We have among the highest petrol taxes in the world.

Mr. Jones

The Conservative Government put the biggest chunk of tax on fuel when they increased VAT to 15 per cent. The hon. Gentleman is trying to stir up this nonsense again about fuel costs being down to tax. He talked about how farmers are struggling. Many of them are struggling because of the increase from 7p to 28p a litre. There is no duty.

Mr. Evans

When farmers drive cars and use lorries to transport goods, they are paying duty. When the accelerator had done its bit and it was proved that it was not working—

Mr. Jones

You introduced it.

Mr. Evans

Indeed, but when accelerators come to the end of their useful life, they should be scrapped. The Government have been putting petrol taxes up for four years, hitting the poorest hardest.

Mr. Jones

The hon. Gentleman argues against his own case. The fuel tax escalator—rather than accelerator, as he was saying, perhaps because he knows that if he kept his foot off the accelerator he would not be spending so much on fuel—was begun by the Conservative Government, and we stopped it.

Mr. Evans

Labour put it up.

Mr. Jones

Of course we put up the price in accordance with the escalator before we stopped it. Fuel for the hon. Gentleman's farmers went up from 7p a litre to 28p a litre. That was the biggest increase, and everyone else was paying it, too. As usual, he is talking a load of nonsense.

Mr. Denzil Davies

To return to the proposal about a differential rate of corporation tax, and the Irish lower rate, did the Committee consider the fact that the lower rate in southern Ireland covers the whole country, so that Dublin and Galway do not have differing rates? Did it consider the problem that, if we introduced a differential system in Wales, there would be a different rate in Newport, outside the objective 1 area, and in Swansea, which is inside it?

Mr. Jones

My right hon. Friend is right. The Irish corporation tax rate is nation wide. We noted that a lot of the country's industry is based around Dublin. The economy as a whole is doing very well, but there are regional problems. We should try out different ideas, recognising that they might not all work.

Mr. Öpik

Does the hon. Gentleman accept that road haulage is particularly important in rural areas where there is no rail network on which to move goods? It would be helpful if the Government gave strategic consideration to managing that issue so that the countryside was not disadvantaged.

Mr. Jones

The hon. Gentleman will remember the Chancellor's special measures for rural transport, which added up to the equivalent of 8p a litre. The Government have listened on that point and they recognise the problem, as the Committee does in the report.

My time is up. The Committee awaits the Government's response with great anticipation. Plaid Cymru, in submitting today's motion, have demonstrated an impatience and a need to grab headlines for a day instead of waiting for a considered response from the Executive. That is sad.

6.30 pm
Mr. Simon Thomas (Ceredigion)

I congratulate the hon. Member for Clwyd, South (Mr. Jones) on his chairmanship of the Select Committee on Welsh Affairs. He and his Committee deserve all credit for their hard work on the excellent report before us. That said, I cannot accept the hon. Gentleman's criticism of our timing of the motion. Today's timely debate has allowed many Labour Members to give their views on matters including manufacturing and Corus, and to express constituency concerns and angers. Our motion is worded extremely carefully. It notes the report, and calls for no action from the Government. We expect Labour Members to support it because it is a tame motion and has cross-party support.

I pay tribute to the hon. Member for West Carmarthen and South Pembrokeshire (Mr. Ainger), who made a great contribution to the debate by distributing useful lists among Labour Members. He has provided much fun. Unfortunately, as my hon. Friend the Member for Meirionnydd Nant Conwy (Mr. Llwyd) has just said to me, those lists give only the good news. I agree that new Labour has a good news story to tell on job creation, and neither we nor our motion have detracted from that.

The motion addresses the wider issues of social exclusion that my hon. Friend set out in his sterling opening speech. By setting out his definitions of poverty and social exclusion, my hon. Friend made it clear that social exclusion goes wider than employment or even wages. It includes access to services, particularly in rural areas, where there are many difficulties in Wales. My hon. Friend was clear on how steps could be taken to engender indigenous business growth and support. That could have been of use to Corus, although it is too late to find out whether that would have been so. Certainly, such support should be available for the future support of what remains of the steel industry in Wales.

My hon. Friend made it clear that the Government could yet intervene in the debate on the future of that industry. The right hon. Member for Llanelli (Mr. Davies) acknowledged that the Government have a role, and it has been too long since a Government were prepared to intervene in industrial policy. After 18 years of Conservative Governments ignoring industrial policy, we have had four years in which Labour has been content to let the Bank of England decide industrial policy. That has been disastrous for Wales.

My hon. Friend the Member for Meirionnydd Nant Conwy concluded with some remarks on the Barnett formula. It is worth impressing on the House some views on the formula. Lord Barnett himself assumed that it would be temporary. My hon. Friend compared the formula to the Drws-y-nant traffic lights, which he said had been in place for 23 years too long. I must tell him that the Barnett formula has existed for 22 years, so it will need only one more year before it beats that record. As with traffic lights on roads that we pass along every day, we have grown used to the Barnett formula. It can turn red or green as it lets us have some money one year or none the next. We never question the need for the formula, and that is the point of this debate.

I was pleased to hear Labour Members acknowledge the need to review the formula because it is outmoded, mechanistic and formulaic. It is based on what the Welsh economy was like 20 years ago, when gross domestic product was closer to 90 per cent. than the 80 per cent. that it represents today. For 20 years, the formula has been entrenched, instead of dealing, as it was supposed to, with changes year on year. The passage of time means that it deals with figures above the funding coming into Wales, not just with changes to funding. The case for changing the formula is unanswerable. The only opposition to change has come from the hon. Friend the Member for Brent, East (Mr. Livingstone).

Mr. Caton

Will the hon. Gentleman give way?

Mr. Thomas

I do not have much time. I did not write a brief before arriving, as many Ministers do, and I want to respond to everyone who has made a point in the debate. If I have time later, I will give way to the hon. Gentleman.

Labour Members suggest that we see the Barnett formula as meaning that every part of the country must get back what it gives in income tax and other taxation. That is not the purpose of the formula. In fact, that is the view taken by the hon. Member for Brent, East, who is now the Mayor of London. The Barnett formula should be a true, needs-based analysis of the needs of the. Welsh economy and public services, and any review should take that into account. If that were so, the formula would go closer to doing what European regional development funds do. They consider what happens all over the European Union and recognise which areas need extra support.

Redistribution is a good, old-fashioned socialist word, but that is what we want enshrined in the relationship between Wales and the Westminster Parliament so long as the people of Wales still want that relationship to exist. The Barnett formula has its place, but it must be reviewed and its analysis must be more closely based on need. If it is not, the people of Wales will question even more the relationship between this place and the National Assembly and Government in Wales.

We welcome the Under-Secretary of State for Social Security, the hon. Member for City of York (Mr. Bayley), to a Plaid Cymru debate. Usually, the hon. Member for Vale of York (Miss McIntosh) attends Welsh questions, and it is good to see her neighbour today. The Minister spoke well from his brief—he had it off pat—but it was a brief full of statistics with no feeling for how people lead their lives in Wales. What he said would not go down well with those who feel the depths of social exclusion, poverty and low incomes. By telling us always what the Government intend to do, the Government betray their own voters, who expected them to have done something after four years in government.

The Minister was quite right to refer to the 18 extraordinary years of Conservative Government, but the Government have had nearly a quarter of that time: they should be at least a quarter of the way towards reforming society, but that does not seem to be so.

Mr. Bayley

If the hon. Gentleman reads my speech later, he will find that I have listed not what the Government intend to do, but what we have done. When we came to power, 95,000 pensioners had pensions of £62.45 a week or less, and they now receive the minimum income guarantee. Their incomes are £18 higher, and will rise to £92 in April. Unemployment is down, and the number of parents no longer on income support but in work has risen. In response to the hon. Gentleman's point on children, I can tell him that 21.1 per cent. of children in Wales were in workless households in spring 1997, and the figure is now 19.5 per cent. We are moving in the right direction, although I would be the first to agree that there is a long way to go.

Mr. Thomas

The Minister finishes on precisely the point that I wrote down from his speech—the Government need to do more. That is precisely what the motion says. Statistics may show movements this way or that, but there is an amazing sense of complacency from Labour Back Benchers, particularly as regards manufacturing industry.

The hon. Member for Ribble Valley (Mr. Evans) was correct to concentrate some of his remarks on the rural areas, because they have been somewhat ignored by Conservative Members. I was pleased to see him occupying the Conservative Benches this afternoon. He is right to point out the problems in rural areas. When numbers of job losses are small, they do not give rise to the shock headlines that the media want to publish.

There is a lack of understanding of the real social exclusion in rural areas. It has to be seen to be believed. It takes a visit to a dairy farm where the farmer's income is less than £4,000 and he is too proud to claim the benefits that are available. He will not make that claim on behalf of his family because he is a business man who has always run the farm himself—he has always kept it going. That happens increasingly in rural areas.

In two years, 6,300 farming jobs were lost—under the Labour Government, not under any previous Government. By comparison, 16,000 manufacturing jobs were lost. Between 165 and 175 jobs are being lost in my constituency: of 700 people—mainly females—employed in manufacturing in Ceredigion, 165 have lost their job overnight, with the closure of a factory in a town of fewer than 2,000 people. That has a devastating effect. Such job losses may not make the headlines, but they are just as damaging to small communities.

In the countryside, we are experiencing a silent shutdown. The countryside is slowly being turned off—tractor by tractor; factory by factory; post office by post office—until it will be nothing but scrubland or a nice place to visit. That is the truth about what is happening in the countryside at present. Labour Members must understand that context for social exclusion and poverty, as well as that for the large numbers of people affected in the valleys and the south-east of Wales. Those areas are equally important, but the countryside has been overlooked.

The right hon. Member for Llanelli pursued excellence in his speech. He gave a concise account of his understanding of the events at Corus during the past few months. I do not disagree with his three analyses. His speech was similar to the one that he always makes about Barnett; he made a threadbare defence of the Treasury's control of the economy of Wales.

Mr. Caton

Will the hon. Gentleman answer the question posed by my right hon. Friend the Member for Llanelli (Mr. Davies)? Under an independent Wales, if Plaid Cymru was successful, how would it meet current public expenditure with a much lower tax take? We need an answer to that question.

Mr. Ruane

Where is the beef?

Mr. Thomas

Hon. Members will have to wait for our manifesto at the general election—[Interruption.] I recommend that the hon. Member for Gower (Mr. Caton) reads the manifesto. He will see exactly what our policies are for the people of Wales—[Interruption.] We will certainly send a copy to the right hon. Member for Llanelli. He will need to read the Plaid Cymru manifesto, because he will need to know where his opposition is coming from.

My right hon. Friend the Member for Caernarfon (Mr. Wigley) made the most powerful speech of the debate—with its combination of intellect and emotion. I pay tribute to him. The House will miss his voice—as a Member of this place for a quarter of a century, he has advocated policies in an impassioned way. That will be missed. The National Assembly's gain will be our loss, although I am sure that the Plaid Cymru Bench will be full enough—partly, at least, to make up for that.

The hon. Member for Blaenau Gwent (Mr. Smith) is no longer in the Chamber. He spoke eloquently on behalf of his constituents and expressed their anger at the closure in Ebbw Vale. All hon. Members have great sympathy with them. Plaid Cymru Members realise that Ebbw Vale and Blaenau Gwent are among the most deprived areas in Wales. Our motion does not seek to undermine that.

Although British Steel was privatised by the Conservatives, its merger with Corus was approved by the Labour Government. At the time, the situation in the financial markets was known; the Government must have known that the merger presaged large financial restructuring. There is Government responsibility. Although Corus wielded the axe, the death sentence was passed by the Government's economic policies.

I can do no more than read from a memo; it is internal to the National Assembly, but unfortunately, it fell into the wrong hands. It states: So I think the message is the Government is not willing to offer any help to Wales at this very bleak time. That memo was sent to civil servants by the second most senior civil servant in Wales. It shows clearly that the Government have responsibility for what happened at Corus.

The hon. Member for Brecon and Radnorshire (Mr. Livsey) made his usual measured and excellent contribution, although his party has partial responsibility for the actions of the National Assembly. Its members in Wales will be judged on that record.

The motion sets out the recommendations of the Select Committee, although our debate has been somewhat overshadowed by events at Corus—rightly so. In a recent report on manufacturing in Wales, the TUC referred to the haemorrhaging of jobs—that is clearly shown at Corus. The motion includes short-term and long-term prescriptions that have cross-party support. We are not actually asking the Government to do much more than note the motion. It would thus be delightful if Labour Members who represent Welsh constituencies could join us in the Division Lobby to show the people of Wales where their hearts are and where their intentions lie.

In the meantime, the Government make the lame argument that at least they are not the Conservatives. Thank goodness that in Wales we have Plaid Cymru to take on the fight from the Labour party at the next general election.

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

The debate has been interesting. I want to clear up one matter immediately for my hon. Friend the Member for Clwyd, South (Mr. Jones). We very much welcome the report of the Select Committee on Welsh Affairs. The Government will consider it and will respond to it in due course, so I do not want to pre-empt discussion of the report in this debate.

One of my hon. Friend's key points was about partnership. The Government are considering that idea; we support partnership between ourselves, the National Assembly and local authorities in Wales to ensure that we tackle social exclusion. I shall take lessons from no one in the House about social exclusion. I see it every day in my constituency—as my right hon. and hon. Friends do in their areas. Many of us came into politics to tackle social exclusion. The contribution of the Select Committee is certainly welcome, but we recognise those exclusion issues and we will take them on in due course.

There has been considerable discussion of the situation at Corus. My right hon. Friends the Members for Alyn and Deeside (Mr. Jones) and for Llanelli (Mr. Davies), the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd), the right hon. Member for Caernarfon (Mr. Wigley), my hon. Friend the Member for Blaenau Gwent (Mr. Smith), the hon. Member for Brecon and Radnorshire (Mr. Livsey) and other hon. Members referred to Corus in their contributions. Last week's announcement at Corus was devastating for the individuals and communities affected. I live among steelworkers—the Shotton plant is close to my constituency. Many of my friends and neighbours work there.

There is no doubt that Corus has been facing difficulties. Trading conditions are difficult; the company has had to consider such issues. However, for the Government, I say that the response of Corus represents short-termism at its worst. As my right hon. Friend the Member for Llanelli pointed out, that response is defeatist; it is a short-term reaction, with no planning for the longer term.

Other manufacturing companies in Wales have taken a different stance. They have taken the long-term view, as my right hon. and hon. Friends pointed out. Toyota and Nissan, in recent weeks, and Ford at Bridgend today have taken decisions on investment in the United Kingdom that are not based on short-term issues.

The Corus decision does not reflect the excellent productivity gains made by the UK steel industry, as my right hon. Friend the Member for Llanelli pointed out. In 1999, UK steel output was 571 tonnes per man—compared with 543 tonnes in Germany and 534 tonnes in France. As has been noted, the Government and Corus should get round the table. Corus should reconsider its decision and work with the trade unions, the Government and the Assembly to make progress on the matter.

My hon. Friend the Member for Blaenau Gwent is not in the Chamber because he is meeting the Prime Minister—as is my right hon. Friend the Secretary of State for Wales—to try to bring some common sense to the matter. They want to discuss with Corus the issues that have been raised in the debate and show the company the correct way forward. Not one steelworker in Wales needs to lose his job. Corus should think again. The company and Corus should consider those issues.

Mr. Caton

Will my hon. Friend assure me that the discussion with Corus will move on? If we cannot persuade Corus to maintain production, it should allow the management and work force to takeover and run the plants themselves. The fact that Corus is frightened of competition suggests that the units can function perfectly well. The work force and management in Bryn Gwyn and Gorseinon in my constituency are considering that option. We must press Corus to allow that to happen, if it is not prepared to carry on production itself.

Mr. Hanson

I hope that Corus will consider those options. As the hon. Member for Brecon and Radnorshire said, Corus should consider such issues. In fact, proposals have been put to it from several sources, including Llanwern. However, having attended, as a constituency Member, last week's meeting with Sir Brian Moffat, as did many of my right hon. and hon. Friends, I doubt whether Corus will consider those issues.

While dealing with Corus, I wish to nail an issue to the floor. In his speech, the hon. Member for Ceredigion (Mr. Thomas) mentioned e-mails from the National Assembly. Discussions are under way, but no final decision has been taken on the issues mentioned in the e-mail, which does not represent the final view of officials, let alone those of Ministers or Assembly Members. The Treasury has not been involved in those discussions. I ask the hon. Gentleman to work with the Government to ensure that we deal with Corus on a united front, as we should.

Mr. Ieuan Wyn Jones

I welcome the Minister's assurance that we have moved on from the information given in that e-mail. Will he assure the House that if the Treasury provides money for Wales as a result of those job losses, it will be in addition to the Barnett block and will not be set off against, or top-sliced from, our current budget? Will it be additional money—yes or no?

Mr. Hanson

The hon. Gentleman would expect me to say that the discussions are on-going. We need to work for a solution for Corus and Wales as a whole.

It is not all bad news in Wales today, as many of my hon. Friends have said. In the past two months, the creation of many new jobs has been announced, including 264 jobs at Wireless Systems International in Cwmbran; 110 new jobs at Pure Wafer in Swansea; 100 new jobs at IQE (Europe) in Cardiff; and 83 new jobs at Surface Technology Systems in Newport. BAE Systems has created many new jobs near my constituency, with Government support. Today, Ford has announced more than 500 new jobs at Bridgend, bringing the production of a new generation of Jaguar V6 engines to Wales. The employment action zones in Preseli, Merthyr and north Wales have been important in bringing employment to Wales.

Ford's £240 million investment in Bridgend is particularly welcome because it shows that the Welsh economy and the British economy are open to major foreign investments, which support and bring employment to this country. That challenges the issues that Corus has brought to the table about the impact of Government policy on the steel industry. If that massive investment can go ahead, I feel confident that other investment will also go ahead.

Mr. Öpik

Will the Minister give way?

Mr. Hanson

Time is tight, so I am afraid that I shall have to carry on.

The good news is reflected in many Plaid Cymru Members' constituencies. For example, in the constituency of the right hon. Member for Caernarfon, unemployment has fallen by more than 400 and 800 people have started work under the new deal since the general election. In Ceredigion, unemployment has fallen and more than 650 have started work under the new deal since the general election. In Meirionnydd Nant Conwy, unemployment has fallen by more than 500 since the general election. In Ynys Mon, unemployment has risen, but more than 1,000 people have benefited from the new deal since the general election.

As hon. Members have said, the resolution of such problems are not easy. The hon. Member for Brecon and Radnorshire mentioned the legacy of 18 years of Conservative rule, but I noticed that the hon. Member for Ribble Valley (Mr. Evans) did not apologise for many of the problems that have led to social exclusion. My hon. Friend the Member for Clwyd, South also made that point. The basic need of deprived communities in Wales and elsewhere is a strong and stable economy. The Government are not complacent about those communities. We are driving forward an active industrial policy, investing in skills, making the most of new technology and supporting industries for the future. We are supplying a platform of economic stability, by cutting public borrowing and ensuring low inflation.

As my hon. Friend the Member for Clwyd, South and other hon. Members have mentioned, we now have the lowest level of unemployment since the general election and for many years before. Some 1,000 new jobs are being created every month by the Government in Wales. Youth unemployment has fallen by 63 per cent and long-term unemployment has decreased by more than 12,000. On the basis of those sound economic policies, the Government, in partnership with the Assembly, can tackle social exclusion and begin to target special assistance on the communities that need it most.

The Government's generous settlement in the spending review—£8.5 billion in 2001, increasing to £10 billion in 2003–01— represents a real investment. The securing of objective 1 funding will bring wealth and prosperity to Wales and the country as a whole. My right hon. Friend the Member for Llanelli has asked on numerous occasions how those resources and objective 1 funding would be secured and matched if Wales were independent. That question has not been answered tonight; nor has it been explained to the Welsh Grand Committee or at any Welsh Question Time. I look forward to hearing the explanation at the general election because, without the strength of the Government behind Wales, those resources would not be invested and we would not be tackling social exclusion.

The hon. Member for Ribble Valley said that we should do this and that, but if he were in government after the general election, he would cut public spending. The nationalists could not afford, and the Conservative party would cut, the increases in state pensions and child benefit, the free television licences, the new deal, the working families tax credit and many of the policies that my right hon. and hon. Friends know benefit their constituencies and tackle social exclusion. On the impact of British Government policy, let no one in Wales forget that the Conservative party would cut public expenditure and the nationalists would not have the resources in Wales to make the fundamental shift involved in using the resources of the United Kingdom to ensure that people in the poorest communities in Wales secure a better deal.

The hon. Member for Ceredigion said in both the Welsh Grand Committee and in this debate that we have accomplished no real achievements in Wales. However, as my hon. Friends have pointed out, we have created 40,000 new jobs since the general election. In addition, the number of jobs in Wales has increased by more than 29,000 in the past two years; 67,000 families benefit from the working families tax credit; 27,000 people are going through the new deal scheme; 100,000 workers benefit from the minimum wage; 100,000 pensioner income households benefit from the minimum income guarantee; and 500,000 pensioners benefit from increased winter fuel allowances. Those are the Government's real and genuine achievements in Wales.

The rural economy has also been mentioned, and all the measures that I have described benefit it as well. In addition, my right hon. Friend the Prime Minister's summit on 30 March last year meant that an extra £15 million of agriculture expenditure was made available for less-favoured areas in Wales; £2.2 million was provided for the dairy sector; £2.5 million for the beef sector; and £6 million for the sheep sector. They are important measures that impact on rural and urban areas.

The agenda on social exclusion has become clear from the debate and it is clear that there are issues that the Government need to deal with further. There are measures that we can and will take in our second term to increase inclusion in our society. However, if we follow the Conservative way, we shall have further cuts in public spending and, if we have an independent Wales, the country will not be able to afford the benefits that a Labour Government bring to Wales. I commend our amendment to the House.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 37, Noes 271.

Division No. 103] [6.59 pm
Allan, Richard Kennedy, Rt Hon Charles
Ballard, Jackie (Ross Skye & Inverness W)
Berth, Rt Hon A J Kirkwood, Archy
Bell, Martin (Tatton) Livsey, Richard
Brand, Dr Peter Moore, Michael
Breed, Colin Oaten, Mark
Burnett, John Öpik, Lembit
Burstow, Paul Rendel, David
Campbell, Rt Hon Menzies Russell, Bob (Colchester)
(NE Fife) Sanders, Adrian
Cotter, Brian Smyth, Rev Martin (Belfast S)
Fearn, Ronnie Stunell, Andrew
Taylor, Matthew (Truro)
Foster, Don (Bath) Tonge, Dr Jenny
George, Andrew (St Ives) Tyler, Paul
Gorrie, Donald Webb, Steve
Hancock, Mike Wigley, Rt Hon Dafydd
Harvey, Nick Willis, Phil
Heath, David (Somerton & Frome)
Hughes, Simon (Southwark N) Tellers for the Ayes:
Jones, Ieuan Wyn (Ynys M ôn) Mr. Elfyn Llwyd and Mr. Simon Thomas
Keetch, Paul
Abbott, Ms Diane Bailey, Adrian
Adams, Mrs Irene (Paisley N) Banks, Tony
Ainger, Nick Barnes, Harry
Ainsworth, Robert (Cov'try NE) Barron, Kevin
Allen, Graham Bayley, Hugh
Anderson, Janet (Rossendale) Bell, Stuart (Middlesbrough)
Armstrong, Rt Hon Ms Hilary Benn, Rt Hon Tony (Chesterfield)
Ashton, Joe Bennett, Andrew F
Atherton, Ms Candy Benton, Joe
Austin, John Bermingham, Gerald
Best, Harold Gerrard, Neil
Betts, Clive Gibson, Dr Ian
Blair, Rt Hon Tony Gilroy, Mrs Linda
Blears, Ms Hazel Godsiff, Roger
Blunkett, Rt Hon David Goggins, Paul
Boateng, Rt Hon Paul Golding, Mrs Llin
Borrow, David Gordon, Mrs Eileen
Bradley, Keith (Withington) Griffiths, Jane (Reading E)
Bradshaw, Ben Griffiths, Nigel (Edinburgh S)
Brinton, Mrs Helen Griffiths, Win (Bridgend)
Brown, Rt Hon Nick (Newcastle E) Grocott, Bruce
Browne, Desmond Grogan, John
Byers, Rt Hon Stephen Hain, Peter
Hamilton, Fabian (Leeds NE)
Campbell, Alan (Tynemouth) Hanson, David
Campbell, Ronnie (Blyth V) Harman, Rt Hon Ms Harriet
Campbell-Savours, Dale Healey, John
Cann, Jamie Henderson, Doug (Newcastle N)
Caton, Martin Hendrick, Mark
Cawsey, Ian Hepburn, Stephen
Chapman, Ben (Wirral S) Heppell, John
Chaytor, David Hill, Keith
Clapham, Michael Hinchliffe, David
Clark, Dr Lynda Hodge, Ms Margaret
(Edinburgh Pentlands) Hoey, Kate
Clark, Paul (Gillingham) Hoon, Rt Hon Geoffrey
Clarke, Rt Hon Tom (Coatbridge) Hope, Phil
Clelland, David Hopkins, Kelvin
Coaker, Vernon Howells, Dr Kim
Coffey, Ms Ann Hughes, Ms Beverley (Stnetford)
Coleman, Iain Hughes, Kevin (Doncaster N)
Colman, Tony Hurst, Alan
Connarty, Michael Hutton, John
Cooper, Yvette Iddon, Dr Brian
Corbett, Robin Ingram, Rt Hon Adam
Corston, Jean Jackson, Ms Glenda (Hampstead)
Cox, Tom Jackson, Helen (Hillsborough)
Jamieson, David
Crausby, David Jenkins, Brian
Cryer, Mrs Ann (Keighley) Johnson, Alan (Hull W & Hessle)
Cummings, John Johnson, Miss Melanie
Dalyell, Tam (Welwyn Hatfield)
Davey, Valerie (Bristol W) Jones, Rt Hon Barry (Alyn)
Davidson, Ian Jones, Helen (Warrington N)
Davies, Rt Hon Denzil (Llanelli) Jones, Martyn (Clwyd S)
Davies, Geraint (Croydon C) Jowell, Rt Hon Ms Tessa
Davis, Rt Hon Terry Joyce, Eric
(B'ham Hodge H) Kaufman, Rt Hon Gerald
Dean, Mrs Janet Keen, Alan (Feltham & Heston)
Denham, John Keen, Ann (Brentford & Isleworth)
Dismore, Andrew Kemp, Fraser
Dobbin, Jim Kennedy, Jane (Wavertree)
Doran, Frank Kidney, David
Dowd, Jim Kilfoyle, Peter
Dunwoody, Mrs Gwyneth Ladyman, Dr Stephen
Eagle, Angela (Wallasey) Lammy, David
Eagle, Maria (L'pool Garston) Lawrence, Mrs Jackie
Edwards, Huw Leslie, Christopher
Efford, Clive Love, Andrew
Ellman, Mrs Louise McAvoy, Thomas
Ennis, Jeff McCafferty, Ms Chris
Etherington, Bill McCartney, Rt Hon Ian
Field, Rt Hon Frank (Makerfield)
Macdonald, Calum
Fisher, Mark McDonnell, John
Fitzpatrick, Jim McFall, John
Fitzsimons, Mrs Lorna McGuire, Mrs Anne
Flint, Caroline McKenna, Mrs Rosemary
Flynn, Paul Mactaggart, Fiona
Follett, Barbara McWalter, Tony
Foster, Rt Hon Derek McWilliam, John
Foster, Michael J (Worcester) Mahon, Mrs Alice
Foulkes, George Mallaber, Judy
Galloway, George Mandelson, Rt Hon Peter
Gapes, Mike Marshall, Jim (Leicester S)
George, Rt Hon Bruce (Walsall S) Marshall—Andrews, Robert
Maxton, John Roy, Frank
Meacher, Rt Hon Michael Ruane, Chris
Meale, Alan Ruddock, Joan
Michael, Rt Hon Alun Russell, Ms Christine (Chester)
Michie, Bill (Shef'ld Heeley) Salter, Martin
Milburn, Rt Hon Alan Sedgemore, Brian
Miller, Andrew Sheldon, Rt Hon Robert
Mitchell, Austin Short, Rt Hon Clare
Moffatt, Laura Simpson, Alan (Nottingham S)
Moonie, Dr Lewis Skinner, Dennis
Morgan, Ms Julie (Cardiff N) Smith, Rt Hon Andrew (Oxford E)
Morgan, Rhodri (Cardiff W) Smith, Angela (Basildon)
Morris, Rt Hon Ms Estelle Smith, Miss Geraldine
(B'ham Yardley) (Morecambe & Lunesdale)
Morris, Rt Hon Sir John Smith, Jacqui (Redditch)
(Aberavon) Smith, Llew (Blaenau Gwent)
Mountford, Kali Snape, Peter
Mowlam, Rt Hon Marjorie Soley, Clive
Mudie, George Spellar, John
Mullin, Chris Squire, Ms Rachel
Murphy, Rt Hon Paul (Torfaen) Stevenson, George
Naysmith, Dr Doug Stewart, David (Inverness E)
Norris, Dan Stewart, Ian (Eccles)
O'Brien, Bill (Normanton) Stoate, Dr Howard
O'Brien, Mike (N Warks) Stringer, Graham
O'Hara, Eddie Stuart, Ms Gisela
Olner, Bill Sutcliffe, Gerry
Pearson, Ian Taylor, Rt Hon Mrs Ann
Pickthall, Colin (Dewsbury)
Pike, Peter L Taylor, Ms Dari (Stockton S)
Pond, Chris Temple—Morris, Peter
Pope, Greg Thomas, Gareth (Clwyd W)
Pound, Stephen Thomas, Gareth R (Harrow W)
Prentice, Ms Bridget (Lewisham E) Timms, Stephen
Prentice, Gordon (Pendle) Tipping, Paddy
Prescott, Rt Hon John Todd, Mark
Primarolo, Dawn Touhig, Don
Prosser, Gwyn Trickett, Jon
Purchase, Ken Truswell, Paul
Quin, Rt Hon Ms Joyce Turner, Dennis (Wolverh'ton SE)
Quinn, Lawrie Turner, Dr Desmond (Kemptown)
Radice, Rt Hon Giles Turner, Neil (Wigan)
Rapson, Syd Twigg, Derek (Halton)
Reed, Andrew (Loughborough) Vis, Dr Rudi
Robertson, John Ward, Ms Claire
(Glasgow Anniesland) Wareing, Robert N
Robinson, Geoffrey (Cov'try NW) Watts, David
Roche, Mrs Barbara Whitehead, Dr Alan
Rogers, Allan Williams, Rt Hon Alan
Rooker, Rt Hon Jeff (Swansea W)
Rooney, Terry Williams, Alan W (E Carmarthen)
Ross, Ernie (Dundee W) Williams, Mrs Betty (Conwy)
Wilson, Brian Wright, Tony (Cannock)
Winnick, David Wyatt, Derek
Winterton, Ms Rosie (Doncaster C)
Wood, Mike Tellers for the Noes:
Woodward, Shaun Mr. Mike Hall and
Woolas, Phil Mr. Tony McNulty

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.

MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.


That this House notes the Government's central aim is a fair and prosperous society that offers opportunity for all, and that both economic prosperity and social justice depend on people being able to achieve their full potential; endorses the Government's commitment to eradicating child poverty, to providing employment opportunities for all who can work, to rewarding saving, and to ensuring that older people live secure, active and fulfilling lives and to tackling the root causes of poverty and social exclusion; further notes and expresses concern at the announcement by Corus on 1st February 2001; believes that the Corus action is a short term solution which is damaging for the individuals affected and the communities concerned; and calls on the company to think again about the planned closures and redundancies and instead work with the trade unions, Government and the National Assembly for Wales to identify a better way forward.

Mr. Nicholas Soames (Mid-Sussex)

On a point of order, Mr. Deputy Speaker. You will be aware that the close friends and associates of the Deputy Prime Minister have today organised a tube strike that has caused the most appalling suffering and inconvenience to the travelling public. There have been scenes of complete carnage on the streets and the strike has been a grotesque inconvenience. Have you received an indication from any Minister, however lowly, of a wish to explain to the House what has happened and what has been done to try to restore the travelling privileges of the British public?

Mr. Deputy Speaker (Sir Alan Haselhurst)

As the hon. Gentleman might suspect, no such information has been supplied to me. However, his remarks will have been heard.