HL Deb 03 March 1988 vol 494 cc347-58

7.41 p.m.

Lord Trefgarne

My Lords, I beg to move that this Bill be now read a second time.

The purpose of the Bill is to raise the statutory financial limit for the Welsh Development Agency from the present level of £450 million to £700 million. The limit was last increased by the Industry Act 1981 when it was expected that a further change would not be needed until 1989. Current forecasts indicate however that the limit will be reached early in the forthcoming financial year owing to the agency's acquisition last October of industrial assets from the Cwmbran Development Corporation and the considerable increase in WDA resources which the Government have provided for 1988–89. It is therefore necessary to increase the limit now so as not to inhibit the agency's vital contribution to the redevelopment of the Welsh economy.

It is customary when setting financial limits to determine a figure sufficient to cover a period of about five years. Accordingly, the Bill proposes that the limit should be £700 million.

Your Lordships may find it helpful if I explain briefly the Welsh Development Agency's remit. Its main aims are to further the economic development of Wales, improve its international competitiveness and enhance the environment. It pursues those objectives through a wide but complementary range of activities: the provision of modern industrial property, the promotion of inward investment and new technology; business advice and venture capital; land reclamation and, increasingly, urban renewal.

Since 1979, the WDA has invested no fewer than £700 million at today's prices in its mainstream activities. In addition, it has given a further £150 million specifically to assist areas affected by the steel closures of the late 1970s and early 1980s. It has used the resources well. For example, its factory lettings have risen every year since 1981 and are on course to achieve an all-time high of 2.3 million square feet in the current financial year—12 per cent. up on 1986–87. The jobs thus generated should also achieve record levels.

The Principality's success in consistently attracting an agreeably high share of inward investment has contributed to that performance. And in the current financial year alone, the agency's inward investment arm is likely to secure 90 projects bringing in £160 million of private capital and up to 7,500 jobs. Wales is now firmly on the map as one of the very best locations for industrial development in Europe.

Backing up the push for increased investment, are the WDA's business and technology advice divisions. Both are reporting record activity, and a surge of inquiries from existing or would-be entrepreneurs. Thirty-nine thousand business inquiries were handled in 1987 alone, nearly a fifth more than in the previous year. The WDA's venture capital arm is also ensuring that viable projects are not thwarted by a lack of risk capital.

If in addition to greater prosperity economic progress is to deliver a better quality of life, there is a parallel need to enhance the environment and remove the legacy of decay associated with the old traditional industries. The agency has a key role to play here, and an enviable track record. Since 1979, it has invested £130 million at today's prices in the land reclamation effort. When schemes in its existing programme are complete, 9,000 acres of derelict land will have been cleared and turned over to productive use to the benefit of all the communities involved. Reclaimed land, particularly in the valleys, is a major asset and a marvellous opportunity for development. The clearest evidence of the impact of the drive to transform the Welsh economy is the heartening fall in unemployment. The seasonably adjusted rate has fallen in each of the past 20 months, and the CBI has forecast that Welsh industry is preparing, in its words, for a huge injection of investment cash over the next 12 months, well ahead of the rise predicted for the UK as a whole. It is vital to build on this success, and the Government have committed themselves to doing so.

The Government have increased the agency's gross spending power—the sum of the direct taxpayer contribution and the receipts from rents, factory sales and other sources—by a massive 31 per cent. in 1988–89 by comparison with the budget for the present financial year. Its new budget will therefore be £113 million, with a further £232 million planned for the following two years.

As a result, the agency has been able to launch a remarkable factory building programme aimed at creating 1.5 million square feet of new working space: 75 per cent. more than in the current year or, to put it another way, 75 per cent. more than the new build in the entire three-year period prior to May 1979. That huge 40 per cent. boost in cash resources will provide accommodation for 4,400 jobs in 1988–89 alone, rising to 13,000 when resources for the two later years are taken into account. New measures, including a property development grant, have also been introduced to enable the agency to encourage private sector developers to play a greater part in the provision of industrial property in Wales.

The agency's business development unit has been given the important task of delivering the Government's initiative on consultancy assistance; and WINtech, its technology arm, is developing a range of new measures geared to stimulating innovation, technology transfer and the use of advanced manufacturing technology.

Resources earmarked specifically for rural areas are also being increased. The budget for the agency's rural affairs unit will rise fourfold to £2 million to promote rural enterprise and diversification of the rural economy. In a move to accelerate rapidly the drive to improve the environment, the WDA will be able to spend £75 million on land reclamation and urban renewal over the next three years, again, 40 per cent. more than originally planned. A good proportion of this total will be invested in the valleys. The WDA is a powerful weapon in Wales' economic armoury. I commend the Bill to your Lordships so that the agency can build on its past successes and pave the way for many more.

Moved, That the Bill be now read a second time.—(Lord Trefgarne.)

7.50 p.m.

Lord Prys-Davies

My Lords, I should at the outset declare an interest. The law firm with which I am associated acts for the Welsh Development Agency. We give this short Bill a very warm and unqualified welcome. The record to which the Minister has referred has demonstrated that the setting up of the Welsh Development Agency in 1975 was an event of enormous significance to the economic life of Wales. We were not then to know that the years which lay ahead would be so harsh for many of the older Welsh industrial communities. But of this we can be sure—that if the WDA had not been in position and working flat out in partnership with the Welsh Office and Welsh local authorities, the scars of the recession would have been far more deeply embedded right across the face of Wales.

The WDA has gathered strength. It has helped in many a community to turn some of our problems into opportunities. The new large developments along the M.4 lifeline, as far west at least as Bridgend and on Deeside, have provided a large number of jobs, not only in production, administration and sales but also in the all-important research and development sector. We want companies to establish all these operations, including the research and development work, lock, stock and barrel in Wales. Experience tends to show that once all these operations are established in Wales the company will usually stay there.

The Minister has referred to the WDA's record of attracting soundly based inward investment. We welcome this investment, but of course it represents only a small fraction of the WDA's investment programme. I think that that is a good thing, because there is by now increasing evidence to indicate that the key to industrial regeneration is the development of new export-oriented small and medium-sized local companies. I read the other day that in Japan 25 per cent. of manufacturing employees work in companies with fewer than 20 employees.

Although we acknowlege, as we must, that the WDA has made an immense contribution to the Welsh economy, unemployment remains high in Wales. It stands at 148,500. That is some evidence, I fear, that we have longstanding and profound economic problems of our own in the Principality. Therefore we welcome very much the Secretary of State's decision to increase substantially the financial resources which are to be made available to the WDA so that it can help to make a significant inroad into the present level of unemployment and we would hope, to remedy the basic weaknesses of the Welsh economy.

I should now like to make a few comments on four or five issues. First, when the WDA was set up a great deal of importance was attached to building factories which were ready for letting. I appreciate that the agency has just announced that it will be embarking on an ambitious programme of factory building during the next three years; it is overdue. I understand that there are gaps in the provision of such factories in parts of Wales. Perhaps the Minister can tell the House how many district councils are without advanced factories ready for letting or at least without an adequate reserve of such factories.

My second point relates to the reclamation of derelict land. The Minister has made the point that the WDA has a very good record on land reclamation. Again one remembers that when the WDA was set up the then Secretary of State for Wales saw it as a natural place in which to continue the work of land clearance and land reclamation which had started after the tragedy in Aberfan, and linking the land clearance and land reclamation wherever possible with the task of factory development. Wales has an immense legacy of derelict land and it will continue for some decades to pick up the bill for the freedom of the past to spoil and pollute.

However, notwithstanding the magnitude and urgency of the problem, I understand that the land reclamation units of the local authorities and possibly of the WDA itself are often faced with major problems when seeking to purchase derelict land in the valleys from two state corporations: British Coal and British Rail. I am told that British Coal takes a very narrow view of its responsibilities to the communities which the coal industry plundered and polluted for generations. It will demand the highest possible price; it will delay a sale in the hope that one day a market will eventually emerge for the site, irrespective of the fact that the interests and wellbeing of the local community may best be served by speedy reclamation of the land and its subsequent treatment.

Likewise I understand that British Rail tends to demand a price which is based on an after-use of the land which British Rail envisages rather than on the needs of the local community as approved by the county councils and the district councils. I am advised by a senior county council officer that the WDA itself wishes currently to purchase a site for industrial purposes from British Coal but that the latter wants to sell it for retailing, which is not even approved by the county council for the district council.

So while these difficulties are being argued about for months and sometimes for years, valuable resources are being tied up. This is a sad commentary and it leads me to ask whether the Secretary of State for Wales, who, after all, has immediate and intimate involvement with all aspects of government policies in Wales and who is close to the painful urgency of Welsh economic problems, can find ways and means to intervene to resolve the difficulties which are being experienced with these two corporations.

On the other hand, to be fair to British Coal and British Rail, if they are statutorily bound to look in their books and to seek the highest price, based if need be on a change of planning use, can the Secretary of State persuade his colleagues in the Government to change the rules? In such situations what makes sense is that the position should be looked at in the round, whether it is British Rail, British Coal, the Welsh Development Agency or the local authorities, and that one hand should know what the other is doing.

My third point relates to the agency's urban renewal unit, to which the noble Lord, Lord Trefgarne, has also referred. It is my belief that the local authorities have no clear understanding of the precise policies and the detailed role of this unit, nor indeed of the resources which are available to it, although the noble Lord has thrown some light on the resources which will be available henceforth. Again the county council officials are unclear as to how this unit relates to the county councils and possibly to the Land Authority of Wales. This uncertainty, or rather ambiguity, was brought to the attention of Welsh Office Ministers in the debate on the Bill in another place. But in addition to the questions raised in another place about the urban renewal unit, I should like to ask two other questions.

How do the objectives, the functions and the powers of this unit compare, for example, with those of the urban renewal unit of the Scottish Development Agency? Can the Minister confirm whether it is intended with the resources that have now become available that the unit should play an active forward planning role, or is it simply to act as a means of channelling funds to approved projects?

As I said, there is some uncertainty and lack of understanding of the urban renewal unit of the WDA. That seems to me to point to the need for a clear statement by the WDA about the unit's objectives, functions, powers and policies so that the planning officers of the county councils and the local authorities throughout Wales are aware of its remit. They can then decide how they can best work with it in common harness.

Fourthly, I readily acknowledge the significance of WINtech, which is the technology arm of the WDA for higher education in Wales. It is particularly important now that Treasury funding for the universities is increasingly favouring those colleges and departments which are strong on research as against those which are weak on research. We are particularly pleased that, as a result of the increased funding going to the WDA, the activites of WINtech will be expanding in the years ahead. The universities are facing a crisis, and WINtech probably more than any other single undertaking can provide the support which the University of Wales and its colleges require in science and technology.

My noble friend Lady White, who is President of the University of Wales Institute of Science and Technology, which is merging with the University College Cardiff, is speaking in the debate. I am sure that she will dwell on the importance of collaboration between WINtech and the University of Wales and its colleges in the creation of centres of scientific and technological excellence in Wales.

I had intended to refer to the relationship between the WDA and the craft industries and to say something about the consultant's report on the future of this particular industry. It is important for rural Wales. Indeed it is important not only for rural Wales but also for the Principality. I understand that there are about 3,000 craft businesses in Wales. But the detailed information upon which I could have based my comments has not reached me. I would however be grateful if the Minister would take note that a number of people who are involved in the craft industries in Wales have their reservations about the consultant's report and about the fact that they will be given every opportunity to put forward alternative proposals and that the Secretary of State and the Welsh Office will give them every consideration.

I have no other questions for the Minister. As I said at the beginning, we very much welcome the Bill, and our hope must be that the additional funds which are becoming available to the WDA will enable the agency not merely to support the Welsh economy but to tackle the root causes of our economic problems in the Principality.

8.5 p.m.

Lord Hooson

My Lords, like the noble Lord, Lord Prys-Davies, I very much welcome this Bill, and I do not know of anybody in Wales who does not welcome it. What I thought was refreshing when I read the debate in another place last evening was the concentration of the present Secretary of State on the Welsh economy. He did not regard it merely as an extension of the British economy. He recognised its dependence; but, nevertheless, he treated it as something distinct and separate. That is very important in Wales because our social and cultural life cannot flourish unless the economy of Wales flourishes.

We have lost so much socially and culturally through young people in particular having to go away to find jobs. In fact the greatest export of Wales, whatever its other exports have been this century, has been that of bright young people. Other parts of the world have had the benefit of them. Although I am in no way a nationalist, I think it is a great pity that the Welsh economy was allowed to decay in the way that it did.

I also congratulate the Secretary of State the right honourable Peter Walker on refusing to be confined to an economically ideological straitjacket of thought prescribed for him by the Prime Minister. It is very significant that in Wales he has departed from the philosophy preached by the Government and has recognised the great importance of public investment as a necessary prerequisite very often to the flourishing of private enterprise.

Everyone who knows Wales knows perfectly well that without public investment over the years the Welsh economy would have been in a dreadful state by today. As some noble Lords know, I have been associated with one of the most successful private enterprise firms in this country which developed in my part of the world. All those who are concerned with that development know perfectly well that it could not have taken place without the investment of public money as well as the flair and enterprise shown by those who created that company.

Therefore it is very important that we have the public money in Wales to build the advance factories. Advance factories do not in themselves create a healthy economy but they are necessary for it. The creation of the necessary infrastructure, the social investment and the cultural patronage is very necessary too. It is necessary because a minority culture like the Welsh culture cannot survive in poor social conditions or finds it very difficult to do so. The future of the Welsh language and the Welsh way of life depends on patronage. In our time the patronage very often has come from public investment and public authorities.

The economy of Wales cannot be transformed overnight into one that is totally or mainly dependent on private enterprise. That is why this Bill is so important and why the setting up of the Welsh Development Agency was so important. It is why the setting up of the Mid-Wales Development Corporation was so important.

I remember writing a booklet in 1961 with Dr. Geraint Jenkins, the present curator of the Welsh Folk Museum, in which we advocated the setting up of a development corporation for Mid-Wales. When it was eventually set up I saw how it gradually transformed Mid-Wales by means of a partnership between public enterprise and private enterprise. That was so necessary because the Welsh economy so decayed in the earlier parts of this century.

Some time ago I read in Trevelyan's Social History of England that the wages of Welsh industrial workers, particularly in Merthyr Tydfil and the anthracite coal mines, were the highest wages paid to industrial workers anywhere in Europe in the latter part of the nineteenth century. But the wealth generated in Wales in those days was largely exported; with some notable exceptions, there was no, or very little, reinvestment in Wales. The wealth was taken away from Wales. This measure is part of the great repair job that successive governments have had to perform in Wales in this century. It is taking some time. I venture to think that the Welsh Development Agency and the Mid-Wales Development Corporation will be needed for many years before their work in Wales is complete.

In Wales we also lacked national institutions to enable us to fight the battle to restore the Welsh economy. A great deal has been done in the last few generations to repair that lack. When I was a boy in North Wales Cardiff meant nothing to me. When I was a student in Aberystwyth, Cardiff simply did not rank as a capital city. When I met Scottish students I realised immediately that Cardiff did not have a place in the Welsh mind in the way that Edinburgh had in the Scottish mind. That situation has changed a great deal over the last 30 or 40 years. Cardiff is very much more a capital city now. There are national institutions, but we still lack sufficient public and private institutions. When I say private institutions let me put that in context. I do not think that Cardiff has yet begun to be the financial centre of Welsh investment that Edinburgh is for Scottish investment. We do not have the private financial institutions that have been set up there. A beginning has been made but there is a long way to go.

On the other hand, Cardiff has changed and stimulates the Welsh economy more than it used to. It means more. I regret to say that we still suffer from pretty poor communications between north and south. That is a point to which the development agency and the Mid-Wales Development Corporation could address their minds.

While I welcome this Bill, I think that those agencies will need much more money in the future because there is a great deal of repair work to be done. I know from personal experience the enormous economic pressures placed on both industry and commerce to develop in other parts of the country.

Perhaps I may make two suggestions. The Government should consider extending the remit of the Mid-Wales Development Corporation to incorporate other rural areas. They could also do a great deal to encourage mature students to go to business schools. The young entrepreneur in Wales with two or three years' experience in industry or commerce often needs formal training to equip him for the competition that is required if private industry is to flourish. It would be very helpful if the Welsh Development Agency were to make it possible for mature students who have such experience in industry and commerce and the right kind of academic background to have a year at business school, preferably in Wales or even elsewhere. The Mid-Wales Development Corporation could do likewise. That would help a great deal in transforming a small business into something which is much more ambitious and much more likely to flourish and develop into a large business.

Altogether I think that the Government are to be commended on this Bill.

8.15 p.m.

Baroness White

My Lords, I wish to join in the gratification that has been expressed this evening that, as the noble Lord, Lord Hooson, has said, the Government for once have abandoned their basic philosophy and decided that instead of cutting their contribution, investment is the best policy. This is a Bill which I think all of us must welcome very warmly.

Before intervening in the debate on a particular aspect which I should like to touch upon, I should like to pay tribute to the foresight of those who originally established the Welsh Development Agency and also, as the noble Lord, Lord Hooson, has very rightly said, the Mid-Wales Development Corporation. I should also like to pay tribute to the members of the authority, including Mr. John Williams, the Chairman, Sir Donald Walters, and also to the staff.

Although the Bill does not deal directly with Mid-Wales, I should also like to pay a tribute to Mr. Leslie Morgan and his colleagues and staff for what they are doing in the more rural areas of Mid-Wales. It has not been an altogether easy progression and I think that we can congratulate ourselves that we have been able to call into public service in this particular sphere people of knowledge, experience and dedication to the needs of the Principality.

Today I wish to mention one particular aspect of the work of the Welsh Development Agency which closely affects the constituent institutions of the University of Wales as well as the local authority colleges of higher education. That is the arm of the WDA known as WINtech, which my noble friend Lord Prys-Davies has already commended. I hope very much that the increased funding which is provided for in this Bill will directly or indirectly affect and encourage the work of WINtech. As some of us know from experience, WINtech is playing an increasing part in developing high technology and other appropriate activities in Wales. It is through WINtech that support is provided for university centres of excellence which seem likely to become focal points of international esteem. I am not using that word without due consideration; it really means international esteem. It is work which can meet the challenge of research and advancing technology in any part of the industrialised world. Such centres must combine academic quality with industrial relevance and also either have or have good prospects of obtaining substantial non-government finance.

WINtech was set up following a report produced in 1983 at the request of the noble Lord, Lord Crickhowell, when he was Secretary of State for Wales. Since its inception WINtech has maintained and supported half a dozen very important university projects, including two at Swansea, three at Cardiff and one at Bangor. The largest of these are the Telecommunications Centre at Bangor and the Semiconductor and Micro-Electronics Centre at Cardiff. I am glad to say that the latter enterprise at Cardiff is a most happy and successful conjunction between UWIST and University College. I believe that in due course we shall enjoy other similar successes. That is a hope which I am certain is shared by my noble and learned friend Lord Elwyn-Jones, who is President of University College, Cardiff, and therefore my opposite number in this joint enterprise.

Some weeks ago, having provided substantial funding for the Semiconductor and Micro-Electronics Centre which is at the forefront of certain elements in this field, WINtech organised a successful visit to Cardiff by journalists from the scientific and technological press so that knowledge of the work being done there could be transmitted to appropriate industrialists throughout the kingdom, and in fact throughout the industrialised world.

At the moment about half the funding for the centre comes from Government sources, including WINtech, and almost half from industry.

In reply to a journalist's query, Professor Vernon Morgan of UWIST remarked: There's hardly a single major UK electronics company that isn't supporting us either in cash or in kind. Without the encouragement of WINtech, that remark could not have been made.

However, equipment costs are rising and the squeeze on government-funded research at the university level is becoming tighter almost day by day. Just one essential machine at the centre costs around £½ million to buy, and there are in addition the fairly high running costs consequential upon that purchase. As Professor Robin Williams of University College remarked: Getting funds to keep this sort of thing going is getting more difficult". We have a united fear, warned Professor Morgan, that: the country will get cold feet at the last minute, and we'll lose out to the US". May we trust that the increased funding for the Welsh Development Agency, and through it to WINtech, as provided for in the Bill, will help to resolve those problems and help to keep us in the lead—a lead which in certain areas we have already attained?

WINtech is also the channel for the distribution of Mr. Kenneth Baker's largesse for the technology centres, nine of which have been designated in the UK. The aim of those centres is to emphasise industrial and managerial training and capability rather than the industry-oriented research which is the main preoccupation of the university centres to which I have just referred. The Wales Technology Centre is not in fact a physical entity but an administrative unit, covering public sector colleges and the Polytechnic of Wales as well as the university institutions. We wish it well, but frankly it would be encouraging if rather more than the £100,000 that is at present available in total were to be found for the needs of the Principality.

Nevertheless, the work undertaken by WINtech, whether directly or as an agent, is a most important element in the current exciting and enthusiastic movement to modernise Welsh industry, to attract appropriate new industries and to raise our education institutions to the highest level. I have some sympathy with the suggestion made by the noble Lord. Lord Hooson, that it would be helpful both to the rural and industrial areas if young people in particular or those who have had a slightly longer experience of industrial affairs were able to supplement that experience with some well devised training in managerial and financial expertise.

I hesitate to do a commercial for the Cardiff Business School but I applaud that initiative which has very recently been undertaken, again on a joint basis with members of staff and students from University College, although it was started by UWIST, and which now has almost 800 students—that number includes overseas students. I am quite sure that an energetic programme is possible, and I have no doubt in due course will be undertaken, which I hope will supplement the kind of work that WINtech is encourging and which will make its contribution to the renaissance of modern industry in the Principality.

8.25 p.m.

Lord Trefgarne

My Lords, I am greatly obliged to both the noble Lords and the noble Baroness for their interventions and for their unanimous welcome to the measure which I venture to bring before your Lordships' House tonight. Having been squeezed out of the dinner hour by earlier business, I am as always under constraint to be very brief at this moment. I wonder whether the noble Lords and the noble Baroness will allow me to reply to them in writing rather than to detain your Lordships tonight.

Perhaps I may just say once again how grateful I am for the welcome that has been accorded to this measure. I promise all who have participated in the debate the most careful study of what they have said and a full and considered reply as soon as I can arrange it.

On Question, Bill read a second time; Committee negatived.

Then, Standing Order No. 44 having been dispensed with (pursuant to Resolution of 15th February), Bill read a third time, and passed.

House adjourned at twenty-seven minutes past eight o'clock.