The Welsh Economy

HL Deb 29 January 1992 vol 534 cc1311-48

3.3 p.m.

Viscount St. Davids

rose to call attention to the economy in Wales; and to move for Papers.

The noble Viscount said: My Lords, I beg leave to move the Motion standing in my name on the Order Paper.

Today's debate on the economy of Wales comes at a time when the economy, both within Wales and nationally, faces a great many challenges. I believe, therefore, that the timing of this debate provides an ideal opportunity to assess the measures which have so effectively revolutionised the economy of Wales and the radical changes that have been wrought at the very heart of that economy over the past decade.

At the hub of all well developed and well balanced economies must be a competitive and flourishing range of production industries which is able to provide the basic requirements for everyday life. Much has been done in Wales to ensure the growth and success of our indigenous industries, though in recent years production, and particularly manufacturing, have occupied an ever-decreasing though still important place in our economy.

Competition from abroad, especially from Japan and South-East Asia, has continued to place great emphasis on both the competitiveness and efficiency of our larger industries. It has forced us to look closely at the very fabric of the Welsh economy and the way in which in the past it has been structured and to remove the frailties which had once been so prevalent.

In Wales, this has meant the rundown of the steel and coal industries on which much of the economy was over-dependent. This process of streamlining major industries is of course continuing in a bid to make them more competitive on the international stage. But it is in Wales that the brunt of these measures has been felt most and where they have been most effectively absorbed.

During the early part of the last decade both the steel and coal industries went through a considerable period of rationalisation. In 1978 Welsh steel making employed 57,000 people. By 1981 this had fallen to 27,000 and it is around 18,000 today. Similarly, the numbers employed in the coal industry have fallen from 30,000 to around 2,500 today.

We should not, however, kid ourselves into believing that this rationalisation is a recent innovation. Far from it. At its peak in 1920, the coal industry employed over 290,000 people. This process of rationalisation began in earnest in the early part of the last decade but was long overdue and very much needed.

Cutbacks of this scale to industries which were the very heart and tradition of Wales could have been debilitating had it not been for the inherent strength which exists in the Welsh spirit. The Welsh economy, aided by strong and effective measures to enhance the employment opportunities of its workforce, has continued to flourish and diversify despite these cutbacks.

In place of an economy once overwhelmed by the colliery face and steel plants, we now have a well balanced economy, far better equipped to respond to the recessionary pressures which are at present dogging the national and world economies. Steel making and mining of course still have a role in the Welsh economy. More than that, they have a unique place in the history and traditions of the communities of Wales. This will always be so, but there is little room for sentiment. We should surely not be looking forward to economic recovery so optimistically if our economy and industrial base were shackled quite so firmly to history and tradition as hitherto.

There are many reasons why the policies of the past decade have been successful. Not least among these is the sterling work which has been carried out by the Welsh Development Agency. The main aims of that agency are to further the economic development of Wales, enhance its international competitiveness and improve the environment. The agency pursues these objectives through a wide range of activities, including the provision of modern industrial property, the promotion of inward investment and new technology, business advice and venture capital, land reclamation and environmental improvement and, increasingly, urban renewal and the economic development of rural communities.

Since 1979, the WDA has invested over £1 billion at today's prices in its activities. It has used these resources well. For example, the agency's property programme has ensured that over the past six years the amount of factory floor space rented to Welsh firms has provided the space for 36,000 jobs.

During the past five years, the agency has also raised over £80 million from the sale of its factories to individual tenants and private sector investors, reinvesting the proceeds of these sales in the Welsh economy. Increasingly, the agency's financial resources and management efforts are being directed to its role as a facilitator: to stimulate private sector investment and enterprise. To give an example, the programme known as Welsh Property Venture was launched in 1989 actively to market opportunities for joint ventures between the WDA and the private sector. More than half a million square feet of factory and office space has been secured in the first year of operation, enough to house jobs for over 1,600 people; and for every £1 the agency has invested in this way it now succeeds in generating more than £4 of private sector investment.

In addition to greater prosperity, economic progress also results in a better quality of life, which in itself will help to attract new investment. There is therefore a parallel need to enhance the environment and remove the legacy of dereliction associated with the old traditional industries. The agency has a key role to play here and has a first-class record.

Since 1979 the agency has invested some £220 million at today's prices in reclaiming derelict land. Over 9,500 acres of such land have been brought back into productive use in one of the largest and most sustained programmes of its kind in Europe. When the scheme and its existing programme are complete, some 20,000 acres of poisoned, derelict or damaged land will have been cleared and turned over to productive use to the benefit of the communities involved and Wales as a whole. Reclaiming land, particularly in the Welsh valleys, is a major asset and constitutes a marvellous opportunity for development.

Last year alone business projects worth £175 million were located on land reclaimed by the agency. At current rates of progress the agency is on target to eliminate all the remaining major industrial dereliction by the end of the 1990s. That is a major achievement for Wales. It is important to build on such success. Your Lordships will recall that a Bill was recently approved by this House which has the effect of raising the WDA's financial limit, thus providing the agency with the headroom it needs to pursue its tasks in the coming year.

The Secretary of State for Wales has been able to secure increased provision next year and to increase the WDA's gross spending power in 1992–93 to nearly £167 million. That is nearly £7 million more than the current year and is the highest sum ever both in cash and in real terms. That will allow the agency to continue to play a vital role in the revitalisation of the Welsh economy. Welsh Development International, an arm of the WDA, has been instrumental in ensuring that Wales continues to be considered as an ideal location for some of the world's major companies. Wales is now firmly on the business map.

Wales is known as the European base of Sony's TV operations in Europe, of much of Ford's engine manufacture and of Bosch's alternator business. The list could go on. The presence of such major world companies in Wales, and their evident success, give a tremendous boost to the credibility of Welsh companies when they seek to do business abroad. Wales has established an enviable record in attracting international and UK based companies to invest in the Principality. The recent decision by Sony—one of the world's most discerning companies—to carry out a £150 million expansion of its plant in South Wales represented a marvellous voice of confidence. Sony was, however, only one of the many companies to announce inward investment last year. In all, the Principality recorded its highest ever inward investment figures—183 projects from overseas and UK based companies promising over 17,000 new and safeguarded jobs. There are presently over 350 foreign owned companies that are committed to Wales. Currently those firms provide employment for around 65,000 people.

The Government are determined to maintain that momentum. I know the Secretary of State for Wales places great emphasis on the need to continue to attract those high levels of inward investment. I am sure that the shrewd marketing skills available within Wales will ensure that that fine record is maintained.

Inward investment also provides considerable benefits for indigenous industry, providing new business for component and service suppliers. New management techniques have also been introduced to the Welsh industrial scene, particularly by the 40 or so Japanese companies that have set up operations in Wales. It has one of the highest regional concentrations of such companies in Europe. As a consequence Wales has an efficient, quality conscious and wide-ranging industrial base which is able to compete effectively at the highest of international levels.

In recognising the vital importance of securing inward investment projects, it is all too easy to forget the valuable efforts of indigenous industries. The development of our own companies is something we continually strive to foster, both by offering grant assistance as an inducement to expand existing businesses and by providing the necessary economic climate and framework to enable individuals to start up on their own. Wales, aided by government policies, has maintained a strong tradition of encouraging small businesses. Indeed there are now over 67,000 more small firms in Wales than was the case in 1981. That represents an increase of some 59 per cent. The contribution that those small, widely diversified and enterprising firms have made to the successful regeneration of the Welsh economy has been invaluable.

As we begin to pull out of the period of recession, Wales continues its success in encouraging home grown companies to expand. The reason for this is quite clear. We have the skills and the infrastructure but, above all, we have a committed workforce. All those factors help to keep Wales in the vanguard when it comes to choosing a location for new and expanding businesses. In 1991 nearly 130 industrial projects, supported by the Welsh Office through regional selective assistance, were announced. They involve investment by companies of a massive £473 million. They promise over 7,100 new jobs and they also safeguard the jobs of 1,300 people already employed. Regional selective assistance of £60 million has been offered to help safeguard those job opportunities.

All of this is great news for the Welsh economy. What is particularly heartening is the extremely diverse nature of the companies involved. They represent the future and show the growing divergence of the Welsh economy. Never again will prosperity be threatened by over-reliance on a few uncompetitive industries.

One of the vital strengths of the Welsh economy and one of the keys to future prosperity lies in having a highly skilled workforce that is ready to make and take opportunities for enterprise and innovation. To achieve this both employers and employees must be committed to continuing training throughout working life.

I know that the Secretary of State for Wales was particularly pleased when, last September, the Prime Minister announced that responsibility for training in Wales would be added to his responsibilities for education and economic development. This becomes effective from April this year and presents an opportunity further to integrate co-operation across the field of training, education and enterprise. Our workforce is the most valuable of resources and we must ensure that all are able to achieve their full potential.

The restructuring of the Welsh economy, the sterling work of the Welsh Development Agency, our success in attracting foreign investment and the development of TECs are just some of the very positive steps taken which have brought Wales into the 1990s in a very competitive position. In 1989 output per employee in manufacturing in Wales was £29,478 compared to the UK figure of £27,279. Since 1985 manufacturing output has increased by 31 per cent. in Wales compared to 13 per cent. for the UK as a whole and total output in production and construction in the third quarter of 1991 was at a level 20.5 per cent. higher than in 1985 compared to an increase in the UK of only 8 per cent.

Of course we do not rely entirely on the manufacturing industry in Wales. There are many more aspects to the Welsh economy to which in the short time available I have not been able to give the weight they deserve. We now have in place an economy which offers the workforce both opportunity and choice—two elements sadly lacking in past years—and which can sustain itself and respond to today's and tomorrow's challenges.

An example of this new found choice comes from the financial services initiative launched in 1988. It is geared to attract inward investment and further diversify the choice for employment within the Welsh economy. Employment in this sector has increased by some 20 per cent. in recent years. It is to be hoped that the information technology initiative which was launched last year will be equally successful in raising the profile of Wales to companies in this field and further strengthen representation of this fast growing sector.

The Welsh economy has made enormous strides in the development of a dynamic and diverse economic base. The fundamental changes which have been made in a comparatively short space of time are a credit to all those involved. Wales has reaped the benefits of the enormous amount of hard work which has been done in the way in which it has weathered the recession.

The results of that commitment are clearly visible. During the recession our industries in Wales have proved themselves to have the greater staying power which comes from efficiency, up-to-date equipment and a highly skilled workforce. Wales continues to be affected less severely than the UK as a whole and the gap between the UK and Welsh unemployment rates was reduced from 0.9 percentage points to 0.4 percentage points since March 1990. That is all the more remarkable when one considers that the gap in unemployment rates was 2.8 per cent. as recently as July 1985.

I firmly believe that we can now look forward with optimism to an upturn in the economy and to greater success and prosperity ahead. I beg to move for Papers.

3.20 p.m.

Lord Parry

My Lords, one of the great pleasures of this House is that occasionally one is afforded the opportunity to congratulate a comparatively new arrival to the House on his contribution. In this case, as someone who was born and brought up in Pembrokeshire and has lived there for 65 years, it is a particular pleasure to welcome the noble Viscount, Lord St. Davids—whose father was known to us all and whose grandfather used to be known at one time as "that damned old radical, Wilfred Philips"—in the generous terms of this House. However, he will not expect me to follow him entirely in the case he made although, curiously, I can underwrite some of the positive aspects.

A determined effort has been made under successive governments to re-establish the economy of Wales, despite the fact that its basic economy was virtually destroyed by the changing circumstances in which it operated. The noble Viscount referred to the past 10 years. I should like to go further back, to the basic piece of research under the general leadership of the current Leader of the Opposition, my noble friend Lord Cledwyn, which made the Wales Tourist Board, the Welsh Development Agency and the Mid Wales board possible, and resulted in a piece of literature entitled Wales—The Way Ahead. If we were to go back to that point and examine the changes that have since taken place we would set the very positive steps which have been taken in the context of the difficulties which beset the area.

The dismantling of the heavy industrial base carried out under various leaderships at considerable pain, even if historically inevitable, was not accompanied by the planning which I consider necessary. If one realises that a basic prop of a nation's economy is being removed it is essential to make positive plans for the long term. Ad hoc-ery—reacting to something which has occurred—is only a short-term solution.

It is true that positive attempts have been made, but we should look at the basis of the problem. I congratulate the noble Viscount on having secured the debate at so difficult a time. In preparation for the debate I searched through earlier documents and up-to-date newspaper reports. I found that the figures which have been researched suggest that because of the dismantling of the coal and steel industries the areas in which mining and steel production took place have suffered a greater loss in earnings than any other area. One might think that that speaks for itself. In fact, John Rigg, who is the director of the regional futures unit of the Henley Centre has produced some relevant figures. Having studied 322 travel-to-work areas throughout Britain he found that the four Welsh travel-to-work areas came bottom of the league in disposable incomes. That is the case now and that situation has existed for some time. Therefore, in terms of the capacity of the people to spend and therefore to help to refuel the economy, which is so vital at this time, Wales is worse placed than any other area in the United Kingdom.

The 1991 figures show that on average in Aberdare disposable income is £105 a week per head; in Merthyr and Rhymney it is £105.60 per week per head; in Pontypridd and the Rhondda it is £106 a week per head; and in Bridgend it is £106.30 a week per head. That compares with £123 a week per head in Cardiff, £122 per head in Aberystwyth and £121 per head in Wrexham. At the top of the league of Britain's travel-to-work areas are Guildford and Aldershot in England, with averages of £168 a week per head. Therefore, despite the progress made under two sets of governments and several Secretaries of State, in Wales today the people are more impoverished in terms of disposable income than those in any other part of Great Britain.

The House will know, because I have said so often enough, that I have the pleasure to be the chairman of the Wales Tourist Board. I believe that I accepted a mandate from two Secretaries of State for Wales—one of whom, the noble Lord, Lord Crickhowell, is present today—to help to promote the tourist trade in order to assist the future expansion of the economy in Wales. I have worked as best I know in that capacity in order to achieve that objective. Therefore, this afternoon I should like to speak about the tourism industry.

The tourism industry is firmly related to and embedded in the agricultural industry. I know that my noble friends Lord Morris of Castle Morris and Lord Prys-Davies, and others, will speak about agriculture but I should like to make this point in the context of what I have already said. The hard times on the farms in Wales have been reflected in the local newspapers during this past week. A very graphic set of figures was published in the WALES on Sunday newspaper showing that the net farm income for dairy farming in Wales has fallen by 21 per cent. Net farm income on hill and upland livestock farms has fallen by 25.5 per cent. and the net farm income in dairy and livestock has fallen by 19.9 per cent.

There should be no doubt in this House that the agricultural industry in Wales is perturbed about its potential to contribute to the earning capacity of Wales, and therefore to the earning capacity of Great Britain, as we "come out of the recession". And when will that be? We have received several forecasts each suggesting that it would be in six months' time but we are still in recession. The general expectation, at least across the Atlantic, is that it will continue for at least another year with the economies of the West moving along the bottom rather than rising. Therefore, let us consider what the leaders in Wales are saying now about the contribution of agriculture to that improvement.

In his New Year message Trevor Davies, the chairman of the NFU in Wales, said: Undoubtedly of major concern is the impact that the CAP (MacSharry) changes will bring". I shall not talk about those proposals although others may well do so. He went on to say: The current proposals are an improvement but, make no mistake, they will hit right at the heart of Welsh agriculture which depends so heavily upon the livestock sector and yet is comprised of true family farms. There will be limited compensation, but Welsh agriculture will not benefit from the lower feeding stuff prices that are centred to the MacSharry proposals". Wales will again be handicapped.

I turn immediately to someone with whom my friends opposite—and I call them that in my defence of Wales—might find some more fellow feeling: Anthony Bosanquet, the chairman of the Country Landowners' Association Welsh committee. In his New Year's message he said that two contrasting examples will affect agriculture in Wales: Interest rates have fallen significantly over the past year, which must be good news for those with high borrowings". I am not a dismal Jimmy. I am not only giving the good news, I am giving the other side of the picture. But there is still at the time of writing no settlement in either the GATT or the CAP reform discussions.

He adds, with some optimism on the one hand and realism on the other: There are, however, encouraging signs that the government is beginning to realise that the countryside of Wales can only be properly managed and cared for by farmers"— he adds "and landowners"— and that market forces alone will not allow them to survive to do so. The reason that the Welsh Development Agency and the other agencies are in being is that they also temper the natural forces of the market with planned policy.

I am rapidly running out of time and I cannot go into detail, but in addition the leader of the Welsh farmers' union—Mr. Parry, who is no relation of mine so I do not have to apologise—said that, the grinding unrelenting struggle to survive would continue to permeate all sectors of the industry". Tourism is worth over £1.5 billion for the economy of Wales and, ultimately, for the economy of Great Britain. It is estimated that it supports 95,000 jobs. When analysed and built into the economic factors its effect is quite astonishing.

I have with me a copy of the Western Telegraph published today. It is the newspaper of West Wales. Whatever the difficulties and constraints that I have mentioned, this edition of the Western Telegraph is the saddest that I have known in my history. The closure of Brawdy air base and the closure of Trecwn mining depot have added to some of those problems.

3.31 p.m.

Lord Chalfont

My Lords, I am sure that the whole House is grateful to the noble Viscount for initiating the debate. It is appropriate for reasons additional to those which he and the noble Lord, Lord Parry, have put forward. At a time when there is a great tendency towards centralisation in our lives, especially in the context of the European Community, it is right that we should underline the importance of what I might call cultural nationalism: the importance of small countries cherishing their language, customs, national traditions and even their national prosperity. In the somewhat Anglo-centric kingdom in which we live, not much attention is lavished on what is sometimes called the Celtic fringe, where much of what is richest and best in our cultural heritage was born and still survives.

Wales is especially rich in history and tradition. It is a country which has nurtured such men as Caradog—in fact he was not a Welshman but was born outside Wales, spoke the Brythonic language and became one of the great Welsh heroes—Taliesin, Owain Glyndwr, Llwewllyn ap Gruffydd and even, I suppose, although it may offend some people, the Red Bandits of Mawddwy. People who can look back on such a history can scarcely be without a sense of national pride. More recently, we can look upon such people as Robert Graves and R.S. Thomas, not to mention Gareth Edwards and Barry John, if I may mention them in this context.

It would be impossible for a country like ours to be without a sense of history. The late Gwynfor Evans in his wonderful book Aros Mae—translated into English as Land of my Fathers—quoted from a Frenchman, Jacques Chevalier, as follows: Wales was the only nation in Europe in the tenth and eleventh centuries which had a national literature apart from an imperial one in Latin. The people of Wales were the most civilised and intelligent of the age". That is, of course, still so.

I should like to say a few words on the subject on which the noble Lord, Lord Parry, embarked, because we are talking about the economy. I want to speak of the tourist industry, to which the noble Lord has given such distinguished and invaluable service. As he said, the tourist industry provides employment for about 100,000 people representing 9 per cent. of all the employment in the Principality of Wales, a much higher share of total employment than anywhere else in the United Kingdom. There were 8.5 million tourist trips from the rest of the United Kingdom to Wales in 1990 and 680,000 visitors came from overseas. As the noble Lord said, that represents altogether an expenditure of well over £1 billion on tourism.

For a Welshman at any rate, that is not surprising. By anybody's standards, Wales is scenically one of the most beautiful places on earth. Whether one is in the Gower peninsula in the south, the Brecon Beacons, the gently undulating country of Gwent on the west bank of the River Wye where I was born, or further north in the Mawddach estuary which runs from Dolgellau to Barmouth with Cadair Idris to the south and the hills of Meirionydd to the north, one finds some of the most beautiful scenery in the world. Further north, one comes to Snowdon and the Lleyn peninsula, the great sweep of Cardigan Bay and the great castle of Harlech, which has played such an enormous part in the history of our country. I should not forget, lest I incur the wrath of the noble Lord, Lord Hooson, the Vale of Llangollen, one of the most smiling and beautiful valleys in Wales or any other country where for many years I was president of the international eisteddfod—a role that is now filled by the noble Lord with greater distinction than I could ever bring to it.

Yet, despite all that incredible and unique physical beauty, the tourist industry in Wales, flourishing as it is, is a relatively recent phenomenon. Its growth and success have been mainly due to the efforts of the Wales Tourist Board, with which I have had much to do in my years as president in Llangollen. I have learned to admire enormously the impact that it has made on the tourist industry in Wales. Until comparatively recently I suppose it was possible to say —indeed many Englishmen and other foreigners did so—that Wales was gastronomically a desert. Apparently, in Wales, all that they ever ate was lamb, laver bread and toasted cheese. That was not entirely true. Perhaps, in parenthesis, I might say that toasted cheese came to be called by the English "Welsh rabbit" because they believed that the Welsh were too poor to eat rabbit and therefore ate toasted cheese instead. Perhaps I may also warn Englishmen against the terrible mistake of calling it "Welsh rarebit", an appalling Essex-type aberration which has passed into the English language. If it is anything, it is "Welsh rabbit" and is in fact toasted cheese.

Today, Wales is liberally endowed with country house hotels, inns and farmhouses where the standard of food, comfort and croeso (welcome) is as high as anywhere in the smaller countries of the world. More recently, there have been even greater improvements. In June 1988, the Wales Tourist Board initiated its five-year plan, part of which inaugurated an annual inspection of all types of accommodation in Wales to ensure that they were up to standard. The Wales Tourist Board is now assisted by having the ability, as Scotland has, to offer grant aid for capital improvements.

However, there were—I say "were" because only recently has the situation changed—two great difficulties. One was an inadequate budget to promote Welsh tourism. The other was the fact that the Wales Tourist Board was forbidden to market Wales overseas because it was alleged to be in some kind of competition with the British Tourist Authority. I am glad to say that the Government have moved on both those issues in recent months and have announced a £2.5 million increase in planning expenditure. They have said also that they will support a Private Member's Bill in the House of Commons to give the Wales Tourist Board overseas marketing powers.

There are still some problems. However, I am sure that the Wales Tourist Board, together with the Welsh Office, the Welsh Development Agency, local authorities and private enterprise will solve them. The future of the Welsh economy lies in partnership and all those bodies operating together and in harmony. Already, considerable efforts are being made. For example, Newport Borough Council—one of two local authorities in the United Kingdom named by the Audit Commission as being in the forefront of effective economic development strategy—is a model for the type of thing that can be done to promote the economy and development of Wales as a whole. I do not refer solely to the tourist industry.

I would not be as gloomy as the noble Lord, Lord Parry, about the economy of Wales. The Welsh Office is to be congratulated on the role that it has played, together with the other elements in Wales that I have named as being important. I encourage the Government to continue in that vein. Perhaps I may remind the noble Baroness, Lady Trumpington, that the Welsh are a remarkable, unique and unpredictable people. I remind her of the time when the England rugby team, in preparation for the coming season, decided that it would have 15 cardboard cut-outs of rugby players in scarlet Welsh jerseys and white shorts set up on the pitch at Twickenham to prepare them for the game ahead. After their first practice, someone asked the English coach, "How did it go?" He said, "Not very well. Wales won by 14 points to six." A country that is capable of that is capable of almost anything.

3.42 p.m.

Lord Crickhowell

My Lords, I congratulate my noble friend Lord St. Davids upon initiating the debate. If I do not exactly thank him, it is because I have taken part in too many debates on the Welsh economy to want to add to the total.

When I took over in 1979 as Secretary of State for Wales, Wales was in a state of deep depression. That was as much psychological as it was economic or social. There was widespread pessimism and that self-defeating lack of confidence revealed itself in the begging bowl approach that was based on the expectation that the Government or the English taxpayer had a duty to come to the rescue. All that was the not surprising consequence of the fact that for the greater part of the century, the old industries on which Wales had depended had been in decline. That formidable basic handicap was magnified by the same industrial inefficiency and union attitudes as then bedevilled the British economy as a whole. The great steelworks at Llanwern and Port Talbot were grossly overmanned and uncompetitive.

The most striking feature of the Welsh scene today is not the diversity and growing strength of the economic base, remarkable though that is, so much as the transformation in attitude and the pride and confidence now evident in Wales. The Welsh workforce now looks the world in the face and says that it can compete with the very best—indigenous just as much as foreign. Llanwern and Port Talbot are now among the most competitive steel plants anywhere. The continued volume of overseas investment is evidence of the reputation that Wales has established in Japan, the United States and Europe.

I believe that I am entitled to say that an important factor has been the firm and consistent policies pursued by this Government and its three Secretaries of State. During my first few years, the going was very rough, but for most of my time in office I, like Mr. Peter Walker, was able to boast that Wales with 5 per cent. of the population was attracting a quite disproportionate share of inward investment into the United Kingdom. It was a great satisfaction to me to see unemployment falling sharply before I left.

The firm foundations which we laid in those difficult years in the early 1980s were built on and developed with energy and flair by Peter Walker, who did so much to expand the first Valleys Initiative and to encourage the widening of economic activity. Now, under David Hunt's leadership, the investment has continued to take place and even during a period of world recession—my noble friend Lord St. Davids reminded us of this—the inward investment performance in 1991 was particularly remarkable. Almost equally remarkable has been the contribution throughout all those years, under three Secretaries of State, of Sir Wyn Roberts.

Unemployment is certainly still too high but the rise has been much less severe than in the last recession despite the rapid closure of coal mines. The figure was 121,600 in January compared with 170,000 in January 1986. The number of long-term unemployed is less than half that figure.

The nature of the fundamental change in the past dozen years is perhaps not sufficiently understood. I have spoken of the change of attitude. However, there is now a quite different economy. While steel remains important, coal has virtually gone and there is now a widely diversified manufacturing base which includes over 300 overseas controlled companies. As important, there has been a reversal of the drain of professional and financial firms out of Wales about which I spoke with concern in a speech to the Cardiff Business Club a few years ago. Of course some serious problems remain with us. The noble Lord, Lord Parry, spoke of the difficulties confronting agriculture and, understandably too, the consequences of the closure of military establishments as a result of the remarkable changes in the world affect my former constituency and his home area of Pembrokeshire.

The transformation of the Welsh economy has been underpinned by a transformation and vast improvement in the infrastructure and by equally significant improvements to the environment. The opening of the Conwy Tunnel in the autumn put us on the final lap towards the completion of the A.55 dual carriageway that links North Wales with the industrial heart of Britain. Similarly, the last gap in the M.4 is being filled near Swansea, and the second Severn crossing will in about five years provide the transport security that the South Wales economy requires.

Noble Lords from outside Wales may not fully appreciate another feature of that South Wales economy, or the scale of another crucial transformation that has occurred in recent years. Cardiff is hardly recognisable as the city it was two decades ago. For long blessed with an exceptionally beautiful civic centre it now presents a thriving and successful face in its shopping centre, its extensive redevelopment programme, culturally in theatre, music and the arts, and the vast reconstruction taking place in the old dock and steelworks areas of south Cardiff. I do not overlook equally striking improvements that have been taking place in Swansea and Newport, but Cardiff has a particular significance for the wider economy. The capital city, with a population of about 300,000, is linked to the valley communities, with a population of perhaps 1.5 million, by a network of trains, and now roads, which have vastly improved access. All that means that there is an integrated economic area in which communities are no longer isolated and wholly dependent on local firms or the local pit. That is why the regeneration of South Cardiff and Cardiff Bay is almost as significant for the valleys as it is for the city itself.

I referred earlier in a single sentence to the improvement of both the infrastructure and the environment. It is appropriate that they should go together. The improvement in the environment reflects the economic improvement and it is a crucial instrument in its achievement. The environmental change is visible; for instance, in the success of the derelict land programme, since the events at Aberfan, in improvements in the housing stock in places such as the Rhondda Valley and, perhaps most strikingly, in Ebbw Vale, where the National Garden Festival will open in May.

All that, the removal of urban industrial squalor and the excellence and adaptability of the labour force are the reasons why Wales is proving to be such an attractive location for overseas investors. The Welsh economy is doing well because Wales is becoming an increasingly attractive place to live, work and play, not only for those of us fortunate to live in its beautiful countryside.

I was once criticised by the Daily Mirror for saying that if you want to attract industry to an area one of the first things you must do is to build a golf course. I shall say that again—but it is not only golf courses that are necessary. My predecessor was absolutely right in providing the funds to help to build the St. David's Hall, one of the best concert halls in the country. I believe that, for artistic and economic reasons, I was right to find the funds to build the major extension now under way at the National Museum of Wales. The local authorities which are doing so are right to provide new homes for music and large-scale theatre in North Wales. I hope that in due course we shall have the opera house which Welsh National Opera and other companies deserve. That is as important for the economy as it is for those who love opera.

The arts are important in themselves, but if we seek to create economic health we must also create a cultural and social environment that is attractive. I believe that the 1980s and 1990s will be seen as a period of historic change when the long agony of depression and decline ended and when Wales, with an increasingly strong and diverse economy, entered a new period of prosperity and cultural richness. Dare I be so optimistic as to suggest that from time to time it might also hope to enjoy success on the rugby field?

3.52 p.m.

Lord Gibson-Watt

My Lords, we are grateful to my noble friend Lord St. Davids not only for initiating the debate but for his excellent speech and the many statistics that he gave. Anyone who has spent most of his life in Wales will be aware of the economic change that has been referred to. It has happened in many countries—nothing stands still.

Before the war the Welsh coal industry was huge and one cannot believe that now not a single colliery is open in the Rhondda Valley. There have been traumatic changes in employment in the steel and coal industries. Successive governments have attempted to tackle the problems and to make the changes as easy as possible for the Welsh people. We must not underestimate their task.

I remember well my noble friend Lord Thomas of Gwydir, who I see in his place, attracting a great deal of industry to Wales, as other Secretaries of State have done. I remember opening one of the first Japanese factories on his behalf when I served under him at the Welsh Office.

It is invidious to argue which of the various Secretaries of State has done best in the various fields that we are discussing. I pay tribute to the three incumbents since 1979 for attracting industry to Wales, for their various initiatives and for their strong support of the Welsh Development Agency and the Rural Development Board. I must not forget the Cardiff Bay development which my noble friend Lord Crickhowell initiated and which his two successors have pursued. While waiting for my train this morning on Newport station I saw a hoarding which read, "Cardiff Bay Development. It will produce 30,000 jobs". All such developments take a long time but those figures could be important to the people of South Wales. In one of the recent debates in the Welsh Grand Committee on 11 th December the Secretary of State referred to an additional £29 million spent on the rural initiative and to a total extra spending for 1992 of more than £½ billion. The figures speak for themselves.

One of the important bodies is the Holyhead Joint Venture Board, with a budget of £5.6 million. That is a good example of the co-ordination that exists in Wales among the WDA, Gwynedd county council, the Ynys Moôn borough council, the Holyhead town council, the Sealink Stena line (which has unfortunately announced many job losses) and the Holyhead Opportunities Trust. That is typical of the co-ordination that exists between central and local government.

Not all the small firms supported by the WDA and RDB have survived. In a world recession an economic problem in the United States or Japan acts like a pebble dropped into a pool; the ripples spread everywhere, even to the smaller struggling firm in Wales. In areas with little industry the loss of one firm considerably increases the rate of unemployment. The RDB and WDA exist to help solve those problems.

I wish to underline the problems of the Welsh farmers. As chairman of the Council of the Rural Welsh Agricultural Society I am acutely aware of what is happening. The continuing decline in the agricultural workforce and the amalgamation of small firms are sad facts. For most of us who live on the land the future is at best pretty obscure. At present the cattle and sheep sectors are supported by grants under the CAP. The result of the GATT negotiations are bound to affect what happens to farmers all over Britain and Europe. This morning's newspapers make it clear that there is a great deal more to come from that direction.

I say to the Government that somehow or other farmers must be kept on the land. One may ask why farmers are different to any other industrial workers. They are no more important but they carry out a specific job over and above looking after their sheep and cattle. Many people come to take holidays in Wales under the aegis of the tourist board. They come to a fine countryside. If there were no sheep and cattle the land would revert to scrub and gorse and broom. If that happened decades of good husbandry would be lost; we should depend on other countries for our meat and the countryside which is so much enjoyed would become a wilderness.

No one is more aware of that than the Secretary of State, the Minister of Agriculture and my noble friend Lady Trumpington, who has been so assiduous in her visits to and interest in Wales. I make no apology for underlining the importance of family farming to all Ministers concerned, whether it applies to Wales or areas this side of Offa's Dike.

I wish to refer to one matter which is perhaps more contentious than other matters dealt with this afternoon. It could in itself in the long term affect the Welsh economy if it ever came about; that is, the idea of a Welsh assembly. I understand that that policy is supported by Plaid Cymru and by the Liberal Democrats. It would be expensive to run and could be a source of friction for the Welsh Office. It could well damage the present economic set-up. Only 12 years ago in a referendum the Welsh people turned down an assembly by three-and-two-thirds to one. In my view they would do so today because the same arguments still apply.

Whatever the result of the arguments on local government reform—and there will be many such arguments in the future—it will be far less damaging to the Welsh economy than an assembly would be. As regards local government reform, I hope that Ministers have not overlooked the expense and disruption that that causes. We had all that in 1972.

4.1 p.m.

Lord Morris of Castle Morris

My Lords, first, I thank the noble Viscount, Lord St. Davids for giving us the opportunity to discuss this subject. I begin by congratulating Her Majesty's Government on the unquestionable success, over a number of years, of their inward investment policy in Wales. Without venturing into the contentious territory of which Secretary of State can claim credit for which achievement, perhaps I may say that each of them has contributed to a remarkable regeneration of industry in Wales. However, we need a decision on the proposed oil and gas terminal at the Point of Ayr. I hope that the Government appreciate the urgency of that matter and that the noble Baroness, Lady Trumpington, will be able to bring us good news.

However, it is an inevitable consequence of geography that the majority of that new prosperity is concentrated in two places; namely, North East Wales and the so called "M.4 corridor". Between those two areas there is very little new industry. Indeed, there is very little industry. Between Clwyd and Carmarthen we grow a great deal of grass and, as I hope to show, herbage brings headaches. The economy of rural Wales—Gwynedd, Dyfed, Powys and parts of Clwyd —is overwhelmingly agricultural and particularly dependent on sheep, beef and milk so that flexibility is difficult and diversification is almost impossible.

In those areas there are immediate fears and problems. Restrictions on sales into intervention of beef create difficulties for livestock farmers particularly in Wales because diversification is so difficult. The tourist market for jolly farmhouse holidays is almost saturated and not many golf courses can be built on Plynlimon or in the Great Bog of Tregaron. Welsh dairy farmers are equally apprehensive. The milk quota system, troublesome though it is, has not been vastly unfair to the Welsh farmer but he cannot expand in any way and he has difficulties in selling his quota. Even if he succeeds, what does he do with his land?

Welsh dairy farmers have a great interest in the future of the Milk Marketing Board and the sooner that matter is resolved the better. Some seem ready to welcome the voluntary co-operative society for England and Wales; others, especially those with small herds, are conscious of the protection afforded by the statutory body and suspect that they may be forced into that new voluntary society which will soon be controlled by, and serve the interests of, the very large producers, very few of whom live in or care about Wales. I hope that the noble Baroness will be able to clarify the position as regards the Milk Marketing Board when she replies.

However, the most quantifiable, remarkable, measurable suffering in Welsh agriculture must be that of the hill and upland sheep farmers. Not only has the market price of lamb been inordinately low for the past two years and more but the farmers are now faced with the abolition of the variable premium system and are forced to recalculate on the basis of a limited number of breeding ewes. According to the recent Farm Business Survey the average income of Welsh hill and upland less favoured area livestock farmers in the year ending February 1991 was £7,561, or £144 per week; that is £4 per week higher than the Child Poverty Action Group's definition of poverty. The picture would be far worse without the large rise in support payments. To those farmers in the hill areas, one thing seems certain: next year will be better than the year after.

The future looks grim unless something is done. Peter Midmore of the agricultural economics department at the University College of Wales, Aberystwyth, reporting on the prospect for farmers in Dyfed in the next 10 years, said: Reduced market returns will force many farmers off the land unless they can diversify their businesses or find off-farm work. The scope for the former is limited, and, in the context of general decline in agricultural output, fewer jobs in industries allied to, or dependent upon agriculture, will be available. Without policies to minimise these effects, 11,000 jobs and income worth £31 million in the rural economy will be lost". I hope that the noble Baroness will be able to give us news of such policies, although she will find the sheep farmers of the Cambrian mountains hard to convince.

Poverty and depression in agriculture is a chronic problem in Wales. The sudden, spectacular and acute damage to the economy in West Wales has been caused by the recent defence cuts. I have been privileged to discuss them with the chief executive of the Preseli/Pembrokeshire District Council. If we accept in every case the lowest estimate for unemployment figures, the closure of RNAD Milford Haven, RNAD Trecwn and the downgrading of RAF Brawdy mean that losses of 735 jobs will have been announced in the past nine months in the defence industry alone. Add to that the consequential loss to the local economy, variously estimated as anything from £20 million to £30 million, and the devastating impact on local education services, where more than 250 children of service personnel at RAF Brawdy alone are in local schools, and your Lordships can begin to see the price of the peace dividend to the people of Pembrokeshire.

The Government have responded by announcing the setting up of a task force with £2.2 million—£1 million of which will come from the Welsh Development Agency—to alleviate local distress. It would be helpful if the noble Baroness could tell the House how much of that is new money. For example, is the £1 million from the WDA free money or is it money already committed through existing rural initiatives? Will the task force members be working full time or are they people already in government employment seconded to that project for a limited period as part of their other work? For a long time Pembrokeshire has been heavily dependent on the defence industry. Those cuts imposed disproportionate distress. I assure your Lordships that in West Wales the remembrance of them is grievous unto us, the burden of them is intolerable.

As in agriculture, diversification is virtually impossible. The trained workforce cannot be redeployed into tourism, fishing or the ferry terminal. Job vacancies simply do not exist. Of course, we welcome the recent announcement by the Secretary of State for Defence of the 600 new jobs at RAF St. Athan. That is good news for South Glamorgan but cold comfort in Fishguard—120 miles away. The unemployed at Trecwn will find it impossible to commute to St. Athan, even if they were all prepared to "get on their bikes". We must know what plans the Government have for the rapid retraining of those who will soon find themselves without employment.

The weakness of the infrastructure in rural Wales contributes to so many of its problems. When we debated the Welsh economy in your Lordships' House last year, I drew attention to shortcomings in rail services, road conditions and bus services. Research at St. David's University College, Lampeter, has demonstrated that deregulation has not improved bus services one iota. More recent research there, under Professor Paul Cloke, on the implications of information technology for North Dyfed has highlighted the importance of infrastructure in rural Wales. Cloke says that, public and private agencies in North Dyfed must foster a degree of technological advance in the local economy. This process of 'fostering' must be deliberate and selective, because modern technology will not develop 'naturally' in a 'remote' rural area like north Dyfed".

We still await the provision of a decent road between Carmarthen and Aberystwyth. Year after year the Dyfed County Council, the WDA and the DBRW call for it. Year after year the Welsh Office refuses it for lack of money. Soon they will be able to pray in aid the lack of demand fallacy—demand will dwindle because everyone will have given up hope and gone home.

If rural Wales is not to rot there must be opportunities for diversification in agriculture, the defence industry and in the provision of infrastructure. It is the responsibility of government to create those opportunities. The workforce, as we have all said, is ready and eager for change. As St. Paul put it, "there are diversities of gifts". There must also be diversities of opportunity.

4.10 p.m.

Lord Jenkin of Roding

My Lords, this has been a good and positive debate and we are all indebted to my noble friend Lord St. Davids for giving us the opportunity to discuss the economic position in Wales. I should perhaps ask the indulgence of the House for I am the first speaker who does not actually have his home in Wales. However, I bear a Welsh name which has been traced back several centuries to North Wales, where it is said that my family lost a battle and had to get out quick. I am a frequent visitor to Wales and in various roles have taken a close interest in the Welsh economy, not least in the process of inward investment. As a number of noble Lords have already said, Wales has a remarkable record in that regard. It is a story that needs to go on being told, because of what it represents in terms of the rest of the world's confidence in Wales. The noble Lords, Lord Parry and Lord Morris of Castle Morris, are entitled to draw attention to some of the drawbacks affecting the economy in Wales and some of the areas of difficulty. However, my noble friend Lord Crickhowell put his finger on the point when he said that there has been a major transformation of morale in Wales. I believe that to be correct.

Lord Parry

My Lords, perhaps the noble Lord will give way for a moment; I realise the time constraints. Nothing from this side of the House denied what he says and in fact we specifically underlined it.

Lord Jenkin of Roding

My Lords, indeed. I was about to say that the noble Lord, Lord Morris of Castle Morris, started his speech with words which we could all endorse. However, it is worth looking a little deeper. There have been criticisms about screwdriver operations and suchlike, which it is right to answer. I have had connections with Japan over the past few years and shall say something about that.

We start from the proposition that the United Kingdom, unlike some of our Continental neighbours, has always extended an open welcome to inward investment. It brings jobs, technology, new systems of management, investment and exports and can often save imports. Wales has certainly benefited from that. My noble friend Lord St. Davids gave a number of figures. It is worth putting on record that since April 1983 up to October last year over 800 overseas projects were secured for Wales, bringing £4 billion capital investment and around 90,000 jobs created or secured in the Principality. By any standards that is a remarkable achievement.

Some of the existing employment by overseas companies has been the result of acquisition. But much of it has been new activity, businesses and factories. My noble friends Lord Crickhowell and Lord St. Davids pointed to the astonishing success of the process last year with 183 projects and 17,000 jobs either safeguarded or created. Today there are some 300 foreign owned companies in Wales. Wales has rather less than 5 per cent. of the population of the United Kingdom. It has secured between 20 per cent. and 25 per cent. of the total inward overseas investment. That is a remarkable tribute to the Welsh Office and to Welsh Development International, which played such a major part in it.

The biggest single group are the United States and Canadian companies, of which there are over 130; a similar number comes from Europe including big ones like Bosch, which has been referred to. Another is UP News, the big paper mill at Shotton, which has been a major shot in the arm for that part of Wales. There are now around 40 Japanese companies and it is about that I wish to say a few words.

Wales has the highest concentration of Japanese firms in Europe. But one is entitled to ask two questions. Why, and what is the effect? "Why" is well established. I was pleased to read in the Liverpool Daily Post last year an article by the managing director of Sharp UK, which is located at Wrexham. He said, talking of his Wrexham factory: The workforce now stands at 1,150 and we are convinced that their willingness and adaptability is a major factor in the company's success". He continued further down, which was music to all Welshmen: I can strongly recommend North Wales to any industrialist contemplating new opportunities".

That is the first point. It is the people who have attracted the investment. Secondly, to the Japanese, English is their second language in schools and many of the younger Japanese speak it extremely well. Perhaps the biggest intangible—I echo the noble Lord, Lord Chalfont —is the welcome which the people of Wales give to overseas investors, not just to the tourists but to those who settle there. There are also the more tangible benefits of access to the European market, various systems of grants that are available and, as my noble friends pointed out, excellent transport links to the ports and airports. Perhaps I can make one point to my noble friend on the Front Bench. I hope that the Government will support those who are putting forward the Severn-side airport near Newport as a major international airport. The plans are now being brought forward, finance is being sought and it has considerable potential to relieve some of the pressure on Heathrow.

The Government have also made great efforts to bridge the cultural divide between the indigenous population and the Japanese. The Welsh Office has given significant support to Japanese studies in Welsh schools. My right honourable friend Peter Walker was successful in securing a significant part of what has been called the "Parker" money for foreign studies by increasing the resources for Cardiff University. The recent Japan Festival had a lively, active and innovative committee in Wales. It brought Japanese culture to a large number of Welsh people which was much welcomed. All that creates a climate which makes Wales, for the Japanese companies seeking a European location, an attractive country in which to locate.

What about the charge of screwdriver jobs? I should like to quote what the former chief executive of the Welsh Development Agency said in a conference last year. He said: I think this is unfair. It is, I believe, almost inevitable that when one establishes a manufacturing presence in a distant continent you are going to start with fairly mundane assembly and work up, as confidence gains, to more sophisticated activities. This is exactly what is happening—perhaps not as quickly as we would like. Sony have been established at Bridgend for some 17 years and have gone from very plain assembly through manufacture of increasingly sophisticated components and now in a small way to the development of research". He went on to quote the example of Race Electronics, which is a smallish components producer based in South Wales. They first broke into selling to the Japanese through selling circuit boards to Matsushita and Sharp. Now they have been able to make a link with the major trading company C. Itoh and are developing the business of selling components back to Japan". Could there possibly be a better commendation than that?

I am indebted to Dr. Max Munday of the Japanese Management Research Unit, Cardiff Business School. His research has thrown much light on the impact on supplier firms of the arrival of the Japanese companies. Time does not allow me to mention more than a couple. One can take the case of Otford EPS in Newbridge. It is a large expanded polystyrene packaging company and began to sell to the Japanese companies. It was eventually able to build a new factory at Crumlyn near Newport, supplying Sony with high quality plastics mouldings using a novel process. It is now not only supplying Sony, but Hitachi at Hirwaun. Radon Controls was also a small company in Caerphilly with the number of employees in single figures. Following a management change it embarked on a project to supply remote control units for TV sets to Sony. That small company discovered a very steep learning curve in order to be able to supply the Japanese companies, with their "just-in-time philosophy" and wanting everything bang on time. Some of the comments that were made by the managing director bear repetition, particularly when he said: The system is geared up, and eventually you get used to being in the 400 mph lane, and you get used to contingencies". These developments have been of enormous benefit to Wales and are continuing to be so. The Welsh people deserve every possible congratulation on the way in which they have made the most of these economic opportunities. They are immensely valuable and they have brought hope and confidence.

4.20 p.m.

Lord Thomas of Gwydir

My Lords, my noble friend Lord Jenkin is absolutely right. This has been a very positive debate. We are grateful to my noble friend Lord St. Davids for having not only initiated it but also for the admirable speech that he made. I am also delighted to see the noble Lord, Lord Cledwyn of Penrhos, here. It is very good of him to attend because he is summing up for the Opposition in the two debates that follow. I am delighted to see him. I am reminded that it is just over 40 years since he and I became Members of Parliament. We had adjoining constituencies. The noble Lord, Lord Cledwyn, did slightly better than I did. I had a majority of 583 votes and, if I remember rightly, he had a majority of 595.

Subsequently, both of us became Secretaries of State for Wales. I wish to pay tribute to the part that he played during that time. My noble friend Lord Gibson-Watt was right: it is invidious to try to select different Secretaries of State for the efforts that they put in. The noble Lord, Lord Parry, mentioned how each government had made a determined effort to try to come to terms with the problems and difficulties in Wales.

I know that the noble Lord, Lord Cledwyn, will agree that since we became Members of Parliament 40 years ago, an enormous and welcome transformation has taken place in Wales. A great deal of praise can be given to many people for the way in which that transformation has been effected. Sometimes change has been slower than it should have been; at other times progress was affected by the question of resources. Nevertheless, there was a determination on everybody's part, not only Ministers but also Members of Parliament for Wales, that something had to be done.

The picture given by my noble friend Lord St. Davids is a very true one. It has been a remarkable story. It is important in Wales that the Government should be active. Some people believe that one should diminish government activity. However, in Wales it is absolutely essential, in the restructuring of the economy, for the Government to play their full part. That is precisely what has been happening for some time. My noble friend Lord St. Davids mentioned the agencies of government and in particular the Welsh Development Agency. That agency was brought into being by a Labour Government. At that time one had a certain degree of concern as to whether it was what was needed.

The Secretaries of State who followed, such as my noble friend Lord Crickhowell and his two successors, made full use of that agency and of all the other associated agencies. They have played an enormous part in the great transformation and restructuring that has taken place in the Welsh economy. I know that we are all very proud of that. The major contribution which governments have made over the years is in roads and communications. When the noble Lord, Lord Cledwyn, and I first became Members of Parliament, North Wales was practically cut off from England. One could travel only down a narrow road, almost a lane, with traffic being held up all the time. There was a suspension bridge over the Conwy which only took single-line traffic. There was one road bridge to Anglesey. Now one sees the tremendous transformation brought about by the A.55. A wonderful expressway runs through North Wales. There is a new tunnel under the Conwy. It is an excellent road running all the way from Chester to Bangor which will be of enormous importance to North Wales.

When the noble Lord and I first became Members of Parliament there was no motorway in South Wales and no bridge over the Severn. Now we are to have two bridges. The M.4 motorway has been of enormous importance to South Wales. Those of us here who have been Secretary of State for Wales had a part to play in the creation of that road. What happens of course is that one does all the hard work, eventually decides where the motorway is to go, meets all the deputations for and against, and then, about five years to 10 years later, a successor opens up the motorway that one first thought of. But that is how it is in government. In a similar manner, when I became Secretary of State, I inherited the derelict land unit which was started by the noble Lord, Lord Cledwyn. That unit has now been improved. My noble friend Lord St. Davids was speaking about derelict land clearance. Enormous activity has taken place over the past few years which has transformed so many parts of Wales and its economy. I have spoken for seven minutes. I wish to follow up something which my noble friend Lord Gibson-Watt said. I have enormous respect for the Welsh Office and for the office of Secretary of State for Wales. Their contribution to Wales is of enormous importance. The Welsh Office is different from any other department. Those who work there are closely in touch with people in Wales. The Secretary of State holds very many responsibilities. He is approachable. It is very important that one should appreciate what an effective institution that office is. The Secretary of State is the legitimate executive authority for government policy in Wales. When he goes abroad he is thought of in those terms. He speaks with authority for Wales. That office has brought enormous benefits over the past few years.

What concerns me is that the policies of the Opposition parties are likely to diminish that authority. I believe that may well be to the detriment of the economy of Wales. I am talking about the proposed constitutional changes. Each of the Opposition parties is proposing an elected Welsh assembly. The Liberal Democrats and Plaid Cymru propose an assembly which is tenable because it would have tax-raising powers and a measure of legislative and executive independence from Westminster. However, what concerns me is the Labour Party policy. The only information I can find is from a document called The Future of Local Government in Wales. I am delighted therefore that the noble Lord, Lords Prys-Davies, is to wind up the debate. The House would appreciate an explanation of what is intended. The Labour Party is the biggest political party in Wales. What does its policy mean?

I am sorry; I see that my 10 minutes is up. All I can ask is: is the Labour Party suggesting that there should be an executive talking shop unable to raise a penny in revenue and under the financial bondage of the Welsh Secretary? Or is it suggested that Wales should be relegated to being just a region of England? Is that what is intended? It is a recipe for conflict, for deadlock and for economic disaster. I know that the House would appreciate the noble Lord, Lord Prys-Davies, explaining exactly what is intended.

4.32 p.m.

Lord Stanley of Alderley

My Lords, my noble friend's Motion this afternoon has made me try to think about the problems confronting Wales. As all noble Lords know, thinking is a dangerous form of pastime. Rather like marriage, it should not be undertaken lightly or unadvisedly, which of course is exactly what I intend to avoid this afternoon because I plan to concentrate my remarks on the problems facing North Wales, and in particular agriculture and Holyhead. I think that all noble Lords know that they pose possibly the most intractable problems in the Principality.

Over the years, governments—and I must go back further than any other noble Lord—and particularly the Liberal governments in the last century, have done a lot for Wales. The Labour ones, under the influence of my neighbour the noble Lord, Lord Cledwyn, contributed a great deal of encouragement to Wales too. In the last century the Liberal Party brought the railway and the ferry to Holyhead. The Labour Government brought industry to Anglesey—Anglesey Aluminium being an example. Recently, as has been mentioned by my noble friends, the Government have vastly improved the infrastructure with the A.55 and the two bridges crossing the Menai Strait. I agree with my noble friend Lord Thomas that all governments have done their bit. Being a farmer, of course I have to say that I hate having to admit that.

However, despite all this, the area remains economically depressed. Holyhead and Amlwch are in a desperate state. Morale is sadly low, which, as my noble friend Lord Jenkin said, does not help matters. I ask myself, why is this so? So far as Holyhead is concerned it is not helped by a stagnant Irish economy affecting the port, aided and abetted, I am sorry to say, by restrictive union practices on the boats. It is not helped by being at the end of the line and with too many tiers of government. I am delighted to hear of my right honourable friend's suggestion that the county council should be abolished and an advisory, as opposed to an elected, council for Wales set up. As a North Walian, I have to say that, if there was an elected council, heaven help North Wales because it would be entirely dominated by those people in South Wales.

The more change and tiers of government the worse for places such as Holyhead which are far from the centre. Help is needed for Holyhead, and the Government are certainly giving that. My former company commander, the noble Lord, Lord Gibson-Watt, pointed out what they are doing there. But I am sorry that the report on the town commissioned by the Welsh Development Agency never saw the light of day. I know that bits of it were controversial, but surely that is the whole point of having such reports. I wish my noble friend would try to find where it is, dig it out of the cupboard and have it published.

What must be said of Holyhead is that although it may be short of entrepreneurs it has a really good workforce—ask the people who employ them—provided they are properly led and are not burdened by well-meaning but misguided bureaucrats turning down every suggestion, as it seems to me. Riskily, I mention the last proposal, which was for a marina and which, I am sorry to say, I believe was turned down by the NRA.

A word about agriculture, which in the area has been and still is the major industry, as the noble Lord, Lord Morris of Castle Morris, pointed out. It is in deep depression, but, again, this is a world-wide problem. I believe all the Government can do to help is to provide firm direction. The two most important decisions that farmers need today are, first, as has been mentioned by other noble Lords, resolution of the GATT talks, and quickly; secondly, resolution of the idiotic—I repeat, totally idiotic—MacSharry proposals.

Whatever decisions come out of those talks, there is a need for better direction in agricultural marketing. We have the quantity and the quality in Wales, but we market our livestock in particular archaically, mainly through 19th century-style live auctions. We need strong, disciplined co-operatives led not by incompetent farmer directors such as myself but by properly rewarded professionals. If I may say so, my son's grain co-operative in Oxfordshire offers an example of employing professionals that should be copied in Wales.

I come to the conclusion that it is up to us who live in this difficult but, to me and to most people, beautiful area to solve our own economic problems. The first thing we have to decide is whether we really want to. We all say that we do, but do we want to pay the price? Do we really want to push half our workforce off the land? I look at my noble friend Lord Gibson-Watt; do we really want to become more closely involved and integrated with outsiders, be they from Chester or Tokyo, and let them run our businesses? Do we really want less government and less local government and more commercially-led direction? Do we really want more jobs and development if they affect our culture and our countryside?

These are hard decisions to take. They could, and in fact they will, affect the Welsh culture and language. I believe that there is a compromise way forward, but both sides—the materialists and the culturists, if I may call them that —will have to sacrifice some of their sacred cows. With sadness I believe that the bias should be in favour of materialism. I suspect that the noble Lord, Lord Chalfont, would be biased the other way, but if we do not take that view we shall continue to lose our young and progressive sons and daughters and the area will degenerate into a disruptive peasant economy.

4.40 p.m.

Lord Colwyn

My Lords, there should be an advantage in speaking towards the end of a debate, in that one has an opportunity to comment on much of what has been said. It has proved a disadvantage to me this afternoon because, despite having, and being proud of having, a Welsh name, I have to admit to possessing a very limited knowledge of Welsh affairs. Most of the points that I wish to make have already been covered in a far more eloquent manner than I could achieve. If I repeat some points, I hope that my noble friend the Minister will regard them as particularly important.

In fact, in speaking on the economy in Wales, I am distinctly nervous, which I think must stem from a distant recollection of trips to Wales, as a second row forward with Cheltenham Rugby Club in the late 1960s and early 1970s. Those were the days when Cheltenham had a first-class fixture list, and I remember long journeys by bus into the Welsh valleys to play against such teams as Ebbw Vale, Pontypridd, Aberavon, Maesteg and Bridgend—the list was impressive and very intimidating.

It was the practice in those days to prefix the names of the players in the programme according to their status—an "i" for international and a "c" for county. Despite making a couple of appearances for Gloucestershire in some of their minor county matches, my name was invariably prefixed by a small coronet. It did not take me long to realise that it was fair game and attracted a certain kudos to be able to lay out an English Peer and I spent many Saturday afternoons lying on the grass being revived with the famous sponge and cold water. I think that being in place to catch a drop-out with eight massive Welsh forwards bearing down on me is still one of the most frightening experiences that I have ever had to endure. However, I am going to resist the temptation to speak about Welsh rugby and instead make a few brief comments on the subject of the debate.

The severe decline in the traditional heavy industries in the 1970s and early 1980s—coal, steel and textiles—hit North Wales particularly hard. The recession of the early 1980s affected the area more than most—to the extent that there is now only one coalmine in the region. Over the past decade a wide range of modern industries have given the economy a much broader base. The average annual inflow of new investment has been around £500 million in recent years and this total is likely to be exceeded in 1991–92. The highly favourable impact of this investment on confidence and the shallowness of the recession probably accounts for much of the recent improvement in performance. As my noble friend Lord Jenkin said, this has been particularly evident by the strong Japanese investment in north-east Wales. Sharp, Brother and Tsuda are all now operating successfully and Toyota's engine plant is currently being built on Deeside. Since 1985, engineering output has increased by more than 40 per cent. compared with less than 25 per cent. in the United Kingdom. Within engineering, output in electrical engineering has increased by nearly 65 per cent. in Wales, but by only 30 per cent. nationally. This, combined with the greater importance of manufacturing in Wales, bodes well for a less painful recovery from recession than once experienced in Wales.

Perhaps I may now stress a point made by my noble friend Lord Thomas. Success in attracting new investment has been dependent on the location and the improved road links, particularly the M.56/A.55 Expressway. The A.55 is now virtually complete to Bangor and the Conwy tunnel was opened very recently. This new road is being promoted by the Secretary of State for Wales as the "Road to Opportunity" and it is hoped that this will encourage investment in western Clwyd and Gwynedd.

This investment in roads is unfortunately not matched by rail investment. Improved rolling stock was introduced recently, but for some reason the frequency of service from Euston to Holyhead was reduced. I think I am correct in saying that all North Wales local authorities take the view that the line should be electrified to provide high speed links from Holyhead—and the Irish Republic—to the Channel tunnel if opportunities for European trade are not to be missed. I hope that my noble friend the Minister will be able to say something on this point.

I am grateful to Bill Breeze, Chief Executive and Town Clerk in Colwyn Bay, who has told me that tourism is still an important part of the economy in resorts such as Rhyl, Colwyn Bay and Llandudno, which continue to market fiercely in an increasingly competitive field. In Colwyn Bay particularly, tourism is being supported by increased efforts and some success in developing the resort for commercial purposes.

Wales is fortunate to have its own specialist economic promotion agency—the Welsh Development Agency—which has succeeded in attracting much overseas investment as well as investing its own money in new programmes. The Welsh Tourist Board has also been useful, but has much smaller funds available. The local authorities, especially Clwyd County Council, have led the way with very active promotion and marketing campaigns.

I should like to thank my noble friend Lord St. Davids for giving me an opportunity to renew contact with the area of Wales with which I am associated by name. I have enjoyed the speeches of all those who have taken part in the debate. I look forward to hearing from the Front Bench speakers and shall detain your Lordships no longer.

4.47 p.m.

Lord Hooson

My Lords, the first thing I should do is congratulate the noble Lord, Lord Colwyn, on his fine intact shape. Considering that he played in the second row not only against Ebbw Vale but also against Pontypool, it is a remarkable achievement. I should also like to congratulate the noble Viscount, Lord St. Davids, on initiating this debate and on his eloquent speech. It was perhaps a panegyric on the activities of the Secretary of State and his agencies at the present time. Did I perhaps sense a whiff of a general election in the air? I wonder.

In the short time available to me, I want to make a few comments on certain aspects of the Welsh economy. I do not share the completely optimistic view expressed from the Benches opposite. There has been a remarkable transformation of the Welsh economy from a home resources based economy of coal, steel, slate, shipping, and so on, to the very much more mixed economy that we have today. Noble Lords have traced the transformation over the past 45 years. No doubt many people and institutions have contributed to that transformation. Nevertheless, Wales today has an extremely vulnerable economy. Every one of us is aware of that. The noble Lord, Lord Chalfont, in perhaps the most poetic contribution to our debate, rightly reminded us that Wales is a home to a unique culture and has a special and distinctive way of looking at social life. The noble Lord, Lord Stanley of Alderley, said that he had made a choice in his mind of which, as it were, priority to select in an agricultural context. We must remember that in whatever way the economy is, or is not developed, it affects the social and culture life of Wales. That is why we want a healthy economy in the first place—in order to safeguard that social and cultural life.

I wish to make a general observation. Last night, in the news on both radio and television, I heard the various suggestions being made about President Bush's State of the Union address. It was said that he was cutting down greatly on armaments in order to channel some of the money available into other investment in the American economy. It is right for us to reflect that the countries which have spent most on armaments—Russia, the United States and the United Kingdom—have suffered economically as a result. The two most successful economies in the world—those of Japan and West Germany—did not spent that kind of money on armaments. It is surely not too much to ask as a peace dividend that our Government, whatever their political complexion, should spend a good deal of the money saved on defence expenditure on developing our economy generally.

Whatever the reasons for spending money on armaments—and it is perfectly understandable that we should do so; we spend it for our own security because it is a necessity, not a pleasure, and has to be done—it seems to me that there is no end product, or bonus; it is simply for self-protection. If any society can afford to do that, it can certainly afford to spend equivalent money, so to speak, to improve the general economy and the social and cultural life of the country.

Having said that, I should like to pose three questions. First, what is the Government's long-term overall economic policy for Wales? There has been a great deal of self-congratulation on the inward flow of investment into Wales. I believe it has been stated that there are 300 foreign-owned companies in Wales at present. They make a remarkably good contribution to the Welsh economy, but it is a very vulnerable one. Companies do not invest in Wales for the sake of Wales; they do so for their own sake. We must understand that. It naturally imposes a certain vulnerability. While I would encourage such investment in all possible ways—and I congratulate the successive Secretaries of State who have brought it about—it is no substitute for an overall economic policy for the development of Wales.

I happen to be a non-executive director of one of the few companies in this country which has developed in Japan. However, we were not allowed simply to develop in that country. The Japanese insisted on having a 50 per cent. equity in the company in Japan. I do not blame them for that. Such things have to be put in a proper perspective. What is greatly lacking in Wales is the promotion of indigenous companies and indigenous industry. There is a lack of business training and, indeed, a lack of ordinary technical training.

I believe it was the noble Viscount, Lord St. Davids, who pointed out that the Secretary of State will be taking over responsibility for training in Wales from April. There was an article in yesterday's edition of the Western Mail, on page 12, which referred to a leaked report from the Department of Employment dealing with complaints from Japanese employers in Wales about the lack of skills, especially as regards their developments in South Wales. It appears that the report was to be published or made available in July, but it has obviously been leaked. If those complaints are correct, surely it is for the Secretary of State who will now take over responsibility for training to ensure that the Welsh workforce, and especially the young people, are trained up to the required standard. I should like to hear a statement from the Government on the matter. The Motion before the House calls for Papers. One paper that we could well do with would be one setting out the Government's long-term overall economic policy for Wales and stating whether Welsh agencies would be used to provide much more equity capital for developments in Wales. I entirely agree with some of the remarks made by the noble Lord, Lord Stanley of Alderley. We could have done with much more forward looking leadership in the agricultural industry among farmers' co-operatives on the marketing side. A good deal of government leadership and support could be provided for the purpose.

Secondly, what is the programme for the next decade for communications in Wales? I live in mid-Wales. The rail communications in that part of Wales are absolutely awful. I have travelled from mid-Wales to London for the past 30 years virtually every week-end. It is less predictable now that one will arrive on time than it ever was. The reliability of the service is awful. Towards the end of last year I travelled with an English businessman, although I did not know then that he was a businessman. He was in the same compartment as myself and was returning to London. He complained bitterly to the ticket collector and said that he would never go to Newtown in mid-Wales again—where he had thought of opening a factory—because of the dreadful railway communications.

The road communications are still pretty bad in some places; for example, the Aberystwyth to Shrewsbury road. The north-south Wales road is still a very difficult road. It is certainly much better than it was 40 years ago; but so it should be. However, it is still a pretty poor road for what it is supposed to achieve—good communication between north and south Wales.

Air communications are also poor. The Laura Ashley company undoubtedly moved its headquarters from Wales to Maidenhead because of the difficulty of communications. Indeed, it is difficult to run an international company from a location in mid-Wales. That will continue to be so unless there is a great improvement in communications, especially air communications.

Thirdly, what is the Government's reaction to the agricultural problem of Wales. Agriculture is the staple of Welsh rural life and is in a very difficult situation. I think that the Government should make a much greater effort to secure co-operation with Mr. MacSharry, the Agriculture Commissioner for the EC, to ensure that we have more flexibility nationally in dealing with the agricultural problem in Wales. We must endeavour to co-operate more with him rather than simply attacking him and the Commission on everything.

I fail to understand what is the Government's agricultural policy. They are always attacking Mr. MacSharry's proposals. But, what are the Government's proposals? How would they deal with the problem? I believe that there is much to be said for a 10-year plan for Welsh agriculture, and perhaps for the United Kingdom. However, at present, I am talking in the Welsh context. I think that there should be an individual management plan for every farm, bearing in mind both the environment and productivity. In that way, we could bring some certainty for the future into Welsh agriculture.

In summary, I should like to add one final point. Everyone has congratulated the Welsh Office, as indeed I do. A great transformation took place in Wales when Cardiff was made its capital; when a Secretary of State was appointed—and many people objected to that appointment. We also had the development of the Welsh Office and of Cardiff as an administrative, commercial and cultural centre in Wales. I think that those developments were of the greatest possible benefit. I should like to see that transformation matched in the future by an elected assembly to which the Secretary of State would be responsible.

4.57 p.m.

Lord Prys-Davies

My Lords, I should also like to begin by thanking the noble Viscount, Lord St. Davids, for introducing this important debate. I am sure that his was a well-designed speech to which the Government will often turn for comfort. But, on the other hand, I venture to express the hope that they will take careful note of the concerns that have been expressed by noble Lords, including those expressed by the noble Lords, Lord Gibson-Watt and Lord Hooson. I also hope that the Government will take note of the characteristically fair and balanced assessment of the noble Lord, Lord Thomas of Gwydir. I am sure that those speakers are indicating the road along which we should travel.

The Welsh economy has undergone profound changes since 1979, which has been the experience of most of the communities in Western Europe. The coal industry in Wales has virtually disappeared and we have seen the substantial growth of the service industries. Moreover, with the guidance and full support of the WDA, in alliance with the Welsh Office and the Welsh local authorities, inward investment from beyond the United Kingdom has made a positive contribution in north-east Wales and along the spine of the M.4 in south-east Wales. I believe that the noble Lord, Lord Hooson, was absolutely right to express a few words of caution. One reason why foreign companies have invested in Wales is that, on the whole, it has also been a low wage economy.

However, Wales is not, as yet, sweeping to prosperity along the M.4 motorway. Alongside the advances, we must open our eyes to the fact that there are blemishes. According to the Department of Employment, overall unemployment is 82 per cent. higher than it was 13 years ago and the number of employees in employment has fallen by 6.8 per cent. Those are the facts and they are worth repeating. According to the accountants Peat Marwick, 4,112 businesses in Wales went into receivership last year. It is its judgment that we shall see the same number of receiverships in 1992. About 2,000 people went bankrupt last year—an increase of 92 per cent. We have heard of the need to encourage indigenous industry, but receiverships, liquidations and bankruptcies always sadden me. They sadden me because they signify so much destruction, loss of family assets, the loss of a good employer-employee relationship and often the loss of an organisation which has been a part of the social structure of a local community. When government policies, by design or misjudgment, lead to a record number of receiverships, liquidations and bankruptcies that is damaging to the community itself. There has even been a slight decline in the GDP per head relative to the UK average. In our view, no government can be content with such a record after 13 years of untrammelled power.

Although South Wales was built on a vast bed of coal, I am not altogether sorry that South Wales is no longer the prisoner of that industry. It was a hazardous and dangerous industry for miners and their families; on the other hand, I am full of admiration for the institutions and the way of life which that industry created for itself in South Wales. It is therefore worrying—I shall be fair—that successive governments, notwithstanding the benefits of the forces of technology and science, have as yet failed to provide the jobs required to replace those lost in the wake of colliery closures. The noble Lord, Lord Crickhowell, referred to the Welsh Valleys initiative. It was an excessively trumpeted initiative, and it is the general impression in the Valleys—I live near the Valleys—that it was no more than a repackaged version of many existing schemes.

Unemployment in the Valleys remains entrenched. On 15th January, Dr. Winkler of the Economic Policy and Research Unit of Mid-Glamorgan County Council, addressing a conference at Aberdare, concluded that the present high levels of unemployment will continue and that only a new initiative could change that sombre assessment. That leads me to ask the Minister whether the Secretary of State is considering issuing new guidelines to the WDA as to how it should best tackle the long term underlying problems, as was suggested by my noble friend Lord Cledwyn on the Second Reading of the Welsh Development Agency Bill. May I also ask the Minister whether the Secretary of State intends to ask British Coal Enterprise Ltd. (a subsidiary of British Coal) to reconsider the scope and conditions of eligibility of its initiatives in South Wales, because notwithstanding the sombre conclusions that I have recently read in Planet, to which my noble friend Lady White drew my attention, I am reluctant to accept that British Coal Enterprise Ltd. is promoting a lost cause?

We accept that Cardiff in the 1980s created flourishing service industries, including financial services, for itself; but, nevertheless, its manufacturing and construction industries have been savaged. Service industries do not provide employment for redundant factory workers, construction workers and dockers, although they may help their children. Three of the Cardiff parliamentary constituencies are at the top of the unemployment list of the Welsh constituencies. Unemployment in Cardiff is roughly the same as the rate for the Rhondda, Merthyr and Cynon Valleys and Gwynedd. That is not to say that the position in the Valleys has improved. It means, significantly, that Cardiff has now reached the unemployment levels characteristic of the Valleys and Gwynedd.

I accept that South Wales and rugby are not the whole of Wales. Many of the speakers who have taken part in the debate have drawn attention to the critical difficulties facing the rural communities of Wales. I agree with much of what was said by the noble Lords, Lord Gibson-Watt, Lord Stanley of Alderley and Lord Hooson, as well as by my noble friends.

It is widely predicted that agriculture will shrink significantly between now and the end of the decade. The Council for the Protection of Rural Wales published in 1990 a report on the changing rural scene prepared by a working group chaired by Professor Michael Haines. That report contained 15 to 20 proposals. They seemed to point in the direction in which solutions might be found. I hope that we shall hear from the Minister that the Welsh Office will respond favourably to the report without much further delay. Will the Minister also assure the House that it is not the Government's intention that the Development Board for Rural Wales should eventually become just an agency of the WDA?

In many parts of rural Wales the economy is threadbare. Against that background, the effects of the closure of a single major source of employment in the local community can be dramatic and devastating. The House has been reminded this afternoon—not that it needed reminding—that the trauma is being felt today in Dyfed with the impending closure of the naval ammunition stores at Trecwn. One is conscious that similar trauma can arise in other situations in Wales where a rural community depends upon a single source of employment. One case that immediately comes to mind is the nuclear generating station at Trawsfynydd in Gwynedd. Others may think of similar circumstances. Hence my question: has the Welsh Office set up a task force to undertake the preliminary work necessary to prepare for such an event where such an event is predictable?

I now wish to touch briefly on an issue which is of common concern to Welsh people, whether they live in rural, industrial or urban Wales. It is worrying that about a third of the unemployed in Wales are aged between 18 and 25 years. I am confident that noble Lords will agree that most of those young people should have access to further education and training. Quite apart from the requirements of modern industry —there are skill shortages in Wales—I believe that young people have a moral right to be well educated, well trained and skilled so that they too have access to wider economic and social opportunities. So I welcome the setting up of the seven locally based TECs, but we must consider how they can be brought into closer partnership with the WDA, the local authorities and the higher education institutions. That was a matter touched upon by my noble friend Lord Cledwyn when the point arose during the Second Reading of the Welsh Development Agency Bill. The question remains valid. I have taken up the time allotted to me. I shall not accept the invitation of the noble Lord, Lord Thomas of Gwydir, to explain the role and significance of a Welsh assembly. That deserves another debate.

5.9 p.m.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington)

My Lords, I share your Lordships' gratitude to my noble friend Lord St. Davids for initiating an extremely timely and interesting debate. It has attracted contributions from, on the Conservative side, two past Secretaries of State and one former Minister of State for Wales; on the Opposition side, the noble Lord, Lord Prys-Davies, was a special adviser to the then Secretary of State for Wales and the noble Lord, Lord Hooson, is a former president of the Welsh Liberal Party. For good measure, we have listened to the noble Lord, Lord Parry, a past chairman of the Welsh Tourist Board, and the noble Lord, Lord Morris of Castle Morris, principal of St. David's University College. Among this galaxy of stars, my noble friend Lord Jenkin of Roding, the noble Lord, Lord Chalfont, from the Cross-Benches and my noble friends Lord Stanley of Alderley and Lord Colwyn have added their words of wisdom. If I do not have time to answer all their questions, at least I have given all their names. They have also asked questions which I shall endeavour to answer but perhaps I may make a few points of my own as I do so.

Incidentally, my noble friends Lord Gibson-Watt and Lord Thomas of Gwydir rightly drew attention to certain consequences of a Welsh assembly. The Government are clear that Wales would lose much more than it might gain, particularly through the likely consequential loss of a Cabinet Minister solely responsible for Wales.

A successful economy is dependent on infrastructure. My right honourable friend the Secretary of State for Wales and his predecessors have planned and are carrying out several vital road links and improvement schemes on a whole variety of roads. My noble friends Lord Thomas of Gwydir and Lord Crickhowell touched on this aspect in their powerful speeches. The noble Lord, Lord Hooson, made so many complaints about transport that I wonder why he has not moved, perhaps with Laura Ashley.

Since 1979 about £1.4 billion has been spent improving the motorway and trunk road network in Wales. Fifty-five of the 60 miles between Chester and Bangor are completed to dual carriageway standard. The £190 million Conwy crossing scheme was opened recently and the £99 million Pen-y-Clip scheme and £12 million Rhuallt Hill improvement are in progress. Only one scheme—the Aber improvement, costing £9 million at November 1989 prices—remains in the forward programme. Improvement of the whole of the A.55 is on course for completion within the next two to three years at a total cost of £620 million.

The Government's first priority remains the completion of the M.4 and the upgrading of the A.55. However, resources are also being devoted to selective improvements on other routes, including the important A.470 and A.483 north-south routes.

The new motorway approach road to the second Severn crossing is planned to start early in 1993, subject to the completion of parliamentary procedures and to be completed for the opening of the bridge early in 1996. My noble friend Lord Jenkin of Roding asked me the latest position on the Severnside airport. The Government are aware of proposals to develop a new airport on Severnside and are monitoring the progress of developments.

The noble Lord, Lord Morris of Castle Morris, asked me what the current position was on the gas terminal at Point of Ayr and what the Government intend to do. The application regarding this matter has now been called in. The Government are currently considering the procedures to be adopted for the determination of this application. The Welsh Office is well aware of the problem and will deal with the matter as expeditiously as possible. A decision will he made as soon as possible.

I am pleased to remind your Lordships that the Programme for the Valleys has now been under way for three-and-a-half years. During that time the achievements of the programme have included the biggest land reclamation programme in Europe, with 1,551 acres reclaimed in the first three years and a target of a further 400 this year. Also carried out by the WDA has been a factory building programme which has seen 1.6 million square feet built in the first three years of the programme, with a target of a further 500,000 square feet in 1991–92. In addition to the original target of 7,000 homes to be included in developing and block repair schemes over the first three years of the programme, the target for a further 2,850 homes to be included in area renewal schemes during the following two years is expected to be achieved.

Forty-five health projects from 1989–90 have received central funding of £25.5 million. Just one of these was the post-graduate dental suite at the Prince Charles Hospital, Merthyr Tydfil, opened in November 1991. Road links also form an important part of the programme: the A.4060 Pentrebach-Dowlaid scheme to improve linkage between the A.470 and the A.465 will soon be completed.

When my right honourable friend the Secretary of State for Wales set out his objectives for the two-year extension of the programme in December 1990 he suggested a new theme for the Valleys: "Partnership with the People". It is right then that I should mention his special initiatives to encourage community involvement in social and economic regeneration. The five communities to benefit under the Community Revival Strategy initiative are making progress in implementing their own very local schemes for regeneration. The Valleys Live '92 festival, a celebration of the life and culture of the Valleys, will also involve local people in generating activities of their choosing. It is this partnership with the people which will mark the success of the Programme for the Valleys.

I was most grateful to the noble Lord, Lord Prys-Davies, for giving me advance warning of his question concerning the Programme for the Valleys. This has proved to be an excellent example of the effectiveness of a co-ordinated approach to facing the problems of urban and industrial dereliction. It has demonstrated how urban regeneration can be encouraged by a wide variety of measures in a particular defined area. As the Programme for the Valleys enters its final year, the Secretary of State for Wales will consider what lessons from the programme can be applied for the future.

I am delighted that European structural fund assistance is so widely available in Wales and share the eagerness of programme partners to see funds flowing to good quality projects. I hope that the excellent progress made so far will continue in the future.

In particular, I am delighted that the LEADER Programme for Rural Wales has been approved and pleased that the European Commission was so impressed with the standard of the Welsh bid that it is providing over 40 per cent. more funding than originally anticipated. This will be of great value in continuing the development of the area and in complementing the other EC and government programmes such as the Rural Initiative.

It would be surprising if I did not mention the key element of the rural economy, which of course is agriculture. It is a pity that I cannot spend longer discussing it. I presume that the noble Lord, Lord Hooson, was expressing his party's official line concerning the future of agriculture. If so, frankly my mind boggles and I am appalled at the lack of knowledge which he displayed. I should be delighted to explain to him why my right honourable friend the Minister with responsibility for agriculture cannot give this country's programme. It is only the Commission that can propose a programme.

We recognise that these are difficult days for farmers. As evidence of our continuing commitment we are investing about £150 million in the industry this year and have already announced that expenditure on domestic agriculture in Wales in 1992–93 is planned to rise by 14 per cent. The four agriculture Ministers jointly launched the publication Our Farming Future last November which outlined the changes that are required to enable the agriculture and food industries to make a continued contribution to the nation's economy and rural way of life.

I entirely agree with my noble friend Lord Stanley of Alderley on the importance of a successful, speedy conclusion to the GATT round, plus of course reform of the CAP. We all agree that reform is necessary but that reform must be fair. The Government have made it clear to Commissioner MacSharry that we do not regard his present proposals, especially for sheepmeat, as fair, and that is a message we shall continue to press home.

I agree with my noble friend Lord Gibson-Watt that it is important to continue to farm the land. However, the rural economy cannot look solely to agriculture to sustain it. Other enterprises must play a part. Some of these will be derived from agriculture through the development of on-farm diversification. Others will be derived through the generation of new employment opportunities off the farm. The Government's long-term policy objective is the creation of a self-supporting market economy. Substantial resources of around £1 million a day are devoted to rural areas in the Principality by the Government and the various agencies. The changing circumstances of the rural economy and the emergence of new institutions require a fresh approach.

In 1991–92 a £15 million increase in the provision for rural programmes, together with £5 million set aside for local authority capital projects, are likely to be of most benefit to the development of rural communities. Ministers undertook extensive consultations with local authorities, agencies and other representative bodies to seek their views on a way forward for rural Wales in the 1990s. They were heartened by the unanimity of support for the Rural Initiative.

As a result of these consultations the Secretary of State published on 9th December 1991 a document setting out his objectives for rural Wales. As a further stage of the Rural Initiative the Secretary of State also announced a fresh series of measures to strengthen and carry forward rural programmes across the economic, social and environmental fields.

The noble Lord, Lord Prys-Davies, was concerned at the reduction in employment since 1979. One of the most important planks of government policy is to stimulate enterprise and enable more people to create their own employment. If the noble Lord takes into account the increase in the number of self-employed people, he will find that the workforce in employment has increased since 1979.

The two reactors at Trawsfynydd were shut down by Nuclear Electric at the beginning of February last year to make adjustments to operate them at a lower coolant pressure. The reactors will not be permitted to return to power until the Nuclear Installations Inspectorate is completely satisfied with Nuclear Electric's safety case for a resumption of operation. As NII's eventual decision is still awaited, it would be premature to consider what measures are appropriate to deal with any possible closure. Ministers would not wish to prejudge the decision of the NII.

As regards issuing new guidelines to the WDA, departmental guidelines to non-departmental public bodies are regularly reviewed under the five-yearly cycle of financial management and policy reviews of individual bodies. Such a review of the WDA is currently under way. The Institute of Welsh Affairs is a totally independent body which sets its own objectives and programme of activities. There is no doubt that within a relatively short time it has gone a good way towards establishing its credibility. Its reports are usually of considerable value in stimulating informed discussion. I am sure this will be true of the Project Wales 2010 on which it is now working. The National Audit Unit's report on creating and safeguarding jobs in Wales is to be considered in another place by the Public Accounts Committee on Wednesday, 19th February. I do not wish to comment on the report in advance of that consideration.

My noble friends Lord Gibson-Watt and Lord Stanley of Alderley asked about the WDA sponsored report on Holyhead. I am aware of the report prepared by W.S. Atkins. That report has, however, been overtaken by events. It was used in drawing up proposals for publicising the joint venture agreement. That matter will be discussed at a meeting of the Joint Venture Board to be chaired by the Minister of State for Wales this coming Friday.

I welcomed the reference made by my noble friend Lord Crickhowell to the developments at Cardiff Bay. The most recent economic appraisal suggests that up to 25,000 new jobs could be created as a result of the developments. Private sector investment could reach a figure well over £1 billion.

On the matter of inward investment, I very much agree with the remarks made by my noble friends Lord Jenkin of Roding and Lord Crickhowell when they commented on the large investment by foreign companies in Wales. The noble Lord, Lord Morris of Castle Morris, mentioned the West Wales taskforce. The Secretary of State for Wales last week announced funding for that taskforce. Funds have been set aside for that area. They are not being switched from elsewhere. The director of the taskforce will be engaged full-time on that work. He has been engaged on other work until last week.

I regret that there are many points I have not answered. I greatly enjoyed the speech of the noble Lord, Lord Chalfont, in which he extolled the beauties of the Welsh countryside. However, the noble Lord did not refer to the Welsh cob stallions running out of the main ring of the Royal Agricultural Show after the judging. That was a superb sight. There is no doubt about the success of tourism in Wales. The noble Lord, Lord Parry, must take credit for a lot of the good work that has been done in that area.

I believe everyone is entitled to have one small dream. I have endeavoured to give an accurate picture of the Principality of Wales progressing and prospering at the end of this century and into the 21st century. As a keen but bad golfer I should like to see the Open Golf Championship played at least once every five years on an existing Welsh links course. Wales has a star in Ian Woosnam, and other stars will emerge. We should think of the benefits such a championship would confer on hotels, tourism and prestige if my dream became a reality. I hope it does. But turning away from my dream, I must add that through various means this Conservative Government have actively encouraged Wales to meet its future head on and with confidence.

Lord Hooson

My Lords, before the noble Baroness sits down, I must mention the fact that she was good enough to ask me why I did not move out of Wales in view of the transport difficulties there. I do not wish to do so simply because I am Welsh and I love to live in Wales. Therefore, in common with many other people who share those characteristics, I put up with those difficulties.

Viscount St. Davids

My Lords, when I took my seat in your Lordships' House in the summer a noble Lord from the Opposition Benches told me I could not consider myself to be a Welshman and a supporter of a Conservative government. I can assure your Lordships that noble Lord has not spoken in today's debate. The relative accord with which today's debate has been conducted in this House proves the total lack of veracity in his observation. Today's debate has been important. I thank all speakers for their contributions. I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.