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Mr. Alun Michael (Cardiff, South and Penarth) : First, I echo the words of the many hon. Members who have paid tribute to the two friends and colleagues who have passed on. We all feel a grievous loss at the death of Brynmor John, who was such a wise and generous friend to many of us. He would have been proud to hear his successor's maiden speech today, with its mixture of humour and passion. He would have enjoyed that.
Sir Raymond Gower, as I well know because I was a former constituent of his and represented a neighbouring constituency, was another consummate constituency Member of Parliament. His last representations were, as ever, on behalf of his constituents, on two issues about which we saw eye to eye. These were the need to save Sully hospital and to plan a positive role for it in the future Health Service, and the need to preserve research vessel port services in Barry. The best memorial to him would be for Ministers to pay heed now to the case that he made on both issues.
Today's debate began with an attempt by the Secretary of State to decry the criticisms of his stewardship as a form of ritual dance between Government and Opposition in which he himself had formerly participated from the Opposition Benches. He may have merely gone through the motions when he was in opposition, but he must understand here and now that we are serious in our criticisms. Our criticisms of his programmes have been
Column 360both detailed and fully justified. The Secretary of State did a disservice to the work of the House and to public service when he said at the beginning of the debate that he regarded it as a game, although we had long suspected that that was his view. We regard being in opposition as a serious, important and responsible job, and it was in that spirit that we approached today's debate.
Our seriousness about Wales has been demonstrated through the 10 locust years, not just when things were going well. I was involved in the redevelopment of the centre of Cardiff, the considerable efforts to encourage home-grown industry, to attract incoming firms and to develop Cardiff as a financial centre, so I know how long a struggle that was. That is just one example, and my hon. Friend the Member for Neath (Mr. Coleman) described another with passion and enthusiasm. I know the very positive lead that our local authorities have given and how hard they have worked in my area and other parts of Wales to co-operate with the private sector to the benefit of their local areas and of Wales. That has also involved seeking support from Europe and from the Welsh office. That co-operation is vital, and it is shameful that the Secretary of State has rewarded the common sense of our councils by cutting back on their rate support grant contributions. It is even more shameful that he should claim the fruits of our labours as though the credit were his alone. My hon. Friend the Member for Alyn and Deeside (Mr. Jones) made it clear that we would praise positive proposals from the Government, but we shall also pinpoint their failings. That response is called for by several of the self-satisfied contributions that we heard from Conservative Members today. The hon. Member for Delyn (Mr. Raffan) said, appropriately, that he always recycles his speeches and showed it by going around in circles when he spoke. The hon. Member for Cardiff, North (Mr. Jones) gave us a typical bit of partisan knockabout and opened the Vale of Glamorgan by-election a little prematurely in a way that I would describe as robust but foolhardy. It was like mounting a kamikaze attack in an unarmed glider, and his answer preceded him in the humorous but serious way in which my hon. Friend the Member for Pontypridd (Dr. Howells) showed the quality of debate that we shall enjoy hearing from him in the future. I welcomed my hon. Friend's excellent contribution as much as I welcome him to the vigorous and lively team that we have on the Welsh Opposition Benches.
In contrast with some Conservative Members, the hon. Member for Clwyd, North-West (Sir A. Meyer), who courteously explained that he had to leave the debate, spoke generously of the confidence of Labour Members following the Pontypridd by-election, and he was right. He also rightly criticised the poll tax, the Water Bill and the reform of the National Health Service, and condemned the Government's excessive belief in market forces. I welcome his honesty on each of those points and I note that Conservative Members are listening rather more quietly now. The hon. Gentleman tried to distance himself and the Secretary of State from the Government, but I must point out that both of them bolster the majority which gives the Prime Minister the sense of being above criticism and encourages her and the Cabinet's extremism.
The hon. Member for Clwyd, North-West and the Secretary of State share responsibility for the very measures that the hon. Gentleman criticised. He was right
Column 361to say that there is a sense in the country that the things which are best done by collective action should continue so to be done. The people of Wales say that enough is enough. Let the hon. Gentleman and any others who have had enough of the Government activities show in the Division Lobby that they mean what they say.
I issue that challenge particularly in respect of the Water Bill, which is wholeheartedly rejected by the people of Wales. The bardic steamroller should recognise the telling criticisms voiced by my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) and others in today's debate, but will the Government be defeated on that Bill or will there be another nominal revolt like that on the eyesight and dental charges, which allowed some Conservative Members the luxury of protest so long as it did not put the Government's majority at risk?
There is an attempt by the Secretary of State and his Ministers to create a myth with which to kid the Welsh people that somehow they act as a buffer against the worst excesses of Thatcherism and that we should be grateful to them for bringing a gentler, kinder branch of Conservatism to Wales than is brought to the rest of Britain. The legend of King Arthur has far more truth in it than the legend of Walker the Wet, and the packaging of the Tory message will not stop it hurting our people in Wales.
My right hon. and hon. Friends have eloquently outlined a range of issues and concerns in Wales which the Secretary of State completely ignored today. What legacy will he leave the people of Wales? He talks a great deal about records, so I am sure that he will be satisfied with his expected entries in the "Guiness Book of Records"--for the largest output of press releases, the most exhaustive use of superlatives, the most consistent overuse of the word "initiative", and the lowest creativity and impact of any ministerial team.
What of education in Wales? When the hon. Member for Warrington, South (Mr. Butler) galloped to the rescue of the small beleaguered band of Welsh Tories, he called for money to be spent on Mudiad Ysgolion Meithrin. He is right. As one whose children have been through and benefited from them I believe passionately that they provide the positive and constructive key to the future of the Welsh language. However, we also want proper funding of education, decent school standards for all our communities from nursery to higher education, and the removal of the loans barrier which threatens to undermine access to higher education.
With regard to incomes and wealth in Wales under this Secretary of State, more of those who are in work in Wales are now earning less than the Council of Europe threshold compared with 1979, a year that the right hon. Gentleman likes to mention when the figures favour him. The 1988 figures show that Wales is the lowest of all regions in respect of the weekly earnings of full-time employees, and that is without taking into account the increasing dependence on part-time work.
I will illustrate that by describing the situation of a constituent of mine. The death of the husband left his widow, Mrs. Linda Moles, in limbo because of a change in the age of entitlement for widow's benefit from 45 to 40. The Government argued that she, by a matter of hours, did not qualify for a widow's pension. When it became
Column 362clear that the Government had got it wrong, a ministerial decision was apparently taken to fight her and others like her through the whole appeals apparatus. I was delighted to hear today that she had won that appeal--and quite right, too. The Secretary of State for Wales should tell his Cabinet colleagues to let well alone and to restore the entitlement of those widows of several years' standing who have had their widows pensions snatched from them after perhaps 12 or 13 years of widowhood.
Pensioners who have lost £18.10 per week per couple and £11.40 per week for a single pensioner will have their own view of the Secretary of State's legacy to the people of Wales. The right hon. Gentleman and Conservative Members should know that to have been a member of a Government who have stolen from the widows, the old, the poor and the young will be a major part of that legacy.
As for law and order and the environment, the Prime Minister has shamelessly pretended to have an interest in the environment and claims to support the rule of law. Yet the Secretary of State is part of a Government who are notorious for breaking the law, even their own laws, and has himself been guilty of introducing retrospective legislation during the last year to steal money from local authorities--for example, nearly £3.5 million from the people of south Glamorgan. Nowhere is the Government's record worse than in their neglect of the environment. They are reluctant to meet EEC minimum standards until dragged to the door of the European Court, guilty of complacency over the dumping of toxic waste, and infamous throughout Europe for being negative and obstructive. Welsh Office Ministers must share the blame for all that.
The long-standing issue of ReChem, repeatedly highlighted by my hon. Friend the Member for Torfaen (Mr. Murphy), is but one scandal which demonstrates the complicity of the Secretary of State for Wales in this shameful neglect. We have on numerous occasions asked the right hon. Gentleman to intervene on behalf of Wales with his colleagues in the Cabinet, but he fails to do so. Despite its excellent record, the environmental research station at Bangor is being torn apart. The Secretary of State has so far failed to intervene to save research vessel services at Barry, even though that is a significant source of employment and expertise. The right hon. Gentleman is allowing, if not encouraging, asset stripping on a grand scale.
This week I questioned the Secretary of State for Energy about plans to use a new process which would utilise low-grade coal and bring environmental benefits at Aberthaw, surely a development that should be encouraged. In fairness to that Minister, he has spoken to me since then and has shown greater interest and enthusiasm than he did at the Dispatch Box but he also said that he had received no representations from the Secretary of State for Wales on the matter. That is shameful because the Secretary of State for Wales should be taking a lead on jobs, energy and the environment, all of which are affected.
Two topics, above all, demonstrate the abject failure of the Conservative party to look after the interests of the people of Wales--the attack on the National Health Service and the sell-off of our water industry. Water privatisation gives the lie to any claim that this Government are good for Wales. There are so many details which are dangerous and wrong about that piece of
Column 363dogmatic, crazy legislation that I shall concentrate on just one aspect today--the right of Welsh people to a say about Welsh water. First, however, I digress to remind the House of the Walker technique. As with the so-called valleys initiative, it is to leak a rumour, to announce an announcement and then, when asked about it, to say that it is premature, but to issue a modest half-denial, then to let things go quiet for a while and then to repeat the process, with an announcement of an imminent announcement, a shy denial and another notch in the legend of Walker the Wet. It is a technique for packaging a product which does not exist and seeking credit for action without having to do anything. The Secretary of State knows the truth of that.
Rumour exists that the Secretary of State for Wales plans to give away council houses to the tenants living in them. Hand over the deeds and the keys and the problem is gone--that seems to be the idea--but the owner of any older house knows that will not solve everything. Inner cities, towns and rural areas all contain privately owned houses which need more money spent on them than most private owners can afford. That is why we have home grants for home owners and tax relief on mortgages, although that is under threat in the Thatcherite revolution.
Mr. Peter Walker : Is not the hon. Gentleman delighted at a piece of legislation which, for the first time under any Government, will give the people of Wales, no matter how low their income, 100 per cent. grants to improve old houses? Does he not agree that that is a radical reform that will benefit Wales?
Mr. Michael : I am always delighted at an improvement, but the Secretary of State has taken away grants from many other people in Wales. By stealing money from local authorities, he has taken away opportunities for people in Wales to have their own homes. He is guilty of neglecting the homeless in Wales. In any event, to return to the matter which embarrasses the Secretary of State, the Chancellor will not allow council houses to be given away without a price and such a solution would still leave local councils and communities with the scandal of homelessness and the lack of homes. The Western Mail described the Secretary of State as being coy on the matter. The Parliamentary Under-Secretary of State admitted in a recent reply that the Government
"have no immediate plans to make changes under the right-to-buy scheme."-- [ Official Report, 27 February 1989 ; Vol. 148, c. 17. ] Nevertheless, the rumours persist.
I can give the Secretary of State an easier alternative. If it is such a good idea to give the people of Wales what they have already paid for, let him give them Welsh Water. All he needs to do is to issue 2,836,000 shares- -one for every man, woman and child in the Principality--without their having to make any payment. Alternatively, he could issue 100 or 1,000 shares each, as that would look even more generous--2,836 million shares to the people of Wales--and give them to us. They would be transferable only to the Government only on death or removal from the Principality. Reservation could be made for a fresh issue of shares--the water birthright --to each baby born in the Principality or to people who come to live in Wales. Shareholders could elect representatives in each area--we could call them local councils--and send them to the board of Welsh Water so that all the shareholders could have a voice in the industry.
Column 364The Secretary of State could then live up to the title of his book and trust the people. The Government say that there is an advantage in operating the water industry as a plc. That system would be a plc and would have all those advantages, if they exist, so the Government could not object. It could borrow to invest, which the Ministers tell us is a good thing, but the people of Wales would still own that which we own now.
Let the Secretary of State put his money where his mouth is and give the Welsh water industry to those who own it now--the people of Wales. That will not happen, of course, because the Chancellor will not let it happen and the Cabinet will not let it happen. The Secretary of State is part of the team who will not let it happen. He knows that the Chancellor desperately needs the income from selling another bit of our birthright to fund his mismanagement of our economy. That is what it is all about--the Tories have the dogma and we pay the cost.
The time in Committee considering the Bill has been instructive, as the Government's case for privatisation has crumbled and fallen apart. Our plea for a Welsh rivers authority has been rejected, there is no credibility left in the Government's claims that the measure will help our environment, improve water quality or clean up our rivers and beaches. None of that will happen unless the public pay. Our environment, our public access, our water supplies, even our health, are under threat from that measure.
Our health will be further under threat by the Government's plans to abandon any pretence of wanting to develop a high quality, all-purpose, universal Health Service. The Welsh Office document on the future of the Health Service showed that far from working for patients, as its title suggests, it is a plan for furthering dogma at the expense of public health. The creaking and groaning evident in the Health Service now has been deliberately created by Conservative neglect. If a week is a long time in politics, 10 years is a political lifetime--and for that length of time the Conservative party has used funding arrangements, Cabinet power, administrative arrangements and the nomination of its own quiescent loyalists to undermine our Health Service.
If the Secretary of State does not believe the Opposition, let him examine the Western Mail commentary of Monday which gives example after example of problems with waiting lists in Wales. The White Paper will do nothing to help people on waiting lists any more than it will help the Health Service as a whole. Indeed, it will make the planning and delivery of a high- quality service harder than ever before.
The Minister's answer last week was :
"The diagnosis and treatment of patients is and will continue to be a matter for the professional judgment of doctors."--[ Official Report, 21 February 1989 ; Vol. 147, c. 608. ]
That cannot be so if the doctor is constrained by his computer forecast and monthly cash flow and he cannot give his single-minded concentration and commitment to the health care of his patients. I do not say that costs should be disregarded, but the Government pendulum has swung too far towards the extreme and the Secretary of State for Wales has swung with the worst of them.
Health Service planning is dependent on the 10-year plan currently being considered, but I am no longer sure what credence to be placed in them. I want a coherent, long-term plan for my area on which we can depend. I
Column 365want to see problems overcome in south Glamorgan, because there are problems with the plan as drafted. The third district general hospital in Cardiff docks cannot be afforded without undermining Llandongh hospital, killing off Sully hospital, distorting the whole service. A decision is also needed now because the idea is casting a blight on a piece of development land which is desperately needed in the Cardiff bay area, but it is vital that it should be the right decision and part of the right overall plan for the Health Service in south Glamorgan and in Wales as a whole, within a coherent approach which puts patients first and does not depend on dogma and political fashion in the way that the White Paper does.
Some time ago, the right hon. Member for Brent, North (Sir R. Boyson) gave the game away when he was quoted as saying that the problem with the National Health Service was that there was no relationship between what we pay and the service that we receive. I had always thought that it was a virtue to get the treatment that we need at the time when we need it--when we fall ill--and the people of Wales feel the same. The Secretary of State and his colleagues have failed to defend our Health Service against people like the Prime Minister, just as he has failed to defend our water, environment, education service, housing and local government in Wales. As on so many other issues, his proposals are an abject copy of the proposals in England. He has failed the people of Wales.
The Parliamentary Under-Secretary of State, Welsh Office (Mr. Ian Grist) : All I can say is that the hon. Member for Cardiff, South anPenarth (Mr. Michael) has not undermined my faith, or that of my family, in the Health Service. I have to go for an operation in a few months' time. It was a disgraceful attack, and very disappointing because I think that the hon. Gentleman can do a great deal better. Today has taken the usual course of a Welsh day debate--we have had constituency representations and hobby horses from all sides, as might be expected.
No hon. Member made a more notable contribution than the hon. Member for Pontypridd (Dr. Howells). I too made my maiden speech on St. David's day 15 years ago but I only wish that I had had half the assurance--and even half the majority--of the hon. Member. He will know, as indeed he has told us, of the gap that he is filling through the death of his predecessor, Brynmor John, a man held in respect and affection by all his colleagues on both sides of the Chamber. We look forward to hearing the hon. Member on many occasions in the future. I feel sure that we shall not be disappointed and he may then expect a more lively response than he received today.
I cannot mention constituency representation without paying a deep personal tribute to our old friend and colleague, Raymond Gower. I feel sure that I speak for all my parliamentary colleagues when I say that we shall greatly miss Raymond and that uncertain support which he sometimes gave Ministers on his own side, or the often sympathetic attacks which he launched in days gone by on Labour Ministers. Raymond was ever looking for compromise, for the best part in us all and not the worst. We all know how warm and caring a friend we have lost.
Column 366But what a change Raymond saw during his 38 years in this House in the economic and social condition of Wales, and at no time during that long period was change more basic or more rapid than during the past 10 years. As we have been reminded, none of us who was in the House 10 years ago can ever forget St. David's day 1979. That was a fateful day.
On St. David's day 1979 the Labour Government, the Liberal party, Plaid Cymru, the media and the clerical crcchach all proved that they were wholly out of step with the people of Wales and that it was the Conservative party alone which understood how Wales felt about devolution and the future of the United Kingdom. Clearly the opinion of the man and woman in the street, and certainly the poll in the streets of Pontypridd, show that devolution still gets the lowest marks of any subject.
Where do the opposition parties now stand on devolution? Are we to be forced to accept a Welsh assembly under any future Labour Government--or perhaps three assemblies? Are we to be refused any chance to vote again on such a proposition? Surely the only reason the right hon. Member for Islwyn (Mr. Kinnock) did not vote against the Welsh Bill was the promise of a referendum. I trust that he has not changed his mind on that, however much he may have wavered on the question of devolution itself.
I remember a most interesting broadcast debate in which the right hon. Gentleman and I were partners against the hon. Member for Newport, West (Mr. Flynn) and the then Labour Member for Wrexham, Mr. Tom Ellis. The right hon. Gentleman spent most of his time fending off a Trotskyist member of his own association who protested about the right hon. Gentleman being on a platform with me.
Mr. Foot : I have heard almost every word of this debate. Would the Minister be good enough to give us the employment and unemployment figures for 1979 and the figures for today and tell us what conclusions he draws from the comparisons?
We have never doubted that on that St. David's day 10 years ago the Conservative party spoke for the hopes and fears of most of our fellow citizens. We understood the burning desire of our neighbours to own their own homes. Now, 68 per cent. of people own their own homes, compared with 59 per cent. when we took office. But giving council tenants the right to buy their own homes was opposed by the Labour and Liberal parties. Now we are told that they no longer oppose the right to buy. How is that for recognising reality? As the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) admitted, Opposition Members seem to hanker after the old corporatist, controlled, planned society from which we have rescued the country only for Mr. Jacques Delors to revive their hopes. Now we hear that the Labour party is in favour of our membership of the EEC. Perhaps we, or at least the electorate, ought to be told.
Mr. Morgan : Before the Minister leaves the subject of council houses, could he tell the House how it can be a good idea for people to buy their council houses when the Government are preventing people from building any more houses? How are the next generation to benefit from that wonderful gift?
Mr. Grist : The hon. Gentleman is again showing that he does not understand why so many of his constituents living in former council houses wished to own those homes. Would he like to tell them that he opposes such a scheme? Does he think that selling those homes to the people living in them reduced the number of houses? Of course it did not.
The hon. Member for Alyn and Deeside (Mr. Jones) said proudly that the Opposition were saying no to the free market. That is an extraordinary claim for any political party. That is the reason why in 1975 and 1976 this country took such a dive and why we had to cut capital expenditure on roads and housing. Hon. Members may remember the A470. That road made it to Winchurch but never got any further. It was not until a Conservative Government came to power that it got to Merthyr. The Labour Government had to go to the International Monetary Fund on their knees. That was the level to which the Labour Government brought us. Our time in the Chamber thereafter was filled by endless debates on devolution. That was the one thing that kept the Labour party going.
The hon. Member for Cynon Valley (Mrs. Clwyd) quite rightly made a plea on behalf of her constituency. A great deal has been spent on it. We appreciate the points which she made about the phurnacite plant. She will know that under projects of regional and national importance there was a capital allocation of £850,000 for each of the three years to 1988-89 to bring the railway to Aberdare. She will know about the Aberdare bypass, which has been paid for. In housing, she will know about the five enveloping schemes costing £3.3 million, when her own authority could not spend its money until it was shown how by the Welsh Office civil servants. She will know that since 1984 expenditure of over £565,000 on urban development grants, leading to private sector investment of £1.216 million, has created or safeguarded 153 permanent and 63 temporary jobs.
As for Welsh Development Agency units, from May 1979 to the end of January 1989, 53 units, comprising 521,000 sq ft, were completed. Since 1976, seven land reclamation schemes, comprising 40 acres and costing £600,000, have been completed. There are three projects in progress involving 294 acres. There are seven projects in the programme but not yet in progress, involving 300 acres and estimated to cost £3.3 million. The hon. Lady will know about all those and many more things which are being brought to Cynon Valley. It is now connected to the A470, which had not reached the valley under her party. That is opening up the area and we are providing the factories and spare places which she wants.
The hon. Member for Ceredigion and Pembroke, North and my hon. Friend the Member for Warrington, South (Mr. Butler), who is sadly not with us, talked about the Welsh language. They will know that grants for the Welsh language will rise by almost 40 per cent. in the coming financial year. That shows our intent for the language. We have a problem in ensuring an adequate supply of Welsh-medium teachers. The demand for Welsh-medium teachers for bilingual secondary schools
Column 368has been growing for some time. We awarded 30 supplements of £1,200 last autumn to encourage more students to train in Welsh. Those were taken up and we intend to offer supplements again this year. We intend to take other steps to satisfy the demand for Welsh teaching. Hon. Members have raised time and again our proposals for the Health Service. When my right hon. Friend announced his proposals for Wales in the White Paper, he said that the Health Service had served the people of Wales well ; indeed it has. The level of achievement over the last decade has been remarkable. Between 1979 and 1988, the number of staff directly concerned with patient care increased by over 17 per cent. So did the pay of staff in the Health Service, whereas it fell under the Labour Government.
I do not know how the hon. Member for Alyn and Deeside, who stood in my place in those days, felt as the pay of nurses, consultants and everyone else in the Health Service went down. How did he feel when the number of out patients dealt with in Welsh hospitals fell by 3 per cent. during his period as a Minister, whereas under this Government 88,000 new out-patients have been dealt with? Nearly 100, 000 more in-patients and 45,000 more day cases have been dealt with under this Government. Yet Opposition Members have the gall to talk about cuts in the Health Service. Would they willingly tell the people of Wales or Britain that we should go back to the Health Service that we had in 1979? Is that really what they would hold up as their banner? Not at all.
All that has been achieved at the same time as we have been improving dramatically the service in Wales for people with mental illnesses and mental handicaps. Our all-Wales mental handicap strategy is widely recognised as a unique and innovative development which is bringing considerable improvements to the lives of thousands of people with mental handicaps, and their families. We have established in our mental handicap strategy something which is admired not just in Wales and the rest of the United Kingdom but in other countries. The hon. Member for Caernarfon (Mr. Wigley) will appreciate and understand that.
We published our draft strategy for the development of mental illness services in May last for a six-month period of consultation. The responses to our proposals have been very favourable and encouraging. We will publish a final version later this spring, and we shall move to the new strategic planning framework in the financial year 1990-91. [Hon. Members :-- "What about the Griffiths report?"] I can promise hon. Members that that will be dealt with in the coming year. In helping the least capable people in our society--the mentally handicapped and the mentally ill--the Welsh Office has set a fine example, not just in Britain but abroad. Mr. Rowlands rose --
Like many other hon. Members, the right hon. Member for Llanelli (Mr. Davies) failed to understand the competitive basis of our water privatisation proposals. There will most certainly be competition. Nor did he appreciate that the Director General of Water Services will control price rises and lay down the conditions under which the new water authorities will operate.
Mr. Ron Davies rose --
Mr. Grist : The hon. Member for Cardiff, South and Penarth and others guyed the idea that Welsh Water, the new plc, could be owned by the people of Wales. Opposition Members may have a surprise coming to them because it is our intention to give the people of Wales every opportunity to take a stake in their own water company in a way that has not been possible before.
The hon. Member for Ceredigion and Pembroke, North called for a north-south road--a rather old idea. The Government have undertaken 47 major motorway and trunk road schemes and 140 miles of roads have been provided. Spending on new capital schemes and structural renewal and maintenance exceeds £1 billion since 1979. Sixteen bypasses have been completed. Four are in and 25 more are programmed for the 1990s. Sixteen miles of road are presently under construction on schemes costing some £270 million. That remarkable development, the Conway tunnel, costing over £160 million, is due to open in 1991. Mr. Geraint Howells rose --
I sum up the Government's record by saying that there has been record home ownership of between 59 and 68 per cent. A record number of patients has been treated. There has been a record number of consultants, nurses and doctors. There has been a record number of patients on renal dialysis--the highest in Europe at 55 per million of the population. There has been a record number of Welsh students in universities and higher education--25 per cent. up on the figure when we took office. There has been a record number of new company formations. A record amount has been spent on training, about which we have heard precious little today. Spending on training has risen from £60.7 million in 1979-80 to nearly £150 million today. There has been a record number of exciting new developments, such as Cardiff bay, Swansea marine, the Ford plants at Bridgend and Swansea, the Newport
Column 370barrage, the valleys programme, the Ebbw Vale garden festival, and the A55. All those projects are bringing hope, new life and new interest to Wales.
The Government are transforming the Principality. They are transforming it from the declining employee-centred economy that it had become over several generations, to a thriving modern society which has faith and confidence in itself. That confidence comes as jobs are created by Welsh-based men and women who are already eager to strike out on their own account rather than wait for the Government, or whoever, to bring them work and benefit from outside like some sort of cargo cult. In that respect, I fully support the hon. Member for Cardiff, West. He talked a great deal of sense and I welcome what he had to say.
This Administration are intent on reforming educational standards. Enterprise agencies are appearing. This is a world in which Marxism is becoming increasingly passe , whether in China, Moscow, Poland or Hungary. All those countries are privatising and discovering the need for profits and losses and that there is no need for the Labour party's old-fashioned approach. I believe that they know that, otherwise there would not be such a deafening silence about renationalising former state-owned businesses and firms, or so little talk about reinforcing municipal monopolies or hamstringing private coach and bus companies. It is not just that they could not afford to repurchase British Gas or the National Freight Corporation ; they no longer have the stomach for it.
If the Labour party no longer stands for state ownership, or even for unilateral or other disarmament, what does it stand for? I cannot believe that, in their hearts, Welsh men and women really see the right hon. Member for Islwyn as Prime Minister of the United Kingdom, or the hon. Member for Alyn and Deeside as a replacement for my right hon. Friend the Secretary of State for Wales. My right hon. Friend has brought a new spirit and a new confidence to political and public life in Wales.
It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.
Motion made, and Question proposed, That this House do now adjourn.-- [Mr. John M. Taylor].
Mr. Nicholas Winterton (Macclesfield) : I am pleased to have the opportunity of raising the important subject of competition policy in the United Kingdom, particularly as it relates to the public interest and to the workings of the Monopolies and Mergers Commission. In developing my case, I wish to ask the Minister a number of relevant and important questions.
Is he satisfied that the Government's preoccupation with competition issues will not lead to substantial parts of British industry being put at risk by the level of investment in United Kingdom companies by highly geared entrepreneurs? It appears to be recent Government policy to have regard only to the financial difficulties likely to flow from high gearing and low interest cover where such financial difficulties could have an adverse effect on competition. Why do the Government no longer consider that the possibility of financial failure of itself involves real public interest issues?
Does the Minister think that companies with extremely complex and opaque shareholding structures, established in countries such as Australia, that do not have the same disclosure demands as this country, should be forced to make full disclosure of their precise shareholding structure and of directors' remuneration before being permitted to acquire United Kingdom companies? In particular, should an overseas company with a record of very different, and less acceptable, accounting standards be considered by the London international stock exchange for a full listing and share quotation?
Does my hon. Friend the Minister feel that overseas companies attempting to take over British companies with substantial assets and large numbers of employees should first adopt accounting standards and conventions practiced in the United Kingdom? I believe that this is very much a matter of public interest.
Does the Minister agree that the needs of highly geared companies for cash flow mean that there is inevitably a potential adverse effect for the consumer and the employees in acquisitions by such companies, since this will inevitably create a need for higher prices on the one hand and lower costs on the other? For example, in the case of Scottish and Newcastle Breweries and Elders IXL, Scottish and Newcastle would be likely to shed some 3,500 jobs.
For the benefit of my hon. Friend, let me say that if Elders is permitted to proceed with its bid for Scottish and Newcastle Breweries and is successful in taking over the company at £5 per share, Elders will be paying approximately £2 billion for the company. This would cost it £260 million a year in interest. As the Scottish and Newcastle profit is likely to be about £160 million in 1989-90, the interest cost of Elders IXL borrowing, above the company profitability, would be £100 million per annum. This would equate, first, to a sell-off of some £800 million worth of assets of Scottish and Newcastle and, secondly, redundancy for 3,500 employees. In short, this is what an Elders IXL takeover could mean for Scottish and Newcastle Breweries, for British industry and for employment in this country.
Column 372Is not the Minister concerned that the proliferation of bids from companies based outside the United Kingdom may result in important areas of British industry being controlled from outside the United Kingdom, thereby moving the centre of decision-taking outside our country, with adverse consequences for United Kingdom regions and for the infrastructure of services provided in those regions, which are so often dependent on local demand?
Companies with high levels of gearing and low levels of interest cover by reference to normal United Kingdom standards tend, in time--I am sure that my hon. Friend the Minister knows this--to face financial difficulties. Such pressures also lead such companies to seek acquisitions which are rich in cash flow and assets and where extraordinary profits on break-up can help fund the companies requirement for dividends and debt servicing. Is that not just typical of the record and reputation of Elders IXL? The activities of certain foreign companies, notably Australasian companies, in the United Kingdom takeover market, having high gearing and low interest cover levels, is a matter of deep concern to me, the House and the British public.
There is, in many quarters of finance and industry in Britain, a considerable unease over the motivation and influence of that group of Australasian entrepreneurs whose sights appear to be set on raiding United Kingdom assets. Can we be happy that the unfettered activities of those modern-day buccaneers are achieving anything constructive for the future of the United Kingdom economy, or is their motivation largely self-interest, with the inherent risk remaining that assets will be moved offshore and United Kingdom taxes skilfully avoided to the long-term disadvantage of this country. Taxation has been an issue in Australia where, inter alia, Elders has been a thorn in the flesh of the tax authorities. They have been in considerable disagreement about the amount of tax paid by the Elders group of companies into the Australian national coffers. There must be a likelihood as already recently demonstrated by Equiticorp and Mr. Holmes a Court, to name but two, of serious risk to others in the financial strategies of those companies.
A good example of highly geared Australian companies seeking to acquire United Kingdom industrial interests is the present attempt by Elders IXL to acquire Scottish and Newcastle Breweries. Elders is a company with various cross-shareholdings, common directorships and other links with numerous further companies. A company called Harlin, which is based in Monaco, has some 20 per cent. of Elders ordinary share capital undiluted together with various options. Another company called Petitio owns a further 18 per cent. of Elders undiluted share capital. Petitio is owned 50 : 50 by AFP Investments Ltd. and Goodman Fielder Watty. Harlin and Petitio together control nearly 40 per cent of Elders undiluted share capital and if Harlins options were exercised it would control nearly 46 per cent. of undiluted capital.
It is crucial to understand the shareholding structure in order to appreciate the indebtedness and crippling level of gearing that surrounds Elders IXL. Harlin has gearing of some 600 per cent. and Petitio has a gearing of nearly 200 per cent. I know that my hon. Friend the Minister is aware that gearing ratios show the ratio of debt to shareholders' funds. Fairly calculated, the gearing ratio of Elders is
Column 373about 218 per cent. now and will rise to just under 400 per cent. on the acquisition of Scottish and Newcastle Breweries. That is a ratio of nearly 4 : 1.
Harlin is a rather interesting company. Elders' 1988 report stated that Harlin was jointly owned by senior executives of Elders and their associates, the Elders superannuation fund and AFP Investments. However, it appears that all the shares in the company, as at February 1988, were held by the directors of Elders, the majority being owned by John Dorman Elliot. At that time the company was known as Pyalong Ltd.
What is worrying is that that appalling monumental indebtedness and fearsome gearing is not getting any better for Elders IXL, as can be seen from its interim figures for the six months to 31 December 1988, which appeared in mid-February. It announced an increase in profits of 12 per cent., although that depended on a low tax charge of about 20 per cent. of profits. Profits before tax and abnormal items would be down by 18 per cent., and, before interest, down by 23 per cent. The supposed increase in post-tax profits of 12 per cent. was stated by Elders to represent an increase in earnings per share of 5 per cent. However, for the present statement, Elders has recalculated earnings per share on the basis of the number of shares outstanding at the end of the period. Had it continued to apply the basis that was used last year, earnings per share would have fallen by 5 per cent.
That shows the sort of fraudulent activities that that company is prepared to get up to hide its true indebtedness and gearing. In September 1986, the Monopolies and Mergers Commission--I refer to the Elders-Allied Lyons report--asked, first, that the Bank of England and the stock exchange should consider whether the appearance of highly leveraged bids in the London market made desirable the introduction of any new powers of control ; and, secondly, if so, whether effective control could be exercised by reference to levels of capital gearing or interest cover. Thirdly, it suggested that the Department of Trade and Industry, represented by my hon. Friend the Minister, and the appropriate City regulatory authorities might consider whether any change was desirable in the rules to require the consent at a general meeting of the shareholders of the bidding company before a bid may be completed.
Will the Minister report on what consideration has been given by him and his Department--and with what result--to whether any such new powers of control or rules are desirable? If it is considered undesirable to introduce guidance or new powers of control in relation to gearing and interest cover for all companies, large or small, would it nevertheless be desirable in relation to large takeovers, in which significant United Kingdom assets, substantial United Kingdom employment and other issues are involved, for minimum standards of gearing and interest cover to be insisted on by the Government of this country?
Does the Minister support the concept of a future British brewing industry which two or three mega-companies dominate, as in Australia, where Elders and the Bond Corporation supply over 90 per cent. of the beer market? Is that in the public interest? Is that not a danger to competition? More particularly, is the Minister aware of the statement by Elders which was reported in The Sunday
Column 374Times of 12 February of this year that Britain will follow other major beer markets such as Australia, America and Canada, which are characterised by market leaders with up to 40 per cent. market shares, and that it expects to be able to drive up its share of the United Kingdom beer market to more than 40 per cent.?
The House should know that in Australia there is a body called the National Companies and Securities Commission--rather like the United States Securities and Exchange Commission--which, in 1988, conducted an inquiry into Elders' relations with the Broken Hill (Proprietary) Co. Ltd.-- Australia's largest company.
Is the Minister aware that the NCSC report was highly critical of Elders and that, had its detailed findings been known in time, the MMC might not have given Elders the clearance that it gave at the time? Elders now claims that that clearance by the Monopolies and Mergers Commission is proof positive of its fitness to own important parts of United Kingdom industry ; hence its attempts to acquire Scottish and Newcastle Breweries and also its attack upon Metal Box. More particularly, from the NCSC report, is my hon. Friend the Minister aware that Elders was in a position to present itself to the Monopolies and Mergers Commission in the Allied Lyons referral only as a company strengthened by the subscription of BHP to 1 billion Australian dollars of capital by, first, inducing at least two of the banks to participate in the loan to finance that transaction by misrepresentations as to the true nature of Elders' intentions ; secondly, failing to disclose to the banks the forthcoming issue of preference shares to BHP for 1 billion Australian dollars ; and, thirdly, "green mailing" BHP to make that subscription using leverage which Elders had acquired by its acquisition of a 19.9 per cent. interest in BHP?
Is the Minister aware that Elders caused the terms of the separate undertaking it had given to the banks in relation to Allied Lyons to be given in a side letter for the purpose of shielding its terms from the Monopolies and Mergers Commission, that the NCSC declined to accept the evidence of Elders on some matters and that the evidence it gave conflicted directly with the evidence given on behalf of at least one of the banks?
In allowing Elders to acquire Courage in the autumn of 1986, after the publication of the NCSC report, did my hon. Friend the Minister and his Department take into account the findings of the NCSC report; and, if not, why not? If they did, why was it not thought right for the Monopolies and Mergers Commission to be asked to reconsider the issues in the light of the detailed findings of the NCSC concerning Elders?
Does the Minister consider it desirable for one major brewer--Elders- Courage--to achieve its desire to control one of the three major suppliers of cans to the British brewing industry? I refer to Metal Box. That may have the result of denying a source of can supply to the rest of the United Kingdom brewing industry and may increase the concentration in the supply of beer and cans. I put a straightforward question to the Minister : does he think it desirable for one major brewer--Elders-Courage--to purchase a major supplier of cans to the British brewing industry? Is that what competition is about?
I shall now move briefly to the issues raised by the unsavoury events of the morning of 10 November 1988. [ Hon. Members :-- "Hear, hear."] I am grateful to my hon. Friends for coming to this debate and showing their