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Mr. Denzil Davies (Llanelli) : My hon. Friend the Member for Alyn and Deeside (Mr. Jones) rightly chastised the Government for their economic record. It is sad that, after 10 years of Conservative rule, Wales is the poorest economic region in Britain. That was not the case in 1979. Whatever Conservative Administrations have tried, they have been unable to improve relatively the wealth of the Welsh economy.
We welcome the Bill, because it is quite an achievement for the Welsh Development Agency to have survived the free market mania that held sway between 1979 and 1991 and the ideological zeal of the right hon. Member for Conwy (Sir W. Roberts), who vehemently opposed the WDA originally. That is a tribute also to my right hon. and learned Friend the Member for Aberavon (Mr. Morris), who helped to build that durable institution, as well as the Land Authority for Wales. Both survived the Thatcherite blitz of the 1980s.
The Secretary of State said that the aim was to achieve a self-sustaining private sector. I hope not, because I cannot identify any in the modern industrial world. France does not have a self-sustaining private sector economy, and nor does Germany or Japan. The agency's purpose is to fill the gaps that the private sector cannot fill. That is why we need interventionism, and why it is good that the WDA has survived.
The agency will have to take a different tack in the 1990s in addressing itself and the Welsh Office to the problems that Wales and the Welsh economy will face in the 1990s--which will be different from those of the 1980s.
Two factors have affected, and will continue to affect, the Welsh economy. My hon. Friend the Member for Alyn and Deeside alluded to the collapse of the Soviet empire. We must acknowledge that the centre of gravity in Europe is moving further east. We have always been to the west of the centre of power--certainly so far as Brussels is concerned--but that will move further east. It is all very well for members of Plaid Cymru especially to salivate every time Baden-Wurttemberg is mentioned, but it could become a big element. Investment from that source may well go to east Germany, Czechoslovakia, and parts of the former Soviet bloc.
It is fashionable to condemn the old command economies of eastern Europe-- but when the dust has settled, it may be realised that considerable basic engineering skills are available in east Germany and Czechoslovakia. I would like comparisions made of the number of qualified engineers in Czechoslovakia and Wales. I hope that Wales will come out of them quite well, but I have doubts.
Those skills can be found also in other parts of eastern Europe. We must not get carried away with the idea that the Soviet economy was unable to produce people trained
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in production. They will be employed in future, and some investment will go to those eastern states unless we are careful. The right hon. Member for Worcester (Mr. Walker) has already spotted that ; having already made a foray into Baden-Wurttemberg, he is now to work for Baden-Wurttemberg in trying to move investment away from this island to eastern Europe.This is not the occasion to debate the move towards European union, but if that is to occur, there is a great danger that Wales will become the South Dakota of the new union. If the United Kingdom is locked into currencies that it cannot change, and unable to control interest rates and to operate budget deficits, and if it cannot subsidise its industry, this country and others on the periphery--we will be more so in future--will suffer from the concentration in the centre.
Mr. Keith Raffan (Delyn) : Does the right hon. Gentleman agree that, if Britain does not sign up to European monetary union and is outside the inner currency circle, there will be pressure on many of the overseas companies that have located in Wales to relocate elsewhere in Europe--and that Wales would then lose many of the benefits achieved by the WDA over the past 10 years?
Mr. Davies : I did not intend to provoke the hon. Gentleman, but without massive transfers of resources from the centre to areas such as Wales, we will suffer from the move towards European union. I see no sign of them by way of an enhanced regional policy in Brussels. If there are such transfers, my fear is that they will go to southern European countries, which can make a case for them in terms of income per head, unemployment, and their domestic economies. Portugal, Spain, southern Italy and Greece could get money--but where would that leave Britain?
I doubt that the Germans would be prepared to use their public money to provide such transfers, which we must have if Wales is not to become the South Dakota or Oklahoma of the united states of Europe, the federal union, or whatever it is to be called.
We are all agreed that the WDA's inward investment arm has worked well, and that operation must be continued and nurtured. I am concerned, however-- this is not meant as a criticism of the people who run the agency--that the agency is leaning too far towards property interests. It is natural for the WDA to have an involvement in property, because to some extent it grew out of the land reclamation units of the Welsh Office. It is natural also that the WDA should be concerned, as it is, with clearing derelict land and constructing new buildings on it.
My hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) gave the public expenditure figures. The Government's hope is that, by selling off property and generating property income, they can be relieved of putting grant-in-aid money into the WDA. However, the 1980s are over, and the 1990s will not be about property debt, and using property development to increase land values. Ski slopes, marinas, and golf clubs are all very nice--but they will not attract the kind of investment needed in the 1990s.
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To do that, Wales must create new skills. Whatever may be the value of the pound or ecu, if Wales cannot offer the necessary engineering skills, it will not attract inward investment. Wales is falling down on skills. It does not have the engineering, technological and scientific skills that it should to attract investment. Ministers know that very well.Our education system is no longer geared to produce the engineering, technological and scientific elite that we need. It is geared to produce the semi-skilled and, indeed, unskilled work force who are required in many large sectors of the economy, especially the service sector. Most jobs in the service sector are unskilled, and a specialised education system is not needed to produce them. We cannot produce the elite engineering skills possessed by Japan, Germany and, to an extent, France. To produce such skills, we need a system that is still concerned with diligence, discipline and attention to detail. The Japanese have done so well not because of management skills but because their engineers are so good. Engineering demands diligence, scientific skills and attention to detail.
I pay tribute to the West Wales training and enterprise council, which appreciates the need to create manufacturing skills. It is, however, having to do its work against a background of 10 years in which nothing was done, and despite the collapse of much of our industry. If an area contains only service industries, where can people be trained to become engineers and technologists? They can only hope to be employed by McDonalds, B and Q or Great Mills. The TECs do what they can, but they have not the hinterland or the infrastructure that would enable them to carry out their job properly.
Perhaps the WDA should now consider itself the arm of the Welsh economy that tries to produce and use money to create an elite in science, technology and engineering, and thus benefit the Welsh economy. I do not know whether that can be done, however. At one time, the California and Massachusetts institutes of technology were the great institutions or the world, but, for all I know, the great institutions of production and engineering may now be in Japan. Why cannot the WDA involve itself more with schools in Wales? Why cannot it find the youngsters of both sexes who have an aptitude for engineering and science, and use Government money to encourage them--perhaps even send them to Japan to be trained? We cannot train them here.
We need an interventionist agency. We may criticise the French ecoles for being elitist and superior, but they have been remarkably successful in creating a technical and scientific work force, quite apart from administrators and civil servants. It will take time, but perhaps the WDA will be able to create the skills without which we cannot develop the Welsh economy, regardless of our political views. Those are the challenges for the 1990s, rather than building or property ventures or even the clearing of land. If we have no skilled work force, the investment will not come, whatever currency union we may belong to.
5.53 pm
Mr. Gwilym Jones (Cardiff, North) : As my right hon. Friend the Secretary of State pointed out, this debate follows a month in which the unemployment figures fell in Wales. That is no small achievement, and it deserves to be
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noted : both the headline rate and the seasonally adjusted figures fell. I wish that I could say that the hon. Member for Alyn and Deeside (Mr. Jones) had acknowledged the fall, but, as always, he tried to paint a completely different picture. The hon. Gentleman is a perpetual merchant of doom and gloom : if he had the chance he would always talk down the Welsh economy, rather than acknowledging positive developments.In the 1983 Parliament, the hon. Gentleman could be relied on to table the same question about unemployment for every Welsh Question Time. That tailed off remarkably in the three years of the current Parliament, in which unemployment fell month after month. The hon. Gentleman became rudderless then, and he may be in danger of becoming so again ; we all hope, in our heart of hearts, that unemployment will fall and he will have nothing left to ask questions about.
Dr. Kim Howells : I know that the hon. Gentleman is not habitually flippant about such matters ; I know that he cares about them. Will he acknowledge, however, that Wales contains some employment black spots? They can be found in the north-west, the middle and, indeed, the south. It is a travesty to treat the subject with anything other than the seriousness that it deserves.
Mr. Jones : I hasten to reassure the hon. Gentleman that I have no wish to treat the subject with flippancy. I know that in the parts of south Wales that he and I represent, and in other parts of Wales, it is not always easy to attract potential investors. I suggest, however, that the Government and the WDA would be even more successful in helping Wales if Opposition Members concentrated on the positive aspects of what is being done, rather than adopting the attitude of doom and gloom that they so often display.
I welcome the opportunity to review the WDA's work. It has already been pointed out that, when the agency was set up in 1975, its establishment was opposed by my party. The hon. Member for Alyn and Deeside's party was then in government. The WDA was a rather different animal then--a very imprecise and wishy-washy animal. It was responsible for industrial development, advisory services to enterprise, small business development, promotion and publicity, the provision of industrial sites and premises, industrial infrastructure and environmental improvement. That is quite a wishy-washy list. As my right hon. Friend the Minister reminded us, virtually the first action that was taken after the 1979 election was the reshaping of the agency into a meaningful body--one that has been successful in Wales. It now has much more precise and targeted objectives : the provision, letting and management of sites and premises for industry, land reclamation and the promotion of Wales as a location for industrial development
Is it not amazing that the promotion of Wales as a location for industrial development was originaly tucked away alongside publicity? It was originaly a very underrated feature. That alone may justify my party's opposition in 1975, and our subsequent reshaping of the agency.
Do not Opposition Members remember the fiasco of the advance factories? The right hon. and learned Member for Aberavon (Mr. Morris)--and probably the hon. Member for Alyn and Deeside--would scuttle around Wales, opening one advance factory after another. It
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became a joke among the people of Wales : yet another empty shed would have its ribbon cut by the right hon. and learned Gentleman. That was the standard of the WDA before my right hon. Friend reshaped it into the successful animal that it is now.The present Government have made the agency much more specific and appropriate. It should never be forgotten that only the present Government have provided it with sufficient funding. As my right hon. Friend was able to announce, its budget has been doubled in real terms, to £160 million. The WDA is now a success of which we can all be proud, as hon. Members on both sides of the House have acknowledged. The right hon. Member for Llanelli (Mr. Davies) stressed its success in attracting inward investment. Since the inward investment arm was formed in 1983, approximately 85,000 jobs have been created or secured. We should all praise the agency highly for that.
I recall attending in the summer recess the most pleasing opening of the Robert Bosch factory outside Cardiff. I should give credit to my right hon. Friend the Minister of State because he has devoted much energy to developing links with the motor areas of Baden-Wu"rttemberg, where Robert Bosch came from, and with Catalonia. He has signed a remarkable treaty in Catalan and Welsh, and we look forward to further developments between Wales and Catalonia. My right hon. Friend the Secretary of State announced that this year the WDA has achieved another record in attracting 165 projects worth £830 million and 15,000 jobs. Again, that is a most creditable figure. I emphasise what my right hon. Friend said--that attracting inward investment is a team job involving Ministers, the Welsh Development Agency, county and district councils and, in my part of south Wales, Cardiff and Vale enterprise. In addition--sometimes it does not get thanked enough--Cardiff chamber of commerce and industry plays a major part in supporting missions abroad and looking after potential investors who come to Wales.
Inward investment has been a real success in Wales. The policy of the Trades Union Congress to Japanese investment is particularly regrettable. It described it as an alien culture.
Mr. Alun Michael (Cardiff, South and Penarth) : The hon. Gentleman paid tribute of the work of the Cardiff chamber of commerce and industry, which received considerable grant moneys from local authorities for the work that it undertook with other bodies. Will he be a little more even- handed rather than appearing to be churlish in criticising organisations and ignoring the contribution of local authorities?
Mr. Jones : That shows that the hon. Gentleman was not listening. If he had paid closer attention, he would have heard me refer to the team that usually comprised the Welsh Office, the WDA and local councils. I also mentioned the significant contribution of the Cardiff chamber of commerce and industry. I do not depart from what I said.
I was dealing with the worrying stance of the TUC in condemning Japanese investment as an alien culture. Especially worrying--I did not notice any comment from the hon. Member for Alyn and Deeside, but perhaps the hon. Member for Cardiff, South and Penarth (Mr. Michael) will deal with this--is Labour Members failing to condemn the TUC's attitude to Japanese inward
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investment. Wales has been most successful in attracting Japanese investment and is therefore most vulnerable to a Labour-TUC campaign against such investment. That would only encourage existing investment to relocate elsewhere and potential investment to say that Japanese investment is not welcome in Wales.Dr. Dafydd Elis Thomas (Meirionnydd Nant Conwy) : I have no authority to speak on behalf of Wales TUC, but from my knowledge of its activities I can say that that is not its policy. It has worked hard to ensure suitable trades union agreements to facilitate Japanese investment in Wales.
Mr. Jones : I look forward to the Wales TUC distancing itself from the TUC, otherwise it will feel that it is being betrayed by the TUC's hostile approach. Japanese companies in Wales and those who care about the Welsh economy must be curious about why Opposition Members have not condemned the TUC's policy.
Mr. Michael : We should all agree on the need to encourage inward investment and indigenous industry and adopt a bipartisan approach. Labour Members agree with the hon. Member for Meirionnyd Nant Conwy (Dr. Thomas) that Wales TUC has adopted such an approach. There has been a partnership between the different agencies of national and local government. In view of the importance of the debate and of the WDA, I invite the hon. Gentleman to be less churlish and not turn it into a party-political ping-pong match. It is too important for that.
Mr. Jones : The hon. Gentleman always dodges the issue. Perhaps I should give way again so that he can condemn the TUC's policy of hostility to Japanese companies and for describing them as an alien culture. We know that that is the TUC's position. Common sense tells us that the only likely result is that Japanese investment will be frightened away and not made welcome. Shall I give way to the hon. Gentleman so that he can condemn the TUC?
Mr. Michael : The hon. Gentleman might as well give way so that we can get a little common sense into the debate. We are discussing the WDA. If he knows anything about the work to secure inward investment in Wales, including Japanese investment, he should know of the close partnership, to which tribute has been paid by successive Secretaries of State, between Wales TUC and unions. It is a diversion for the hon. Gentleman to go down this course. Although it is not for me to call him to order, I suggest that he returns to the subject of the Welsh Development Agency.
Mr. Jones : I suppose that I should apologise. I have been wasting the time of the House by allowing the hon. Gentleman to intervene. He continues to evade the point. He will not condemn the TUC. He is saying, as a Labour Front-Bench spokesman, that he does not care about Japanese inward investment. By not condemning the hostility to Japanese investment, on behalf of his party he is saying that he does not want Wales to have the opportunity of exporting to Japan. Instead, he would prefer investment to be made elsewhere and for Japan to export to Wales.
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Wales can develop far more profitable opportunities from its successful partnership with Japan. About three years ago, a parliamentary mission to Japan met the head of Yuasa Batteries. His opening remarks were, "How can we apply the Thatcher miracle here in Japan?" The Japanese recognise that they can gain from us in the same way as we can gain from them. But we shall not gain from the hostility of the TUC or from Labour's failure to condemn that attitude.Another inappropriate development has been the unfortunate way in which the chairman of the WDA has been drawn into political debate. Early-day motions have been tabled by an hon. Gentleman who is not in his place to explain what he means which make some unwarranted or not obviously justified allegations against the chairman. The most substantiated charge against him is that, in the middle of a busy business trip to the other side of the world, he might have had a 24-hour stop-over en route from Australia to the west coast of America. That is a most ridiculous charge. It is like criticising the hon. Member for Cardiff, West (Mr. Morgan) for stopping for a cup of coffee at Membury or Leedelamere services as he drives home to Cardiff on the M4 tonight. That the chairman should have a break and stop at a normal refuelling point for 24 hours--all air services from Australia stop at one or two locations--scarcely appears to warrant a wholly unjustified early-day motion. Again, I wait to see what Opposition Front- Bench Members say about that slur. Anyone who has been on parliamentary missions abroad will know that they are not junkets. Their itineraries--or those of the missions on which I have been--have been exhaustive. There was very little free time left to any of the participants. The people who work so hard for Wales inevitably need a break at the weekend to recharge their batteries so that the hard work done until Saturday morning can be restarted on Monday morning.
I am sorry that the hon. Member for Cardiff, West (Mr. Morgan) is not here. I regard the early-day motion as the cheapest of cheap shots. I imagine that he does not have great support from his colleagues. In considering the signatories of the two early-day motions, one finds that of the first six only one signature on each motion is that of a Welsh Member of Parliament. The hon. Gentleman has had to rely for support on English Members of Parliament, and we can see those who signed this wholly unwarranted and unjustified slur against the chairman of the Welsh Development Agency and against the agency itself. I wish that the hon. Gentleman were here to hear what I say. He is doing nothing other than contributing to the "selling Wales short" campaign.
I have met the chairman of the WDA a few times and I know of no justification for such an attack. He appears to have very much the right approach, which is to go out and get business for Wales. Who can be surprised that changes are being made to such an agency? It is a body which must constantly move on, change and become more efficient and more expert. It is natural that a new chairman of the WDA would change the style of the agency's operations. From what I can see, he seems to be making the right changes and the WDA is making progress.
I hope that the useless and ridiculous early-day motions, which should never have appeared on the Order Paper, can be put behind us and that we can pretend that they do not exist. In general, the WDA and all those who work for it are doing a good job, and we want to see them do even better.
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6.11 pmMr. Richard Livsey (Brecon and Radnor) : I welcome the Bill to increase the investment limit of the Welsh Development Agency from £700 million to £950 million. The WDA's record is very good and I do not think that any hon. Member will dispute that.
I do not wish to be churlish, but I am a little concerned about the comparison between the ability of the WDA to spend £950 million and the £16 million approximately that is allocated to the Development Board for Rural Wales. Since the WDA also has a remit to operate in rural areas, it is clear that some of the money allocated to it will find its way into the rural areas of north, south and west Wales. However, there has been a lack of recognition so far in the debate of the crisis in the countryside, in farming and in the rural areas. I am greatly concerned that many sons--even single sons--of farming families are now leaving the industry. That has happened to the chairman of the Brecon and Radnor National Farmers Union, who was a member of the same young farmers club as I was. His son is unable to continue on the family farm, which is sad.
I think that we all accept that there must be an interventionist role in the WDA and the DBRW for channelling public funds into a mixed economy, so more attention should be paid to the very low incomes now to be found in farming. They are now at their lowest since the second world war.
One problem confronting agriculture and agricultural products is the power of the supermarket chains in the marketplace. They now control more than 50 per cent. of food retail marketing. Indeed, one would have thought that it should not be necessary for them to ask to open on Sundays in order to ply their trade. I should have thought that they were doing very nicely anyway. However, that leaves the agricultural industry, and farmers in particular, in a very weak bargaining position. I should have thought that the WDA and the DBRW could in future pay more attention to aspects of co-operative marketing. Earlier this week I visited the Royal Welsh showground and I was pleased to hear the chairman of the DBRW, Mr. Glyn Davies, announce investment in a new food hall on the Royal Welsh agricultural show site. That is an excellent initiative and should be the forerunner of more initiatives to market more Welsh food products.
Sir Wyn Roberts : The hon. Gentleman is well aware of the financial backing that the Development Board for Rural Wales is giving to food promotion which will be our main arm in selling Welsh food products at home and abroad.
Mr. Livsey : I am certainly aware of that fact and I welcome such initiatives which, I think, are long overdue. I am glad to see that some are in the pipeline. I am concerned about the present inability of farmers to co-operate effectively in marketing their food products. I hope that such initiatives will assist that process. I am especially concerned about the lack of EC abattoirs in rural Wales, whether in the WDA's area or in that of the DBRW. I think that I am right in saying that there is now a fourth abattoir in Llanidloes which--I acknowledge--has received support from the DBRW. However, let us compare our position in rural Wales with that of other parts of the United Kingdom. Scotland has 20 European Community-approved abattoirs and Northern Ireland has 28, so we are a long way behind. I
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should like the DBRW and the WDA to encourage co-operative marketing groups among farmers and to enable them to set up abattoirs and meat packing plants so that they can compete in the fierce retail food market in Britain and, I hope, to export to mainland Europe where they also need to compete.Unless we have our house in order and can market products that housewives want and which are in an easily accessible form for modern living, we shall lose out. It appears that unless things change rapidly, we shall be able to slaughter only about 40 per cent. of our lamb crop in Wales. We still have little ability to produce marketable products from meat packing, and so on.
I make no apology for drawing the Minister's attention to an issue that concerns my constituency. I noted the WDA's great success in land reclamation in south and north Wales. It has done an excellent job. However, as the Minister will know, I am very concerned about a continuing burning tyre fire on a derelict site. The fire has serious environmental consequences at Heyope near Knighton, where 10 million tyres have been on fire for the past two years as a result of arson. Water is becoming steadily more polluted in the river Teme. Four million water consumers downstream in the west midlands might be threatened. To be fair, many agencies have tried to tackle the problem, including the Powys fire service, which has gone as far afield as Canada to draw attention to the problem. As many millions of pounds are available to the WDA to reclaim old sites in south and north Wales, will the Minister please consider the possibility of using derelict land reclamation funds from the WDA to tackle that site, which is not large? We are talking about hundreds of thousands of pounds, not millions of pounds, to overcome the problem. There I leave that topic.
Sir Wyn Roberts : I know that that problem is causing concern and I am glad to tell the hon. Gentleman that there will be an early meeting of the chairman of the WDA, the local authority and company representatives to discuss it further.
Mr. Livsey : I am delighted to hear that and I thank the Minister most sincerely. There is great and mounting concern about the situation, which not only affects a small locality but has wider implications. I believe that the situation is unique in the world. Another aspect of the WDA and, to some extent, the DBRW which concerns me--I am not nit-picking ; I am merely mentioning the matter--is the desirability of having more in- house consultants and agencies in Wales to provide consultancy work for the two agencies. Far too often consultancy services have to come from outside Wales, yet in Wales we have people with professional training who could develop greater expertise in consultancy work, especially financial consultancy. I trust that in future this idea will come more to the fore.
Only yesterday, as the Minister will know, we had a wide-ranging discussion on infrastructure projects in Wales--especially roads. Wales still has poor infrastructure. We still need a north-south road and better links between mid-Wales and the midlands. That will require more public investment than can be provided by local authorities, or even by the Welsh Office. Some of the agencies may be able to assist us. Perhaps the WDA and the DBRW could make recommendations for improved
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infrastructure in Wales. That would assist with exports and communications and improve economic activity in general.I am sure that the Welsh Office already consults on the matter, but perhaps it could consult the agencies more on economic infrastructure, such as roads and railways. Perhaps it could consider jointly with the Department of Transport the desirability of electrifying the railway lines into Wales.
Other hon. Members have rightly stressed the importance of skill training. It is vital. We know that Wales has an immensely dedicated resource in its work force. Hon. Members have also rightly praised the Welsh work force for its ability to get down to the job, tackle it and learn how to increase productivity. However, even given the advance of the training and enterprise councils, we need more integrated skill training and more integration with local education authorities, too. That matter needs more attention. Sandwich courses are important, as is training on the job and then returning to courses run by education authorities--higher education colleges, for example. I was in that environment before I entered the House. Perhaps with the increased investment available under the Bill the WDA will be able to assist with the problem of unemployment. Wales is still an unemployment black spot, with more than 120,000 people out of work. That is far too many. The problem must be tackled. The philosophy of the mixed economy is now widely accepted on both sides of the House, despite what the hon. Member for Cardiff, North (Mr. Jones) said, Thatcherism is dead. It may have been a factor in the 1980s, but it does not live in the 1990s. We are in a different era altogether. We all accept the mixed economy and the fact that the WDA and the DBRW can contribute to it.
We have been fortunate in some of the tenants of the Welsh Office, especially the right hon. Member for Worcester (Mr. Walker)--I suspect that the tendencies of the present Secretary of State, too, are on the damp side. We have been fortunate that there has been the will to pursue the philosophy of running the mixed economy better. The fact that the Bill provides increased powers for giving financial support to the WDA shows that clearly, too.
The problem of the low-wage economy in Wales still needs to be tackled. We will not get better quality jobs until we have better skill training and more skilled people there. That cannot be emphasised too much--nor can the importance to the Welsh economy of home-based industry and small businesses that grow. More attention must be paid to them, especially in terms of providing better financial arrangements and management assistance. I know that the chief executive of the WDA is now considering that and will soon go round the small businesses of Wales, geeing them up and trying to improve the position. I welcome that initiative.
Increasing the amount of manufacturing industry, after its disastrous decline over the past 12 years, is vital for Wales. The WDA will have a crucial role there too.
The future of Wales lies within the European Community. I strongly endorse monetary union and greater policial integration in the EC. I believe that we will get more for the Welsh economy, a higher standard of
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living and a better future for our young people out of better integration within the European Community. Federalism is much misunderstood in some parts of the Conservative party.Subsidiarity--the policy coming out of the EC--fits Wales well. It is about making decisions at appropriate levels in the Community, so one would hope that in future more power will reside at a Welsh level. Parts of the WDA operation already show that. All that we need to do now is to bring greater democracy to Wales to ensure that political decision making, too, is brought nearer to the people.
At a European level, the creation of a single currency is inevitable and will bring great benefits to Wales. It is only just round the corner. We have a few little local difficulties, such as Maastricht, to overcome, but on the whole the British people, especially the Welsh, are behind those moves. We are going in the right direction, and my party welcomes the Bill.
6.27 pm
Mr. Ted Rowlands (Merthyr Tydfil and Rhymney) : The Welsh Development Agency has been, is and, I am sure, will remain the development lifeline of communities such as mine. We find it difficult now to believe in life without the WDA. But sadly, however much of a lifeline it has been and still is, I have to report that in the past decade it has been unable to cushion us against or insulate us from recession and economic mismanagement.
The Secretary of State said today, as he has repeatedly said in the past, that we face a period of restructuring the Welsh economy because of the loss of jobs in coal and steel over the past decade. I remind him, and the House, that in my community over the past 10 years three times as many jobs have been lost from the manufacturing sector as have been lost from coal and from the closure of the last of the Dowlais iron works. It is not the collapse of coal and of iron in the past decade, but the collapse of manufacturing industry that was brought into our communities to replace the coal and steel jobs which has created the jobs chasm. That has been our major problem in the 1980s.
It could be argued that the problems of the early 1980s led to a need to restructure and to develop new production techniques in the manufacturing sector. That view was taken as much by the trade union movement in Hoover in my constituency as by management and by the Government. However, we rightly feel resentment and bitterness about the second recession and about the second destruction of jobs that is happening now. That is not a consequence of restructuring and it has nothing to do with coal or steel. The self-inflicted recession and loss of jobs are a result of mismanagement by the right hon. Member for Blaby (Mr. Lawson) and the Cabinet during the two years that led to a crazy commercial and property boom not in south Wales, but in other parts of the country. That had to be stopped by cripplingly high interest rates. In turn, that not only brought to a halt the property boom in the south-east, but brought about the sudden and disastrous decline of manufacturing investment in industrial and consumer goods. We have the right to say that the job losses suffered in the past 18 months have occurred as a result of mismanagement by the Government. The Welsh Development Agency has been unable to protect us from that.
The problem is best illustrated in my own community. Effort has been put in by all concerned, including the
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Secretary of State, the Minister, the Welsh Development Agency, local authorities and myself. We have worked hard to attract new companies. It was announced recently that two new companies in my community, an exciting prospect, could bring in 170 jobs in the next couple of years. Last week, almost 100 jobs on one line were lost at Nancanco in Rhymney which almost wiped out the job opportunities provided by the new companies. What has happened is a result of economic mismanagement, not of demanding too high wageincreases--Hoover workers have scarcely had a wage increase--or of bad industrial relations in the past two years. Workers' rights have been eroded week by week and month by month in our community. There is no citizens charter for people at work who are having to accept poor conditions and relationships. The jobs have gone as a result of economic mismanagement by the Government over the past two years. Once again, we must try to bridge the jobs chasm which has emerged in communities such as Merthyr Tydfil and Rhymney. We turn to the Welsh Development Agency for support and assistance in bridging the jobs chasm. Two questions lie behind many of the speeches made by hon. Members. Where will the new jobs come from? How shall we attract them? If we can answer those two questions, we can identify the role of the Welsh Development Agency and of the money that we shall approve through the Bill.
Where will the jobs come from? Much has rightly been said about the need to attract inward investment and all communities in south Wales can demonstrate the success of inward investment. However, as my right hon. Friends the Members for Llanelli (Mr. Davies) and for Alyn and Deeside (Mr. Jones) have observed, the game is getting more competitive. Whether from central Europe or from other Community countries, there will be growing competition, and the competition to attract inward investment is already intense. We must not become over-dependent on a new wave of inward investment. In some ways, we do not need to be too dependent on new inward investment because within our own communities with the existing inward investors there are tremendous job creation possibilities.
I read with great fascination a recent publication by the Department of Trade and Industry, and I hope that the Minister, the Secretary of State and everyone in the Welsh Office has also read it. One had given up the Department of Trade and Industry, yet in June 1991 it published a document called "Market Opportunities for Electronic Component Manufacturers--A Study of Demand Created by Japanese Electronic Equipment Manufacturers in the UK". It shows that about £1 billion worth of components are feeding existing inward investment and that the figure will rise in the next four years to £1.7 billion. Hon. Members should think of the jobs potential if we can reach out and develop the contacts, and if we can create the manufacturing capacity to meet some of that demand. The Department of Trade and Industry document refers to local political pressures. I am delighted that somebody in that Department understands the issue, even if the Secretary of State for Trade and Industry does not. The document refers to the pressure that is being put on existing inward investors to diversify and to source in the local communities. We have heard nothing so far about what strategy the Secretary of State and the Welsh Development Agency will adopt to gain a share of the magnificent Japanese
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investment in south Wales and to benefit from the components potential of inward investment. Will we gain a share of the local sourcing? That could be a major area of job creation within our community. Everyone dismisses the sheds. I do not, and I am very glad that there are sheds in my area because we shall need many more if we are to fill the jobs chasm. Companies, whether local, United Kingdom or owned by inward investors, will come to the sheds to feed components into the first generation of inward investment manufacturing. We must appreciate that potential and we should not spend all our time chasing new companies, although we must do that to an extent. We must spend as much time building on the potential that has been identified even in dry Departments such as the Department of Trade and Industry.Sir Wyn Roberts : I take the hon. Gentleman's point. Surely he must be fully aware that with many of the new inward investors, especially the Japanese, there was an insistence that a percentage of the materials should be sourced either in the United Kingdom or in other European countries. He will be aware that many companies in Wales, especially the Gooding Sanken Group, have taken advantage of that.
Mr. Rowlands : Yes. My point is that there is pressure for insistence on a growing percentage of local sourcing. We want a far more definitive strategy from the Secretary of State and from the Welsh Development Agency so that we can tap into the growing potential. Sony is now sourced heavily from within the United Kingdom, as is Nissan in Sunderland. One of the companies that is coming into my area will produce goods for the new markets and new opportunities created by the first generation of inward investors.
Are we moving to a new plane raising our sights and setting targets in view of the potential job creation in Wales resulting from those developments? Is there, for example, a view on the enormous Bosch development adjacent to the M4 within 15 minutes' journey time of my community? What strategy has been adopted to ensure that, as a result of the Bosch development, jobs in the components industry will be created in the community of Merthyr Tydfil? We cannot fit the Bosches into our valley communities. We do not have great land sites--we do not need them. We need to create 2,000 to 3,000 jobs as a spin-off from other investments. I should like a lot more. I should like to hear the chairman of the WDA and the Secretary of State overtly, deliberately and consciously in a planned fashion reaching out to the new potential market for jobs in our community. Perhaps they do so behind the scenes.
Unless the Minister of State can prove otherwise, the trouble is that, after all those efforts, information on the Welsh economy is appalling. The paucity of information about the Welsh economy strikes one. Those are not my words ; they are the words of the most recently published document, entitled "Valley Skills", an inward investment study. That document came out of the Welsh Office last week, and it states :
"The paucity of information on a number of basic issues is a theme running through this report".
The report makes that point very well. There is a paucity of information about what skills we have and what skills we need. If there is enormous potential for jobs within the new inward investment that has already occurred, how will we
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attract them? How will Merthyr, Rhymney, Neath, Pontypridd or Llanelli attract those jobs? There are two methods-- one involves the role that the WDA has been and is playing, and with which it is only beginning to come to terms, as was mentioned by my right hon. Friend the Member for Llanelli. The first is a traditional method. I do not dismiss it. Perhaps my hon. Friends went too far in saying that we have the necessary property. I am not much interested in property, but I am certainly interested in land reclamation. I am certainly interested in the building of modern industrial real estate in communities such as mine, because at least one has something physical to offer and to market, and that is extremely important. That is why I was concerned about and interested in the WDA budget figures for the next couple of years.In the public expenditure White Paper on the Welsh Office there is a decline in net expenditure by the Welsh Office to the Welsh Development Agency from £85 million or £90 million in 1991-92 to £64 million in two years. That is a drop of more than £20 million in the contribution from the Welsh Office. However, the figure for the gross budget remains at £160 million. It is for the Minister of State to justify the figures, but it seems that the budget will be sustained by increasing rents on new properties from £32 per sq m to £45 per sq m--a good contribution to industrial inflation. I must say--and by existing average rents of the whole portfolio rising from £15 to £24per sq m.
The second method is a huge divestment of properties. I am not arguing the merits or demerits ; that is not my concern at the moment. My concern is whether that will happen and, if it does not happen, what will happen to the WDA budget. The forecast is to go from the current sales this year of 74,000 sq m to 300,000 sq m. That will be three times as much property sold. My right hon. Friend made a point about preoccupation with property. There will be tremendous preoccupation to reach those figures. I cast doubt because the figure for 1991 factory divestment was supposed to be 209,000 sq m this year. The achievement is 74,000 sq m. Given that track record, it is reasonable to ask whether, if we do not reach those figures, and if there is a shortfall in factory sales, the budget will be made up by the Welsh Office and the Secretary of State in the coming year. That is all I ask, and I should like an answer to that question, because we are dependent on that budget.
A major new matter to which the WDA must pay attention is the attraction of our communities, as my right hon. Friend rightly pointed out. It gives me nightmares to watch our society being de-skilled and to watch many people's skills becoming redundant. I remember marching a couple of Fridays ago. Banners were being waved ; it was a romantic moment. Pragmatically, I asked the chairman of the lodge committee, "What are you going to do?" He said, "I don't know yet. I am a trained electrician ; I was trained by British Coal. The electrics that I know are totally redundant in the world outside. I was a good Coal Board electrician, but I am not an electrician for the new age. I asked British Coal, with all its job shops, to train me again. They said, No, we will not train you again, because we have already trained you once.' " From British Coal, British Gas and British Telecom and the South West
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electricity board came a generation with good training skills. Privatised companies will let us down on training, just as manufacturing is letting us down on training.One of the real ironies is what we read in many documents, the latest and glossiest of which is the strategic guidance from the Secretary of State, entitled "Skills and Enterprise : An Agenda for Wales". It was released yesterday. I thought that it was a Labour party policy document, it looks so good and colourful, but it is minus the content. It states :
"The Secretary of State therefore invites Welsh TECs, working with the WDA and DBRW, to develop proposals for a coherent framework of services on skills that the development agencies can market to inward investors."
It is recognised that we shall need skills and market them to attract new jobs and new opportunities to our community. Training is supposed to be employer-led, but I must tell the Secretary of State that employers are not training. We are depending on the very people who have let us down. I do not say that that is the cause of the recession, but they have cut the money that has previously been spent on training. We are turning to a manufacturing and trading base that does not exist. If it exists, it has shrunk to a level that is incapable of sustaining a new training initiative of any character. Another worrying matter--it relates to the electrician from Penallta--is that the type of training being offered is often out of date. I recently went to a fine training skills centre. It shook me rigid that people were being taught old-fashioned skills and on old-fashioned machinery. It is true that many of those people will go into factories with such machinery, so we are training for the here and now if not for the past, but there is a new generation of manufacturing, and production techniques. Hoover in Merthyr is demonstrating that. Any new inward investor will bring modern manufacturing training and machinery to our communities. We shall have to offer people who will understand and have a feel for that type of production and the training that goes with it, but who will prepare the new generation for the next five or 10 years? Who will help middle-aged redundant people in communities such as mine? We do not have the manufacturing base or training programmes to go with it. That is why, in the summer, I wrote a special programme and prepared a detailed analysis of what would be a manufacturing training programme for a community such as mine. I put a proposal that we create a centre of excellence. I appreciate my right hon. Friend's point that we may have to send our people to Japan and elsewhere, but we could train them in our own communities, but that would require much more intervention and greater effort to create opportunities for our people. The WDA, alongside our TECs, will have to play a more fundamental part in educating the new generation so that, when we invite and attract new companies to our areas, we will offer not only major new industrial real estate, new factories, and financial assistance, but a community with modern skills, ready to attract modern industry to create a modern economy for the Wales of the 1990s.
6.49 pm
Mr. Keith Raffan (Delyn) : I agree with some of the comments made by the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), especially about the paucity of the information available to us about existing
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skills in Wales, the skills that we need and therefore the importance of a skills audit. He is also right to say that it is at a local level that we can best assess the skills that are needed. My worry about the training and enterprise councils is that they cover too big an area. Sometimes the local authorities know best exactly what skills training we need. The district council in my constituency has played a dramatic role in our area's economic and industrial regeneration. There needs to be much greater integration between the local authorities and the TECs on matters relating to training and skills needed.Although, as I have said, I respect some of the comments made by the hon. Member for Merthyr Tydfil and Rhymney, he will not be surprised if I disagree with him about the recession. He was unfair in looking at the British economy and British interest rates in isolation. My latest information was that the Labour party had been converted in its thinking on Europe. We must look at the British economy and British interest rates in the European context and bear in mind the fact that we are not the only country in an economic recession : other countries are in the same position.
In addition, the level of our interest rates is now directly affected by factors outside our control, ranging from the strength of the peseta in the exchange rate mechanism, the fact that the German Government have taken on the enormous task of regenerating east Germany with the consequent impact on Germany's interest rates, and even that, according to the chief of staff at the White House, President Bush may have made certain impromptu and spontaneous remarks on a golf course.
All those factors are outside our control but, in the global economic village in which we now live, they have a direct effect on our economy and interest rates. I am sure that my right hon. and hon. Friends on the Front Bench will nod their heads vigorously at that, because nobody could be keener to reduce interest rates than the Government, especially as we have only a few more months to run of this Parliament and we are desirous of re- election. As I have said, we must look at our economy and interest rates in an international context.
I must apologise to the House in advance for not being able to be present to hear the replies to the debate, but, like hon. Members of all parties, I am glad to have the opportunity to support the Bill. As my right hon. Friend the Secretary of State has said, there is no doubt that the Welsh Development Agency has made an immense contribution to the Welsh economy and to the industrial regeneration of the Principality. I have direct experience of that in my constituency, where the partnership between the WDA, the Welsh Office and the local authorities has been remarkable.
If I had to specify one local authority, I should like to pay tribute to Delyn borough council. That partnership has been to the enormous benefit of local people. I remember the dark days of 1985 and the closure of Courtauld's greenfield site where over 800 people were made redundant. That had a multiplier effect on the local economy, with a further 400 or 500 redundancies. Male unemployment in Flint and Holywell approached 40 per cent.
There has been a dramatic improvement since then. The local economy used to be far too concentrated on only three industries--coal, steel and textiles. However, thanks to the partnership between the Welsh Office, the WDA and the local authorities, it is now much more diversified. That
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