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9.24 pm
Mr. Donald Anderson (Swansea, East): We are having this debate on the Welsh Development Agency in the last few weeks of this Parliament. Opening the debate, the Secretary of State said that he at last recognised that various distortions had arisen in Wales that had not been corrected and that he proposed to tilt the agency's balance of policy more in the direction of west Wales and north-west Wales, which have not so far benefited. The difficulty is that it is the end of the Parliament so, when we urge the facts, which do need remedy, really we are preaching to my hon. Friend the Member for Caerphilly (Mr. Davies) and urging him to take up that challenge, because we will be unable to see the fruit of the apparent and intended change of policy.
There has been a marked degree of consensus about the value of the agency's role. My city, Swansea, has benefited substantially from joint ventures with the agency, especially in Swansea vale and Castle quays, but the record on inward investment is not good on the whole. For example, there has been no major investment in Swansea bay or in the area that includes Llanelli during the existence of the Welsh Development Agency.
There is an increasing perception in political and business circles in south-west Wales that the agency--and the Welsh Office, which presides over it--are countenancing a widening gap between the economic performance of south-east and south-west Wales. Yes, the division of the agency's responsibilities into three regions is important, but Bridgend is included in the south-west Wales region, and that masks the problems that have showed themselves further west, so a misleading impression is given of the performance west of Bridgend.
I hope that what the Secretary of State said will be taken up by my hon. Friend the Member for Caerphilly, but much damage has been done in the past, as my right hon. and learned Friend the Member for Aberavon (Mr. Morris) showed clearly, by what the Government may call working with the grain, which in effect negates the key aim of regional policy to reduce internal imbalances as well as imbalances between England and Wales.
There have been specific examples of diversion of investment projects from west Wales to Cardiff bay, such as one from Baglan, in the constituency of my right hon. and learned Friend the Member for Aberavon. Much damage was done by the right hon. Member for Wokingham (Mr. Redwood) in reducing the grant in aid
for the agency to £25 million at a time when the Cardiff Bay development corporation was receiving slightly more than twice that amount in grant in aid. I understand the concept of making a flagship of the capital city, but it is now generally recognised in Wales that the Government have gone too far in that direction to the detriment of balanced development throughout Wales.
The West Wales chamber of commerce has sent a questionnaire to its members, the results of which are to be returned today, on precisely that theme. As the Secretary of State should know, there has been considerable disquiet in south-west Wales on that subject. Yes, we all rejoice that LG has gone to Newport, but there is now a major site, for which planning procedures are almost completed, at Velindre in the constituency of my hon. Friend the Member for Gower (Mr. Wardell). That would have a major impact on the economy of south-west Wales, and it is there that the present Secretary of State and my hon. Friend the Member for Caerphilly, his successor, should exert their energies to try to get a major investment at Velindre to match that at LG in Newport.
Mr. Rhodri Morgan (Cardiff, West):
The debate has ranged far and wide, although it is about the financial limits of the Welsh Development Agency. Those limits are relevant to the WDA's activities and how quickly it exhausts the limits previously set. The key question that has emerged from this wide-ranging debate--this seemed to scandalise Welsh Office Ministers and former Ministers, such as the right hon. Member for Conwy (Sir W. Roberts)--is whether it is right for us to accuse the Conservative Government, who are now reaching their fag end, of having an ambivalent attitude towards the WDA, even since its inception in 1975. Although they have found the agency convenient from time to time, they have caused it to exist on a diet of feast and famine, so that it has never known quite where it stood with the Government.
The right hon. Member for Conwy accused my hon. Friend the Member for Caerphilly (Mr. Davies) of a travesty of the truth in making that accusation against the Government. This matter is at the heart of the debate. The Secretary of State--unintentionally, I am sure--misled the House when he said that the amount that the WDA will receive next year in accordance with the financial limit set by the Bill will be greater in real terms than the amount that it received 10 years ago. He is right if one uses that comparison, but one can always pick out a year here and a year there to substantiate any claim. We should use the average figures for central Government financing of the WDA.
For the first 10 years of the WDA--from 1976 to 1985, half of which was under Labour, and just over half under the Conservatives--the amount of grant in aid and the
other relevant finance for the purposes of the Bill averaged £90 million a year. For each of the next 10 years--from 1986 to 1995, all of which were under the Conservatives--the amount was lower, but it was still fairly healthy at an average of £60 million a year. That is at today's prices.
Then along came the right hon. Member for Wokingham (Mr. Redwood), and all of a sudden, instead of £90 million a year on average for the first decade and £60 million a year on average for the second decade, the relevant figure--the amount of additional finance that the WDA received--suddenly dropped to £13 million, which was the second lowest figure in the history of the WDA in cash terms, let alone in real terms. That was the amount that the right hon. Member for Wokingham gave it in 1995-96, which was his first year as Secretary of State. Only in its first year, when it received £9 million--it was a new body and had not had time to set up its machinery--did the agency receive less grant in aid or have less borrowing power.
Then we had the first year of the present Secretary of State. Until the change in the budget last November, he was going to give the WDA only £17 million, which would have been the second lowest amount. That figure has shot up to £42 million, because of the extra £25 million that was supplied halfway through this financial year. The figure now looks respectable, but the Secretary of State's original intention was that it should be only £17 million. In those two successive years, the figures were £13 million, given by the right hon. Member for Wokingham, and £17 million, given by the present Secretary of State. That is a true measure.
The Secretary of State has now learnt his lesson, and has realised that being Secretary of State for Wales with the WDA at his disposal can bring him kudos. When he realised last summer that LG had signed on the dotted line, he thought, "I might become a bit higher profile as Secretary of State for Wales. I can become a slightly more important person and rise up the pecking order of the present Cabinet, and even more so of the future shadow Cabinet, if I am seen as the man who helped to bring LG to Wales."
All of a sudden, instead of the WDA being on a famine diet of only £17 million--the second lowest budget, barring its first year and the previous year under the right hon. Member for Wokingham--the Secretary of State decides to give it more money. Suddenly it is feast time again, at least to a moderate degree, and the amount of relevant finance is £42 million, which is still well below the average of the previous decade, but it is respectable. It looks as though the amount will go up to £65 million next year under the terms of the Bill, so the WDA will get a sum which is about the average of the past 10 years. That will be the time when the LG industrial development must be financed.
All that makes one wonder whether our charge that the Government are ambivalent about the WDA--making it exist on a diet of feast or famine--is not the bullseye. They have always had a problem with the WDA. That was apparent in the case of the Scottish Development Agency when it first started. The Government still do not know how they want to give the WDA the operational freedom to bring in large new inward investment and to
use those big investments from outside to stimulate indigenous business in Wales to act as suppliers to the new industries.
Everyone now agrees about the farcical period of the right hon. Gentleman's predecessor, nominally the Secretary of State for Wales, but in practice the Secretary of State for Wokingham and the Tory right-wing think tanks. He was the one who crippled the WDA's operational abilities by causing it to privatise itself from the inside by selling all its major assets, which meant that it then did not have the monthly cash flow, and every time a large investor came in, the WDA had to go back to the Welsh Office for special finance. Luckily, in the case of LG, it did so successfully.
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