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Orders of the Day
Welsh Development Agency Bill
Not amended (in the Standing Committee), considered.
Order for Third Reading read.
8.58 pm
The Parliamentary Under-Secretary of State for Wales (Mr. Gwilym Jones): I beg to move, That the Bill be now read the Third time.
The House will be aware of the provisions of the Bill, the purpose of which is to amend section 18 of the Welsh Development Agency Act 1975 to raise the financial limit of the agency from its present level of £950 million to £1,350 million. The Bill is a routine, technical measure to permit on-going public expenditure to finance the agency's activities without prejudice to future spending decisions.
I was asked in Committee how long the proposed increase of £400 million would last. The annual amounts that contribute to the limit are derived from a series of activities that have to be based on the best assumptions at the time, including the total that can be afforded for the agency's programmes, the estimate for total capital and current receipts, the likely level of repayments and the permitted level of the budget for running costs. On top of that would be any supplementary provision that could be made in-year. It is really not possible to state with any certainty how long increases in the agency's financial limit are likely to last, and I would not wish to pre-empt future public expenditure decisions either generally or specifically.
In Committee, the hon. Member for Cardiff, West (Mr. Morgan) asked me to provide the total figure for 1997-98 and 1998-99 that will count against the agency's financial limit. I have written to him and a copy of the letter has been placed in the Library. Approximately £62 million is planned to count against the agency's financial limit in 1997-98 and about £101 million in 1998-99. Those figures should be taken as only indicative figures for the purpose of debate, and they are liable to change.
Mr. Ted Rowlands (Merthyr Tydfil and Rhymney):
In some ways, I regret that it looks as if this Bill will be the last of the Welsh Development Agency Bills because of its provision that such matters will in future be dealt with by statutory instrument and in a debate of an hour and a half. I regret that because, even during the passage of this Bill, we have probed and discovered aspects of the agency's expenditure, budgets and future targets, which are of interest and concern to us all.
The most important fact is that there is a Bill at all and that, after 18 years, a Welsh Development Agency has survived. Those of us who recall the heyday of early Thatcherism--in which any form of government intervention was denied entirely and it was thought that everything should be left to the market and the money supply--will be fascinated by the agency's experience over the past 18 years. There was supposed to be no fine-tuning of the economy, but the Chancellor and the Governor of the Bank of England now fine-tune on a monthly basis.
The most extraordinary and interesting development of the agency, which has been spending very large sums of public money--I support that expenditure--has been in ensuring the location of major inward investment. By any standards, it represents regional, development area policy of the kind that goes back to post-war Britain. It is strange that, considering everything else that has been said ideologically over the past 18 years, the agency has been fulfilling a rather traditional, long-standing function. Indeed, it has gone beyond that.
I found the Secretary of State's speech on Second Reading fascinating for the way in which it seemed to counter the concept of non-intervention. We have not only intervention, but clear, specific prescriptive targets for the agency to achieve. We have got down not only to the number of jobs that we expect the agency either to create or secure but to sub-regional targets, which I very much welcome.
I should like to remind the House that, on Thursday, the Secretary of State said:
As we have targets and the Secretary of State made the case for them on Second Reading, we should be enlightened on the definition of the sub-region about which we are talking. What is the eastern M4? At which junction does it become the western M4?
Mr. Jon Owen Jones (Cardiff, Central):
Bridgend.
Mr. Rowlands:
Perhaps the Minister can confirm that.
We should also have a definition of the M4 corridor. How wide is it? I am fascinated by the prescriptive targeting that has emerged from the Secretary of State's thinking, but we need closer definitions.
Now that the discussion of detailed, prescriptive targets has started, I would like to propose some more targets. I shall direct my remarks to my hon. Friends on the Opposition Front Bench, because I hope that they will soon establish with the Welsh Development Agency
targets for the next few years. However, my remarks may be valid during the Secretary of State's few remaining weeks of tenure. If targeting is now in fashion, we should ask the agency to reach other targets.
First, I would like one target to be restored. We used to have a specific target for the reclamation of derelict land by 2000. That clearly defined target has been pushed aside, but I hope that my hon. Friends on the Opposition Front Bench will consider restoring it. In the debate last Thursday and in our debates on the Bill, concerns emerged that, whatever success the agency has achieved, with LG and Halla Engineering, the Welsh still have the lowest disposable personal income in the United Kingdom and the lowest gross domestic product per capita. Therefore, I see no reason why a future Secretary of State should not seek to establish targets to improve those figures by a certain date.
Mr. Denzil Davies (Llanelli):
That is Stalinism.
Mr. Rowlands:
I am merely describing targets like those that the Secretary of State has suggested. If we can have geographical targets, we can ask the agency to achieve economic targets.
The Welsh economy differs from those of most other regions and nations in the United Kingdom in another respect. Everybody says that future development in the world economy will come from small and medium companies, not larger ones. All the figures that I have seen show that Wales has a low proportion of small and medium companies, especially in manufacturing. The UK figure for companies with under 200 employees is 45 per cent., but the Welsh figure is 32 per cent. Small and medium companies therefore play a smaller role in the Welsh manufacturing economy. A significant target would be the promotion and development of small and medium manufacturing companies as a future base for the Welsh economy. That might also be an important Welsh Development Agency target.
I was fascinated by the new concept of prescriptive targeting by a Tory Secretary of State. I can imagine the howls of protest that would have come from Opposition Members if a Labour Secretary of State had talked about such targets--they would have called it old socialist planning--yet a Tory Secretary of State is targeting and planning, even in a sub-regional fashion, as much as any previous Government.
I welcome the Government's conversion to those concepts, because I still support those concepts. I believe in the role and function of Governments. I represent a community that is living proof that government matters, because when Governments did nothing we suffered; I believe passionately in targets and in government, and therefore in the role that the agency can play.
Mr. Dafydd Wigley (Caernarfon):
I am glad to take part in the debate, albeit late in the passage of the Bill. I have had an interest in Welsh Development Agency legislation from its earliest days. My only regret is that
The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) went back to the days in 1975 when the original Bill was debated. There was total opposition from Conservative Members to the creation of the agency: they were against it, lock, stock and barrel, because it would be interventionist and might affect the workings of the free market economy.
One of the Conservative party's wiser acts after coming to office was to realise that one does not throw the baby out with the bath water, and that the WDA had the potential to do a great deal of good for Wales. The Welsh Development Agency may not have had the resources that the Bill will give it, and may not always have had the guidelines that we would consider necessary for it to make an impact on the Welsh economy; none the less, it has been an extremely important body and has a future role that may be even more significant.
The hon. Member for Merthyr Tydfil and Rhymney spoke about targeting. I, too, was interested in the fact that the previous target allowed up to 80 per cent. of the new jobs that were coming to Wales to be concentrated in two small corners, the south-east and the north-east, which represent 10 per cent. of the land area of Wales and include about 30 per cent. of the unemployed.
Now the position is that 50 per cent. of the jobs will exist within 90 per cent. of the land area, and 50 per cent. will be in an area with 70 per cent. of the unemployed. That is a move in the right direction, but it does not solve the problem. Furthermore, the hon. Member for Merthyr Tydfil and Rhymney was right to ask about the definition of the two areas. Is it to remain the same, and on what basis has it been reached? It is not a statutory basis, and this has not been defined formally at all.
"I shall require that at least 50 per cent. of the jobs safeguarded or created by the agency to be outside the eastern M4 and A55 corridors."--[Official Report, 27 February 1997; Vol. 291, c. 461.]
So far, it has been argued that development has favoured the south-east and the north-east. Such planning is prescriptive. We are saying to the agency, "Thou shalt put 50 per cent. of all jobs and the expenditure that goes with them in certain specific areas in the Principality." Although I support that--the Secretary of State's announcement was widely welcomed--I think that it produces an interesting concept of detailed prescriptive targets which I thought were inconsistent with high Thatcherism.
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