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9.29 pm
Mr. Rhodri Morgan (Cardiff, West): Like the hon. Member for Caernarfon (Mr. Wigley), I offer my felicitations to the Secretary of State on his engagement. I am sorry that he is not here to receive those felicitations, but perhaps it is because he was a bit shy of receiving them that he decided to absent himself.
I understand that the Western Mail was in two minds as to whether to run the headline this morning, "Offa's Tyke Joins Welsh Establishment", but decided against it for good reasons. We shall watch carefully to see whether the Welsh Development Agency decides to invest in some Welsh gold mines now, if the Secretary of State orders an especially large engagement ring for his new fiancee.
I shall now discuss the Bill, and especially the issues that have arisen tonight, on how one resolves the differences between what has emerged of the Secretary of State's promises, as to how he will distribute WDA resources differently geographically. That subject was highlighted by my hon. Friend the Member for Swansea, East (Mr. Anderson) in the annual Welsh affairs debate--the St. David's day debate, as we sometimes call it--last week, on 27 February 1997 at column 462. He drew attention to the attempt to push investment and new job creation preferentially westward, and to some extent northward, by creating what one might loosely call a Mason-Dixon line. South-east Wales would have a lower priority than south-west Wales, the former having received the benefits of LG and certain other recent investments--Ocean Technical Glass, Newport Wafer-Fab and so on--and now that, perhaps more modestly, north-east Wales has received the benefits of the expansion of JCB, Hoya Lens and so on, investment would be pushed further west along the A55.
The problem is that, to do that, one must know whether sufficient resources are available to make it possible. Although the Bill extends the WDA's parliamentary financial limit by £400 million, if, as is likely, the Bill is passed--we shall not oppose it--the issue will remain of how much of those resources is left uncommitted, with which to execute the new policy of pushing investment further north and west. What is the point of issuing a ringing declaration about directing new WDA investment preferentially to areas that have not benefited very much in the past couple of years, if there are no resources to do so?
My right hon. Friend the Member for Swansea, West (Mr. Williams) has asked the Minister to tell us how much of the WDA's budget is uncommitted as things stand: uncommitted in this case meaning, I believe, on a commonsense basis--uncommitted to the known projects, in other words, to LG, Newport Wafer-Fab, JCB, Halla Fork-Lift Trucks, the expansion of Sony in Bridgend or any other investments that have been announced.
The Secretary of State is making a grand pronouncement about his intention to bias the agency's operations so as to push job creation further west: further into the valleys, further west into north Wales and west Wales, and into Pembrokeshire because of its unique difficulties following the problems of bovine spongiform encephalopathy, the Sea Empress disaster, defence cuts and the oil refinery closure, but how can that be done if all the resources have been fully committed? We have not yet received an answer to the question that was posed by my hon. Friend the Member for Swansea, East in column 462 in last week's annual debate on Welsh affairs. That question has arisen repeatedly during tonight's Third Reading debate.
What resources are available to the Welsh Development Agency, via the Bill, the public expenditure survey process and so on, with which to carry out the
commitment given by the Secretary of State to execute the grand new policy to try to develop the whole of Wales, not merely the south-east and north-east corner?
The WDA has the problem, not only of existing commitments, but of how the Welsh Office wants to define its relationship with the agency. In other words, does the Welsh Office see the WDA as an organisationally autonomous body, within the constraints of Treasury approval, approval from the Secretary of State and parliamentary debate once every five years, such as this debate? Does the Welsh Office envisage that within the normal constraints of parliamentary approval, the WDA should have a reasonable degree of operational autonomy, or should it work on the basis that every time it lands a big fish such as LG, it should go back to the Department for approval to spend the money? The Department would then give it a special handout, as happened last autumn in the winter supplementary estimate, and would say to the WDA, "Obviously, you have landed a big fish. You cannot handle that within your cash flow. Here is another £25 million, and a further £20 million for the next financial year."
That was never the original intention for the relationship between the Welsh Office and the WDA. In the past few years, the amount of finance given by the Welsh Office to the WDA has gone up and down like a yo-yo. The agency was virtually crippled by the previous Secretary of State and the forced asset sales policy, which took away the cash flow, its operational autonomy and its ability to handle all but the largest projects within its annual budget. Once the agency lost the cash flow from its rental income on buildings and land, it did not have operational autonomy.
We need to know from the Minister tonight whether it is now Government policy in the few remaining weeks of this Government to try to make the WDA totally dependent on the Welsh Office, so that every time it has a need for expenditure approved by the Welsh Office, it will ask the Welsh Office to give it some money from the general pool, as happened with the extra £25 million. I am sure that the Minister recalls that in Committee my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) asked him where the extra £25 million that was awarded to the WDA last November came from. The Minister replied, "Within the usual flexibilities."
Is that the sort of relationship that the Welsh Office wants to have with the WDA? Does it want the WDA to ask the Department every time it wants to spend some money, rather than being operationally autonomous during the financial year, except in emergencies? "Within the usual flexibilities" is not sufficient to define the relationship between the Welsh Office and the WDA in the future.
Many speakers have referred to the problem of getting the balance right in Wales in terms of new job creation. Has south-east Wales, in particular, done almost too well for its own good, and is it straining the labour supply and the supply of specialist skills, such as those of engineers?
I saw a letter in the Western Mail that referred to the possible emergence of an almost continuous urban strip of a possibly undesirable kind, running roughly from Cardiff Wales airport, to the west of Barry, right through Cardiff, through Newport and on to the end of the steelworks at Llanwern. That was described as a newly emerging city called Bacardiport--made up of Barry, Cardiff and
Newport--giving the right yuppie image of people sipping sundowners while looking at their boat from their luxury pad, and so on.
That illustrates the danger of areas of Wales having prosperity levels that we usually associate with the south-east of England, while the rest of Wales would be left to fend for itself as dormitory areas or areas that remained dependent on welfare, and so on. We need to know more from the Government about how they intend to achieve the right east-west, north-south, valleys-coast balance in the work of the WDA.
Finally, I shall deal with the sums that the Government will make available via the Bill and its financial provisions. In Committee, at columns 12, 16 and 19, I guessed that under the terms of the Bill, using the Bill's definition of finance for the WDA, the WDA would require about £100 million in the year 1998-99.
The Minister did not want to answer in Committee, which is fair enough. We then received a letter stating that my figure was wrong, and that the sum was £102 million. I received a letter on 25 February stating that the figure would be £202 million, but that letter was withdrawn.
Given the excitement generated in the ministerial private office by all the talk of engagement and marriage, it may be natural and forgivable to make a few mistakes, but it looks as if the figure of £100 million was about right--within £1 million or £2 million of the correct figure. That means that, having given an additional £400 million to the WDA in terms of the financial limit, or having permitted that expenditure, we would be doing the same job again in about four years' time.
The Government have said that they will attempt to give us the indicative limits. We are not talking about fixed commitments, but the amount will be about £100 million in 1998-99, which means, obviously, that £400 million will be used up in four years. If, as the Minister said, the limit is only indicative, I do not see why he could not go a step further and say--as it was not a commitment--that the Government expected the £400 million to last for so many years.
It would be useful for everyone in Wales to know the Government's policy on the WDA. Its financing, and its dependence on the Welsh Office, should not be allowed to go up and down like a yo-yo. We have lived through that over the past few years: we have lived through a very serious situation. The previous Secretary of State for Wales, the right hon. Member for Wokingham (Mr. Redwood), tried to wreck the WDA by forcing it to dispose of all its major saleable assets. He lowered the amount of finance required in the terms of the Bill to only £13 million in 1994-95. The present Secretary of State started off in the same mould, keeping finance to less than £20 million, until he found an extra £25 million last November. He is now rebuilding the agency, but he is doing so with post-dated cheques. It is important for us to be given a much clearer picture.
As for the WDA's financing of the Eurofreight terminal project between Cardiff and Newport, no money appears to be going in. The WDA has been asked to look after the terminal on behalf of the Secretary of State, but what is it actually doing? Consultants commissioned to act on behalf of the Secretary of State, but under the WDA's aegis, have reopened the whole issue of whether the
terminal ought to be between Cardiff and Newport or between Newport and the Severn bridge, or on Cardiff docks, or on the site of the existing freightliner terminal at Pengam moors.
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