20. Can we switch to agriculture,
Secretary of State? As you will know, our report on the present
crisis in the Welsh livestock industry is due to be published
tomorrow and we must not anticipate our findings here. Nevertheless,
you know the concern that we all feel about the state of agriculture
in Wales. Surely this is not the time to reduce expenditure on
agriculture by over 17 per cent, or are there special reasons
for this?
(Mr Davies) I would refer Mr Livsey to the reply
that I gave earlier to Mr Llwyd. It is not a question that the
Welsh Office has taken a decision to reduce expenditure. That
is not the case and any suggestion that that were to be the case
would be inaccurate. What has happened is that for technical reasons
the expenditure has gone down. I referred earlier to the decision
last year to use the HLCA mechanism as the means of paying agri
money compensation. The financial year just finished, 1997/98,
had an element in it of some £12 million which the present
Government decided to pay in agri money compensation. The expenditure
plans that we have got at the moment of course do not have any
provision for agri money compensation because the Government has
taken no decision yet as to the payment of such compensation,
although it is true to say that the Government will keep that
matter under review. Were there to be—and this should not
be taken as a suggestion that there will be—any payment
of agri money compensation in the current financial year, that
then will reflect in the figures which will be published at the
end of the year, so that gap would be reduced.
21. And this is shown graphically in the
agriculture expenditure coming from the EU receipts on your report,
page 9, where you have got a forecast outturn of £212 million
as against £178 million at the present time. This obviously
reflects changes in the value of the pound and agri monetary movements.
We have a number of problems coming up but that of course is in
the coming year. However, the calculations obviously have taken
into account movements in the pound. Are they fixed at a particular
level?
(Mr Davies) I think it would help if I were to
explain that the agriculture estimate for the Welsh Office originates
from two sources. First of all there are the CAP payments which
are largely determined on a headage basis. They determine that
at a European level and if we have eight million sheep and X million
cattle we get the appropriate amount and that does not come out
of the block but it is reflected in these expenditure plans. Then
there is the other part of expenditure which is the domestically
determined agriculture expenditure. That is fixed between the
agriculture ministers, with the Minister of Agriculture as the
lead Minister, and the Treasury as a whole and then we in Wales
get a percentage of that which is fixed for the UK as a whole.
We actually do rather well in Wales. I hesitate to say this when
there are colleagues representing English constituencies present
because they might berate me for it, but I think it is fair to
say that whilst we do not have 25 per cent of the UK population,
we get about 25 per cent of the total UK domestic agriculture
expenditure, so we do have some discretion over that element but
we do not have discretion necessarily directly on the CAP element.
Mr Paterson
22. Secretary of State, at Carmarthen, at
the Welsh Grand Committee where you were, the local MP was booed
by farmers. You have explained the technical reasons why the farmers
will receive less money this year, but our report which we have
produced shows that the situation in the hills particularly is
absolutely desperate. I wonder if the Government really understand
how bad things are, particularly when you consider the shocking
weather we had just before Easter which hit sheep farmers just
at the wrong moment for lambing. I do feel circumstances are exceptional
at the moment.
(Mr Davies) I certainly understand how serious
the problem is and I have understood for the last 10 years how
the crisis has been deepening and it was for that reason that,
certainly as long as eight years ago, I was warning the Government
about the incipient crisis of BSE and urging them to take much
more robust action.
Chairman
23. As we all were.
(Mr Davies) As indeed you were in the previous
incarnation as it were. It is a matter of great regret to me that
the previous Government did not understand what it was doing in
the handling of British agriculture. The present Government has
moved very quickly and very decisively to try to get some improvement
in the prospects for the soaring beef market. I think we have
made a considerable breakthrough at a European level. We have
paid agri money compensation, as I indicated, and we do keep the
whole of the agriculture industry under close review. Prior to
the Carmarthenshire meeting of the Welsh Grand Committee, I think
I had 15 official meetings with representatives of the farming
organisations, and I have had many more informal meetings with
delegations from colleagues here of the Welsh Grand Committee,
so I am very well aware of the problem. But of course Mr Paterson
will understand that the Government currently is following, certainly
for last year and this year, the expenditure plans which were
laid down by the previous Government which he supported. I would
be very interested to know if Mr Paterson is now suggesting that
we should change those expenditure plans, presumably either by
having increases in taxation or by cutting other programmes because
this is the reality of education or health or other forms of economic
development, to make additional payments to farmers. I should
be very grateful; I am not sure if it is entirely in order for
me to question members of your Committee but this is a question
which has been bothering me for some time.
24. I would be delighted to have your job
and make decisions, but you are in charge. You are quite right
when you say that the Welsh portion of the agriculture budget
is a higher percentage than for the English areas. That is quite
right because agriculture is so overwhelmingly important an economic
activity in particular in the hills. You switched to BSE which
is always a clever political trick. I am actually referring to
the sheep industry which has been particularly hit, as Mr Livsey
knows. I am not trying to make a cheap political point. I do think
that agriculture has an overwhelming preponderance of economic
activity in many parts of Wales, but for various reasons there
is a very real crisis. I think circumstances are exceptional and
you are the man in charge and I think it is right to ask: are
you prepared to do anything exceptional under exceptional circumstances?
(Mr Davies) There are two questions which Mr Paterson
raises. The direct answer to his second question is yes, of course,
and that is what the Government has done and that is why we have
had two very substantial tranches of help both before Christmas
and after Christmas. I will continue to meet the farming industry
and I will continue to make sure that the British Government responds
as effectively and as sensitively as it can to changing circumstances.
There are many things that can be done at a Welsh level and I
am certainly doing that, trying to devise the necessary strategies
which will allow us a distinctive response to these problems.
His first point I must take issue with. The raising of the matter
of BSE is not a cheap political trick at all. I think that the
root cause of the problem that we have at the moment with the
British livestock industry is traceable back to BSE. It is not
a problem which only affects the beef industry. If you look at
the way that our export industry has been hit; if you look at
the extra charges which are on the sheep sector, for example,
they stem directly from public concerns about the problem of transmissible
encephalopathies. There is no indication that the sheep sector
presents any danger at all, but because public anxieties have
been raised as a result of problems with BSE which are largely
past us now, there is in place a whole series of mechanisms which
do affect the livestock industry as a whole. It is not possible
to say that the sheep sector can be viewed quite independently
of the beef sector. That is not the case. There are enormous implications.
It is not only for sheep; it is for the whole of the livestock
sector and the feed processing industries as well.
Mr Llwyd
25. Unlike my colleague, I do not have my
eye on your job,——
(Mr Davies) Nor do I on yours, Mr Llwyd.
26. For the time being. Following your answer,
there is a distinction to be drawn, is there not, between beef
and lamb because frankly we have a problem in Wales because, although
we have a very good product, the large chain stores are not actually
selling it as they should. Part of the reason, as I understand
it, may well be the fact that we do not have any large freezing
plants. This is something which the Government as part of its
strategy I have no doubt will be considering. Am I right in thinking
that?
(Mr Davies) Yes. Certainly I await with great
interest the report of your Committee, Mr Jones, which as I understand
it is out tomorrow.
Chairman
27. You probably do not need to respond
to that, Secretary of State, since we are straying into the area
of——
(Mr Davies) I am quite happy to do so. As I say,
I await the report with interest. As I say, I do not know what
is in the report but I will look at it very carefully. I will
respond to the point that Mr Llwyd has made because I am very
concerned about the infra structure that we have in Wales for
agriculture. This is not in anticipation but before your report
is published, and it is for that reason that I have, with the
Welsh Development Agency in the new powerhouse that we have created,
had numerous discussions with the Board, with the Chairman, with
many other people concerned with agriculture in the food promotion
industry, with the universities, both at Aberystwyth and at Cardiff,
to look to see how we can develop an agenda for the better promotion
of Welsh foodstuffs. It may well be that we do have to have investment
in infra structure. I cannot give any undertakings at this stage
what that might be or what my view would be, but suffice it to
say that I do recognise that we have many problems with the infra
structure, with marketing of our Welsh products. I want to see
Government being an active partner. At the end of the day it will
be down to farmers to produce a commodity people want and people
are prepared to buy in the market place, but Government does have
a role to play in assisting the rural community. There is a special
Rural Policy Unit within the overall Policy Unit of the Welsh
Development Agency, and I very much hope that, as we move forward
with that reorganisation, we will be able to do more to assist
in a proactive way the promotion of Welsh resource.
Mr Thomas
28. Secretary of State, you will be aware
that the all-Wales Agri Environmental Scheme has been widely welcomed
as a positive initiative to the problems facing Welsh agriculture
and environment. Can you give us your assurances that you will
use your best endeavours to ensure that that scheme is adequately
financed?
(Mr Davies) I will certainly use my best endeavours
and I have a vested interest in doing it because the scheme is
largely one of my own creation. The funds are limited; there is
no point in beating about the bush. I think the importance of
the scheme however is that it establishes a scheme as an all-Wales
scheme so that everybody has an entitlement. I acknowledge that
that entitlement is in part theoretical because the scheme will
be rationed according to the quality of the environmental output.
It is therefore theoretically available as an all-Wales scheme,
but it is only the best projects that will be funded first. It
is important however that we establish that principle. The second
benefit I think is that it will allow us in Wales, as we see the
reorganisation of the European Union and the renegotiation of
the common agricultural policy, to have a scheme that we can present
both to the British Government as a whole and to the European
Union and say, "Look: if it is the desire of the European
Union"—and I believe it is—"to move the
emphasis of the common agricultural policy away from direct commodity
support towards more direct assistance which brings in other benefits
like environmental ones, we have a tried and trusted scheme here
in Wales", and I think that will be of enormous benefit whilst
arguing the case for reform in Europe as a whole and getting the
benefit because we will have the advantage of having a scheme
up and running.
Chairman
29. Perhaps we can move on to education
now. On table 1.02, page 3 of the report, in the column "Education,
Welsh Language, Arts and Recreation", the forecast outturn
for 1997/98 is £613.5 million, and the planned expenditure
for 1998/99 is £567.2 million, which seems to me like a reduction
of £46 million. In table 7.02, again the outturn is forecast
at £1,263 million and the 1997/98 figure is £1,240 million,
which seems to be a reduction of £23 million. Can you tell
me how this is consistent with the Government's commitment to
give priority to education?
(Mr Davies) Yes. Dr Roberts is checking the second
question. I do not have the table in front of me at the moment.
The first thing that you quoted is mainly a direct result of the
transfer of the nursery voucher money from direct Welsh Office
expenditure to the local authorities. That is money of course
which has now been repatriated as it were, given back to local
authorities, and you will see that there is a corresponding increase
in local authority education expenditure. I am sorry: I have not
been able to track down the second question.
(Dr Roberts) Which table are you referring to,
Chairman?
30. Table 7.02, page 69. It does seem, certainly
in my local authority area, I have got a school which basically
has class sizes in this coming year of 40 or more. They are obviously
very concerned that the Government's commitment to reduce class
sizes is not having an effect in that area. Obviously there are
going to be individual anomalies and we cannot address that individual
case, I am sure, but perhaps you could say when schools like that
might expect to have their class sizes reduced.
(Mr Davies) I acknowledge that there is a particular
problem in Wales because of the existence of small rural schools
which present their own problems in terms of trying to meet a
defined target such as a limit of 30 on schools, because it does
in a sense take away some of the flexibility which has traditionally
been one of the stronger elements of education provision in smaller
rural schools, so there is a particular problem. Win Griffiths
who, with Peter Hain, has been looking at this matter over a period
of time, has identified a number of strategies and I certainly
hope that Peter Hain, who has direct ministerial responsibility
now, will be able to find solutions to this general problem. It
is the case, however, that we have the target of reducing class
sizes. That is a clear objective of the Government, and it is
our policy to try to meet that. I would refer you to the question
I answered right at the outset of this hearing, that whilst I
did indicate that we are putting over a million pounds to reduce
infant class sizes as a result of the phasing out of support for
the independent sector, and during the Budget of last summer a
further £50 million has been made available to local authorities.
What I want to do, and I acknowledge that this is potentially
going to be difficult, is to make sure that that money, which
has been made available for local authorities for the specific
purpose of reducing class sizes and improving educational standards,
is used for that purpose. My officials are in touch with the Welsh
Local Government Association and indeed we have required our Welsh
local authorities to submit returns to the Welsh Office which
we are currently evaluating to try to track this money to make
sure that it is actually used for that purpose. That is the determination
that I have and I will follow that determination ruthlessly. Certainly
it is my intention that, as we move through this Parliament, because
it was a manifesto commitment that we gave for delivery over the
five year period of Parliament, to make sure that we deliver that
commitment.
(Dr Roberts) On table 7.02, this is total local
authority expenditure for Wales. Therefore it relates to support
given by the Welsh Office but also has income generated by local
authorities themselves. The final column there is in fact 1997/98,
so it does not refer to the current financial year, and obviously
a substantial part of our revenue support grant is not hypothecated
by the Secretary of State, so these are decisions made by the
local authorities themselves.
31. You answered the general point but I
am looking particularly at the column "Education, Arts and
Libraries" which has increased. If you go back to 1995/96,
it is £1,241 million. In 1997/98, which is the outturn in
this report, it is £1,263 million, and then the forecast
is reduced by £23 million.
(Mr Davies) That figure that you are referring
to in the end column for the outturn for 1997/98 does not include
the additional money which went in direct to local authorities,
so there will be an increase on that figure in terms of the total
expenditure on education via local authorities.
32. In other words it does not include the
£50 million?
(Mr Davies) That is right.
Mrs Williams
33. Could I turn to further education, Secretary
of State. It has continued to expand while funding really remains
roughly constant. That sector has expanded vastly since 1993 but
when we look at the unit costs per student you will see that they
are coming down by around £200 or more per year. Are you
satisfied that the quality of further education is being maintained
because people in this sector have expressed great concerns to
myself?
(Mr Davies) I am sure there are many problems
that we have in further education. Some of the colleges have not
performed as well as they should and I do have very serious concerns.
I am also not entirely sure at this moment whether we get the
best value for money out of the present system of delivering post-16
education. It is for that reason that we have a task force which
is looking at this and that task force has representatives on
it of the colleges, of the local education authorities, the schools
and the private sector, which is looking to see how best we can
make sure that we have mechanisms in place for the funding of
post-16 education which makes sure that we get the best return
possible for the money that we spend. That may well lead to some
difficult and controversial decisions for us in the Welsh Office,
but there is no doubt at all in my mind that this is a critical
area. Education is a priority of the Government and certainly
in Wales, if we are to perform better economically, we will have
to rely on the skills and qualifications of our workforce and
we have to address this area of post-16 education. It is a problem
area. I am not satisfied with it at the moment and we will look
very closely at it.
34. Can you tell us more about the timescale?
(Mr Davies) I am afraid I cannot at this stage.
I will just check with my officials but the task force is looking
at this matter and I am afraid I am not prepared to answer that
in the sense that I would happily answer it if I could but I have
not had the preparation necessary to answer the question. It has
been pointed out to me that the Further Education Funding Council's
grant for the current financial year has been increased by £8.9
million which does of course more than offset the reduction which
was planned by the previous Government, so there has been an increase
in expenditure but, as I understood it, the question was about
the value that we get from that expenditure.
35. It is expanding, the figure of £200
or more a year. This is what I was after really. Why is it expanding
and with a greater number of students where does that take us?
You are not able to tell us when the task force will be able to
give us an indication as to how things are going in Wales?
(Mr Davies) I am afraid I cannot at this stage,
no.
Mr Caton
36. As you said, compared to the previous
Government's plans you have added a considerable amount of money
to the further education budget but, even after that, the Further
Education Funding Council for Wales was requiring efficiency gains,
as they call them, of 8.7 per cent from colleges. Are you concerned
that this looks like being met by very substantial cuts in community
education across large parts of Wales?
(Mr Davies) I am concerned at any reduction in
educational provision and I am very conscious of the great benefit
that community education does provide, but I am also conscious
that as Secretary of State I have a budget which is limited and
I have to make spending priorities. The decision as to how its
grant is distributed is a matter for the Further Education Funding
Council and it would be wrong of me to acknowledge that system
and then to try to second-guess their decisions.
37. You mentioned the task force you have
set up. Is one of the things that that will be looking at the
comparative expenditure per student in sixth forms in our schools
as compared to the further education sector?
(Mr Davies) Yes. That is the key. If you look
at the level of expenditure which goes into the different sectors
of post-16 education, there are great discrepancies and I am not
satisfied that we are targeting at the moment on the outcomes.
It seems to me that what we need to do is to target the outcomes
rather than to pay on structures.
Chairman: I am sure,
Secretary of State, you will take into account the very good report
of the previous Committee on further education in Wales, made
under the chairmanship of Gareth Wardell who, I am delighted to
say, is in the room today, which is very worrying for me because
he is obviously checking up on me, but welcome to the Committee.
Mr Paterson
38. Can we turn to health please? Are you
happy with the additional funding that you made available will
be sufficient to reverse the increase in waiting times which we
saw last year?
(Mr Davies) It is going to be difficult. I think
the Secretary of State for Health referred to it as the ocean
liner effect which we would all be familiar with in terms of turning
round the programme. The Government has indicated that it wants
to see a reduction in hospital waiting lists. We have to make
sure that as that is done the Health Service also responds on
the basis of patient need and patient need does not always correlate
of course with length of time on waiting lists. This is a problem
we have in the National health Service. I am satisfied that the
changes we are now seeing through in Wales will result in the
reduction in bureaucracy and the application of additional resources
to front line patient care. Certainly, as with the reduction in
class sizes, we have a manifesto commitment to reduce hospital
waiting lists over the period of the Parliament, and I am satisfied
that the additional resources which have gone in and the reorganisations
that we have carried out which have released more funds from within
the existing budget will eventually bring about that reduction.
39. When?
(Mr Davies) This depends on so many factors. We
are proceeding very rapidly and I cannot make any forecasts about
the state of the health of the nation. It would be foolish of
me to forecast what next winter's weather is going to be or the
extent to which a new bout of Asian `flu will strike the people
of this country. I cannot make that forecast. What I can say however
is that the Government is determined to bring about a reduction
in hospital waiting lists. We are following policies which will
bring that about and I am afraid that Mr Paterson will have to
wait like the rest of us for an answer to that particular question
about when we will see that reduction.
